TaxTMI 
TaxTMI 
2019 (8) TMI 1950
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessee along with other family members had purchased a seven-storied building at Loharuka Point for total consideration of Rs. 2,29,60,000/- with assessee's 1/4t h share being Rs. 57,40,000/-. During the course of assessment proceedings, a reference was made by the Assessing Officer to the District Valuation Officer (DVO) under section 131(1)(d) of the Act in order to determine the fair market value of the building purchased by the assessee. The valuation report of the DVO, however, was received by the Assessing Officer only after the completion of assessment under section 143(3) valuing the said building at Rs. 10,85,59,651/- with assessee's 1/4t h share being Rs. 2,71,39,913/-. According to the Assessing Officer, there was thus under-valuation of his share of property by the assessee to the extent of Rs. 2,13,99,913/-. He, therefore, reopened the assessment after recording the reasons and after obtaining the approval of the concerned CIT, he issued a notice under section 148 of the Act to the assessee. In response to the said notice, a petition was filed by the assessee requesting that the return originally filed by him on 23.11.2007 may be treated as the return filed in resp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently In the course of the proceedings under this section, or re-compute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereinafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under subsection (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under subsection (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interes....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... has been a failure on the part of the appellant to disclose fully and truly material facts necessary for the purpose of assessment. In this regard, your honours attention is drawn to the observations of the Hon'ble Court in the case of Hindustan Lever Ltd. v. R.B. Wadkar [2004J 268 ITR 332 1 (Bom.), a Division Bench has opined thus:- The reasons recorded by the assessing officer should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. Reasons are the manifestation of mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide the link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year so as to establish the vital link between the reasons and evidence. That vital link is the safeguard a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n report is not proper as valuation report is only an opinion regarding the cost of purchase/construction or the fair market value of the property. A mere change in opinion cannot be the ground to reopen a completed assessment. The same does not amount to information, nor can it form a ground for reasons to believe that the assessee failed to disclose his income fully and truly within the meaning of sec. 147. In this regard, your honour attention is invited to the decision in the case of Tarawati Debi Agarwal vs. ITO 162 ITR 606 (Cal) wherein the assessee had constructed a house property. Necessary facts required for assessment were disclosed to ITO and all the details required by him were furnished. A.O. referred the matter to departmental valuer and meanwhile completed the assessment on the basis of valuation by the assessee. It was held that a valuation report of the Government valuer estimating the cost of construction of, or of repair to, a property at a higher figure than that shown by the assessee does not, without other evidence, entitle the A.O. to take action ix]» 147. Court observed, "in any event, valuation is a question of opinion and unless there is a c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e petitioner u/s. 143(3) the impugned notice u/s. 148 was issued only on the basis of change of opinion and was therefore, invalid, notice was also illegal on the ground that it was based on the valuation report of cost of construction. In CIT vs. Smt. Meena Devi Mansighka (2008) 303 ITR 351 (Asst yr 1995-1997 to 1998-1999) it was held that mere DVO's report cannot constitute reason to believe that income has escaped assessment for the purpose of initiating reassessment and therefore tribunal was justified on holding that the reassessment proceedings initiated on the basis of DVO's report were invalid-ab-initio, more so when it has found that the DVO's report suffers from various defects and mistakes. In ITO V. Santosh Kumar Dalmia (1994) 208 ITR 337 (Cal.)(Asst yr 1973-1974) as also in ITO v Shiv Shakti Build Home ( P) Ltd (2011) 141 TTJ 123 (Jodhpur) ( Trib.) it was held that where apart from the valuation report which was relied upon by the ITO there was no material before him to come to the prima facie conclusion that the assessee had received the higher consideration than what had been stated in the sale deed, reassessment would not be justified. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion. Your honour, the satisfaction of the sanctioning authority has to show objectivity with regards to the facts of the case and the material on record. In this regard we would like to invite your honour's attention to the decision of Madhya Pradesh High Court in the case of Commissioner of Income Tax, -Jabalpur V. S. Goyanka Lime & Chemicals Ltd. 56 taxmann.com 390 (Madhya Pradesh) wherein it was held that "whether where Joint Commissioner recorded satisfaction in mechanical manner and without application of mind, in order to accord sanction for issuing notice under section 148, assumption of jurisdiction to reopen block assessment was invalid. The special leave petition filed against this decision has been rejected by the honourable Apex Court. Your honour, we would also like to draw your attention to the decision of Honourable High Court in the case of Arjun Singh v. Asstt Dit: [2000] 246 ITR 363 (MP). Your honour in this "The commissioner acted, of course, mechanically in order to discharge his statutory obligation properly in the matter of recording sanction as he merely wrote on the format "yes I am satisfied" which indicates as if he was to si....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the assessee, it is held that the assessment proceedings were not validly initiated. In view of above, the re-assessment order passed is quashed". Aggrieved by the order of the ld. CIT(Appeals), the Revenue has preferred this appeal before the Tribunal. 6. We have heard the arguments of both the sides and also perused the relevant material available on record. In support of the revenue's case on the issue under consideration, the ld. D.R. has relied on the decision of the Hon'ble Calcutta High Court in the case of Prem Chand Shaw (Jaiswal) -vs.- ACIT [383 ITR 597]. He has contended that the said decision of the Hon'ble Jurisdictional High Court is squarely applicable in the present case as it was held by Their Lordships that the mere fact that the Additional Commissioner did not record his satisfaction in so many words should not render invalid the satisfaction granted under section 151(2) of the Act. However, as rightly contended by the ld. Counsel for the assessee, the said case cited by the ld. D.R. is distinguishable on facts, inasmuch as, the assessee in the said case had restricted his challenge to the validity of notice under section 148 only on the ground that sanct....