TaxTMI 
TaxTMI 
1992 (5) TMI 207
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....roduced in Court and the department also produced the relevant authorisation of the Inspecting Assistant Commissioner of Income Tax to issue the notice of reopening in place and stead of the Income Tax Officer. No hearing was given prior to the sanction for issue of notice under s. 151 but about this I shall make my comments only at the end of this judgment. 5. The reasons for reopening are basically this that the assessee tendered a revised valuation report dated March 1981 and that the department also obtained departmental valuation report of 1983. The petitioner is a construction company with a mercantile system of accounting. It appeared from these valuation reports to the respondent that income bed escaped assessment and therefore, notices of reopening were issued. 6. Section 147 of the Act of 1961 in so far as the same concerns the present case is set out below:- "147. Income escaping assessment.- if (a) the Income-tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under s. 139 for any assessment year to the Income-tax Officer or to disclose fully and truly all material facts necessa....
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.... cited in this regard, being the cases of Calcutta Discount and Lakhmani Mewal Das respectively reported in Volume-41 (1961) ITR 191 and Volume 103 (1976) ITR 437. These cases support the above proposition of law which was relied upon by learned counsel for the petitioner. In particular in the Calcutta Discount case the point arose whether share transactions were made for the purpose of reinvestment or for the purpose of earning some income. It was not the duty of the assessee to do anything but bring on record the facts relating to the share transaction. The view to be taken thereupon was to be taken by the Officer on the facts disclosed and if one particular view, was taken, reopening of assessment, thereafter, on the allegation of the assessee's default, would be incompetent because the assessee had not made any omission or suppression. 10. The words of s. 147 clearly indicate that if a disclosure full and true of all material facts necessary for assessment is made then and in that event there would be no jurisdiction to reopen assessment under 147(a) of the Income Tax Act. 11. The respondents would also be entitled to reopen assessment notwithstanding no omission or f....
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....etc. In four sheets in the form of a chart, handed up by the learned Counsel appearing for the respondents, it has been mentioned that the valuer's report of 1981 submitted by the assessee was filed due to rise in the cost of construction and rise in the area of construction. 15. This brings us to the crux of the matter. In so far as the assessee's revised valuation of 1981 is concerned nobody ever applied his mind as to whether the valuation therein was increased by reason of any suppression or omission earlier made on the part of the assessee or whether the valuation changed because of other circumstances beyond the control of the assessee in any manner. One might read and reread the reasons for reopening of assessment but one would not cease to wonder in regard to the answer to the above central question. 16. The valuation made by the defendants stands on another footing. This is an act independently done on the part of the respondents. The assessee had nothing to do with it. By no stretch of imagination, can the assessee's omission or failure to disclose any fact be inferred from the departmental valuation, which came into being only in the year 1983 and not a....
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....e civil consequence should follow without observance of the rules of natural justice. 21. Indeed if an assessee is heard after four years of completion of assessment prior to grant of sanction by the Commissioner the assessee might well be able to bring before the Commissioner materials which would prevent a reopening of assessment on the materials which have been placed by the Income-tax Officer unilaterally before the Commissioner. Such a hearing would ensure the proper application of mind by the Commissioner and the giving of reasons for his sanction and this would rather aid the cause of justice than obstruct the same. No doubt revenue that is due to the authorities should be collected, but it is equally free from doubt that in the matter of such collection the citizens should be given their ordinary rights which they have under any special or general law of the land. 22. I quite see that the Commissioner did not even think of giving a hearing as the point is somewhat novel and it never occurred either to the Commissioner to issue a notice of hearing to the assessee or to the Income-tax Officers or the Inspecting Assistant Commissioner to issue such notice on his own to t....