TaxTMI 
TaxTMI 
2016 (8) TMI 1500
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....f assessment is bad in law. 3. The CIT (Appeals) ought to have appreciated that the assessment being reopened on the ground of cost of construction/valuation of residential house, the reopening is bad in the eye of law as settled by the Hori'ble Supreme Court in the case of (1) Sargarn Cinema vs. CIT (2010) 328 ITR 513 (SC) and (2) ACIT vs. Dhariya Construction Co (2010) 328 ITR 515 (SC) and therefore the consequent assessment order is not sustainable in the eye of law. 4. Without prejudice, the CIT (Appeals) ought to have appreciated that the reopening of assessment was made on a mere change of opinion more so on the allegations of investment made by the Appellant and that there was no material whatsoever with the assessing officer to arrive at the conclusion that there was escapement of income and therefore the assessment order is not sustainable in the eye of law. 5. The CIT (Appeals) grossly erred in sustaining the addition with regard to the agricultural income when admittedly the assessee was having 5 acres of agricultural land and therefore the estimation of Rs. 3,000 / - per acre by the assessing officer is highly unjustified. 6. The CIT (Appeals) grossly erred ....
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....ent of the assessee by issuing a notice under Section 148 on 23.3.2011. The assessments were completed under Section 143(3) r.w.s. 147 of the Act vide order dt.28.12.2011. The assessee challenged the action of the Assessing Officer before the CIT (Appeals) but could not succeed. 6. Before the Tribunal, the learned Authorised Representative of the assessee has submitted that the assessments were reopened by the Assessing Officer on the basis of the DVO's report and valuation therefore the reopening is not valid as the Assessing Officer has not applied his mind to form a belief that income assessable to tax has escaped assessment. He has further submitted that there was no other corroborative evidence or material with the Assessing Officer except the report of the DVO to reopen the assessment. In support of his contention, he has relied upon the decision in the case of ACIT Vs. Dhariya Construction Co. 328 ITR 550 (SC) and submitted that the Hon'ble Supreme Court while confirming the decision of Hon'ble High Court has held that the opinion of the DVO per se not an information for the purpose of reopening of assessment under Section 147 of the Act. The Assessing Officer has t....
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....f the assessee. 8. I have considered the rival submissions as well as the relevant material on record. The reason recorded by the Assessing Officer for all these five assessment years are common which reads as under : "Shri Narayanrao M More H.No.8-9-270/A-62, Guru Nagar Colony, Bidar. PAN : ASPPM 5328N Asst. Year : 2007-08. A Notice u/s. 148 was issued and served on the assessee's wife Smt. Rukmini Narayanrao More on 29/03/2010, on the ground that Smt Rukmini Narayanrao More has constructed a residential house at H.No. 8-9-270/A-62, Gutunagar Colony, Bidar. Vide this office Notice u/s 148 dtd: 29/03/2010, Smt. Rukminibai N More was to deliver a return of income in the prescribed form within 31 days from the date of receipt of the notice. There had been no compliance. A Reference Proforma was issued for estimating the cost of investment under section 142(A) of the Income - tax Act 1961 addressed to The Assistant Valuation Officer., I.T.Dept., Hubli to evaluate the cost of investment in construction of the above said residential house. The Valuation Officer Valued the residential house at Rs. 41,40,4001-. During the course of Valuation the assessee did not submit the ne....
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....ficer has reopened these five assessment years of the assessee. It is clear from the reasons recorded by the Assessing Officer that apart from report of the DVO, there is no other material or corroborative evidence to show that the alleged investment was made by the assessee in the residential house during all these assessment years. It is pertinent to note that the Assessing Officer has presumed the investment of each year based on the DVO's report without referring any other documents or evidence to indicate that the construction of the property started in the FY 2003-04 and it continued up to FY 2007-08 relevant to the assessment years 2004-05 to 2008-09. Therefore except the report of the DVO there is no other material either referred in the reasons recorded or it was available with the DVO. There is nothing in the reasons recorded as what is the basis of the DVO's report to say that the assessee has made the investment in the residential house during all these years and to the extent of the amount as alleged in the DVO's report. Therefore the reasons recorded by the Assessing Officer for reopening of the assessment clearly reveals that the reopening is based on the DVO's repor....
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....deleting addition of the income based on the said report. The High Court of Delhi after considering the aforesaid question, observed at para Nos. 4 and 5 as under:- "4. Only point to be considered is whether the valuation rendered by the DVO is to be taken into account or not. It has been argued by the learned counsel for the revenue that the assessing officer was justified in referring the matter to the DVO for an opinion with regard to the fair market value of the property and once that opinion has been rendered, the same has to be taken into account and if that were to be so, the addition of 2,81,83,000/- would be fully justified. Consequently, it was submitted by the learned counsel for the revenue that the Tribunal had erred in deleting the addition. On the other hand the learned counsel for the respondent referred to a Division Bench decision of this Court in the case of CIT v. Shri Puneet Sabharwal: (2011) 338 ITR 485. In that decision a specific question had been raised as to whether the Income Tax Appellate Tribunal was right in holding that notwithstanding the report of the DVO the revenue had to prove that the assessee had received extra consideration over and above th....
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....e was dismissed. 17. We need not burden our judgment with other case-laws, since in our view the aforesaid two decisions of the High Court of Delhi throws light on the settled legal position for the purpose invoking power under Section 69 of the Act. 18. Examining the matter further on facts, in the present case, it appears that it is not a case of the revenue that there was any independent or corroborative material for consideration paid or received in addition to than mentioned in the sale deed. The basis of the addition is only valuation report of the District Registrar under the Stamp Act and the Departmental valuer. As such, there is no independent material which had come on record for such purpose. The payment of additional stamp duty may be on the basis of the valuation of the valuer of the stamp Act authority but same ipso facto cannot be said to be a valid ground to initiate the proceedings under Section 69 of the Act or to invoke power under Section 69 of the Act on the premise that additional consideration was paid or received. Further, if such could not be the basis, subsequent valuation report would also not a ground. In the absence of any independent material, the....
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....Airways (I) Ltd. 331 ITR 236 has held that the condition precedent to exercise on the jurisdiction under Section 147 is the forming of reason to believe by the Assessing Officer that income chargeable to tax has escaped assessment and subsequently if the Assessing Officer found that as a matter of fact the same is not escaped assessment, it is not open to him independently to assess some other income as held in paras 22 & 23 as under : "22. Explanation 3 lifts the embargo, which was inserted by judicial interpretation, on the making of an assessment or reassessment on grounds other than those on the basis of which a notice was issued under s. 148 setting out the reasons for the belief that income had escaped assessment. Those judicial decisions had held that when the assessment was sought to be reopened on the ground that income had escaped assessment on a certain issue, the AO could not make an assessment or reassessment on another issue which came to his notice during the proceedings. This interpretation will no longer hold the field after the insertion of Expln. 3 by the Finance Act (No. 2) of 2009. However, Expln. 3 does not and cannot override the necessity of fulfilling the....
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....lso not sustainable when the Assessing Officer has not made any addition of income on account of unexplained investment but made some other addition. In view of the above discussion, the reassessment for the Assessment Years 2004-05 to 2008-09 is not sustainable. 10. Since the reopening itself is quashed therefore I do not propose to go into the merits of the other additions made in the reassessment. 11. For the Assessment Year 2009-10, the Assessing Officer has framed assessment under Section 143(3) of the Act. The assessee filed his return of income on 20.12.2010 declaring income from rent of Rs. 1,40,000 and income from agriculture of Rs. 65,200. The Assessing Officer found that the assessee has credited his capital account of Rs. 1,80,000 as sale of gold and insurance of Rs. 51,244. The Assessing Officer allowed an amount of Rs. 10,000 from sale of gold as shown in the balance sheet as on 31.3.2004 and the balance amount of Rs. 1,70,000 was assessed by disallowing the claim of Long Term Capital Gains. Similarly the Assessing Officer has also disallowed the claim of agriculture income to the extent of Rs. 50,200 and added the same as 'income from other sources.' Apart from thi....