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2019 (1) TMI 956
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.... under section 80IB(10). The return of income was selected for scrutiny and regular assessment was completed under section 143(3) of the Act on 31.03.2014 after detailed scrutiny of documents, audit reports, audited books of account etc. During the course of regular assessment proceedings, the respondent issued a notice dated 11.06.2013 under section 142(1) of the Act calling upon the petitioner to furnish the details/documents as enumerated therein, which included details regarding the claim of deduction under section 80IB(10) of the Act. Subsequently, fresh notice under section 142(1) was issued on 30.07.2013, calling upon the petitioner to furnish further details including the details relating to the cost of construction etc. concerning the project for which deduction under section 80IB(10) of the Act was claimed. It appears that, subsequently, further notice came to be issued on 23.12.2013 proposing to reject the entire claim of deduction under section 80IB(10) of the Act, in response to which, the petitioner furnished written submissions as well as various details such as ledger accounts, bank statements, creditors confirmation, expenses account etc., from time to time. After ....
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....er has estimated the cost of construction at Rs. 8,99,96,351/- as against the cost of construction shown by the assessee at Rs. 5,94,52,001/-. It was submitted that it is settled legal position that the DVO's Report cannot be the sole ground for reopening the assessment. In support of such submission, the learned advocate placed reliance upon a decision of the Supreme Court in the case of Assistant CIT v. Dhariya Construction Co., [2010] 328 ITR 515, for the proposition that the opinion given by the District Valuation Officer is not per se information for the purpose of reopening an assessment under section 147 of the Act. It was submitted that during the original assessment proceedings, the petitioner had produced the entire construction details along with bills etc. and it was only after examining the same, that assessment under section 143(3) of the Act was finalized, and, therefore, the said valuation report cannot be construed as sufficient and tangible material which may permit the respondent to reopen the assessment. 3.3 It was further submitted that original assessment under section 143(3) of the Act was completed on 31.03.2014 and the District Valuation Officer prep....
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....er had made the reference to the District Valuation Officer without rejecting the books of account and that during the course of regular assessment, the assessment was made by accepting the cost of construction as given by the assessee. 3.5 It was, accordingly, urged that on the reasons recorded, the Assessing Officer was not justified in reopening the assessment of the petitioner and that the impugned notice, therefore, deserves to be quashed and set aside. 4. Vehemently opposing the petition, Mrs. Mauna M. Bhatt, learned Senior Standing Counsel for the respondent, referred to the reasons recorded to submit that the Assessing Officer has recorded therein that the Assessing Officer, on finalizing the assessment, found that the assessee has understated the cost of construction and accordingly, referred the matter to the District Valuation Officer for ascertaining the correct cost of construction of the property. The District Valuation Officer furnished the cost of construction at Rs. 8,99,96,351/- whereas, the assessee, in the books of account, has shown the cost of construction at Rs. 5,94,52,001/- which clearly shows that the assessee has not correctly and truly disclosed th....
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....Officer could have found out the position by probing further. The court held that that, however, does not exonerate the assessee to make disclosure fully. The court observed that the principles have been well settled that mere production of evidence before the Income Tax Officer is not enough, that there may be omission or failure to make a true and full disclosure, if some material for the assessment lay embedded in the evidence which the revenue could have uncovered but did not, then it is the duty of the assessee to bring it to the notice of the assessing authority. It was submitted that the Assessing Officer has sought to reopen the assessment based upon tangible material namely valuation report submitted by the District Valuation Officer which shows that the cost of construction is much higher than that is shown by the petitioner. 4.3 Reliance was also placed on the decision of Allahabad High Court in the case of Sunder Carpet Industries v. Income-Tax Officer and Another, [2010] 324 ITR 417, wherein, the court has held thus: "[10] xxxxxx. Under section 142A of the Act, a reference can be made for the purposes of section 69. Section 69 says about the unexplained inv....
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.... proceedings and further held that section 55A does not in terms create any bar on the DVO proceeding to value the property on the basis of a valid reference made by the Assessing Officer. 4.5 Ms. Bhatt submitted that at the time of the original assessment, the Assessing Officer had formed the belief that the assessee had not disclosed the correct facts and, therefore, he had made a reference to the District Valuation Officer. Once a valid reference under section 142A of the Act is made, the Assessing Officer can rely upon such a report. In support of such submission, reliance was placed on a decision of the Punjab and Haryana High Court in the case of Grover Nursing Home v. Income Tax Officer and Other, [2001] 248 ITR 493, wherein the court opined that even though the report of the Departmental Valuation Office cannot be made the sole basis for initiating action under section 147 read with section 148 of the Act, it can certainly be considered with other facts for forming the belief that the income of the assessee had escaped assessment. 5. Before adverting to the merits of the rival contentions, reference may be made to the reasons recorded for reopening the assessment, whi....
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....n of property which has been met out of undisclosed sources. The DVO estimated the cost of construction at Rs. 8,99,96,351/- whereas the assessee in the books of account shown cost of construction at Rs. 5,94,52,001/-. This clearly shows that the assessee has not correctly and truly disclosed the expenditure incurred for the construction. The excess cost of construction would be met by the assessee out of the undisclosed source of income. Failure on the part of the assessee to disclose fully and truly all the material facts necessary for the assessment, the income of the assessee to the extent of Rs. 3,05,44,350/- has escaped assessment within the meaning of Section 147 of the Act. 7. Seventh paragraph will include escapement of income chargeable to tax in relation to any assets (including financial interest I any entity) located outside India: N.A. 8. Applicability of the provisions of section 147/151 to the facts of the case: In this case a return of income was filed for the year under consideration and regular assessment u/s. 143(3) or reassessment u/s. 147 was made on 31/03/2014. Since, 4 years from the end of the relevant year has expire in this case, the req....
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....2014. In this case more than four years have lapsed from the end of assessment year under consideration. Hence, necessary sanction to issue notice u/s. 148 has been obtained separately from Pr. CIT as per the provisions of Section 151 of the Act. 6. From the reasons recorded, it is manifest that the Assessing Officer seeks to reopen the assessment of the petitioner on the basis of the report dated 31.03.2014 furnished by the DVO estimating the cost of construction at Rs. 8,99,96,351/-. In the backdrop of the facts and the contentions noted herein above, the question that arises for consideration is whether the reopening of assessment for assessment year 2011-12 in case of the petitioner solely based upon the report of the District Valuation Officer is valid? 7. On behalf of the petitioner, it has been contended that sole reliance cannot be placed upon the report of the District Valuation Officer without ascertaining or coming to the conclusion that the books of account of the petitioner company are not correct and without rejecting the same, reopening of assessment cannot be resorted to. It was pointed out that during the assessment proceedings, relevant bills pertaining to t....
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....on or before that date, except in cases where a reassessment is required to be made in accordance with the provisions of section 153A. Explanation. - In this section, "Valuation Officer" has the same meaning as in clause (r) of section 2 of the Wealthtax Act, 1957 (27 of 1957)." 8. Thus, section 142A of the Act as it stood at the relevant time provided that where an estimate of the value of any investment referred to in section 69 or section 69B of the Act is required to be made for the purpose of making assessment or reassessment under the Act, the Assessing Officer may require the Valuation Officer to make an estimate of such value and report the same to him. Section 69 of the Act refers to unexplained investments and provides that where, in the financial year immediately preceding the assessment year, the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer satisfactory, the value of the investments may be deemed to be the inc....
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....he Assessing Officer accepts the books of account and frames assessment, reopening the assessment solely on the basis of the report of the District Valuation Officer without any other material coming to his notice, would amount to mere change of opinion. Moreover, as held by this court in Kisan Proteins (P.) Ltd. (supra), without rejecting the books of account, it is not permissible for the Assessing Officer to make a reference under section 142A of the Act. 11. The learned advocate for the respondent has drawn the attention of the court to the existing provisions of sub-section (2) of section 142A of the Act, which provide that the Assessing Officer may make a reference to the Valuation Officer under sub-section (1) whether or not he is satisfied about the correctness or completeness of the accounts of the assessee. In the opinion of this court, since sub-section (2) of section 142A of the Act in its existing form has been brought on the statute book by substituting the earlier provision with effect from 01.10.2014, viz., subsequent to the reference made by the Assessing Officer, such provision would not be applicable to the facts of the present case which would be governed by ....
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....horities and if they do so, the validity of that action can be questioned by the assessee on grounds which he may be advised to take. The court has also observed that it was not concerned with the said aspect of the matter. Under the circumstances, the said decision does not lay down any proposition of law to the effect that the report of the DVO made during the pendency of the assessment can be relied for the purpose of reopening the assessment. 15. The decision of the Supreme Court, in the case of Indo- Aden Salt Manufacturing and Trading Co. Pvt. Ltd. (supra) also does not come to the aid of the respondent inasmuch as, except for the report of the District Valuation Officer, there is no other material to show that the petitioner had not shown fully and truly all material facts relevant for the assessment. 16. The decision of the Allahabad High Court in the case of Sunder Carpet Industries (supra) would also not carry the case of the respondent any further, inasmuch as, in the facts of the case, the returns for all the assessment years had been processed and accepted summarily under section 143(1)(a) and there was no scrutiny assessment under section 143(3) of the Act. 1....