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2012 (3) TMI 60 - AT - Income TaxValidty of Re-opening under 147 - Assessment under 143 on 28.02.06 Necessary facts and report of Registered valuer on record - Matter referred to DVO under 55A, report received on 13.03.06 - Held That - Assessee had disclose fully and truly all material facts necessary for his assessment. AO have not formed any reason to believe for escapement of LTCG rather he wanted to review the assessment on the basis of opinion of DVO who has opined for a lower fair market value as on 01.04.1981. Assessment under 147 after expiry of 4 years from relevant A/Y is not valid.
Issues Involved:
1. Validity of reassessment proceedings initiated under section 147 read with section 148 of the Income Tax Act, 1961 based on the Departmental Valuation Officer's (DVO's) report. 2. Whether the initiation of the reassessment proceedings was barred by limitation. Detailed Analysis: 1. Validity of reassessment proceedings initiated under section 147 read with section 148 of the Income Tax Act, 1961 based on the Departmental Valuation Officer's (DVO's) report: The assessee filed its original return for the Assessment Year 2003-04 on 28.11.2003 and revised it on 25.03.2004. The Assessing Officer (AO) accepted the revised return. The assessee sold two plots of land in Chennai and computed Long Term Capital Gains (LTCG) based on a fair market value as of 01.04.1981, supported by a registered valuer's report. The AO, not convinced with the registered valuer's value, referred the matter to the DVO but completed the assessment without the DVO's report, accepting the capital loss claimed by the assessee. Subsequently, the AO reopened the assessment based on the DVO's report, which valued the property significantly lower than the assessee's valuation. The AO issued a notice under section 148 of the Act, leading to a reassessment that increased the LTCG. The CIT(A) upheld the reassessment, leading the assessee to appeal before the Tribunal. The Tribunal examined whether the AO could reopen the assessment based solely on the DVO's report received after the original assessment. The Tribunal referred to the Supreme Court's decision in ACIT Vs. Dhariya Construction Co. and CIT Vs. Kelvinator India Ltd., emphasizing that reassessment cannot be based on a mere change of opinion and must be supported by tangible material. The Tribunal also considered the Calcutta High Court's decision in Hotel Regal International Vs. ITO, which held that a DVO's report received after the completion of the original assessment could not be treated as new information for reopening the assessment. The Tribunal concluded that the AO's reassessment based on the DVO's report constituted a review rather than a reassessment, which is not permissible under the law. 2. Whether the initiation of the reassessment proceedings was barred by limitation: The Tribunal noted that the original assessment was completed under section 143(3) of the Act, and the reassessment notice was issued after four years from the end of the relevant assessment year. According to section 147, reassessment after four years is only permissible if there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The Tribunal found that the assessee had disclosed all material facts, including the registered valuer's report, during the original assessment. Thus, there was no failure on the part of the assessee to disclose necessary facts. The AO's reasons for reopening the assessment did not indicate any such failure but rather relied on the DVO's subsequent report. Therefore, the reassessment proceedings were barred by limitation. Conclusion: The Tribunal quashed the reassessment proceedings, holding that the AO's action was without valid sanction of law and constituted an impermissible review based on a mere change of opinion. The appeal of the assessee was allowed, and the reassessment proceedings were invalidated. The Tribunal did not adjudicate on the merits of the case as the assessee did not make any submissions on that aspect.
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