1990 (3) TMI 25 - HC - Income Tax

Summary

Issues involved: Assessment under section 143(3) read with section 144B of the Income-tax Act, 1961, revision under section 263, notice under section 148 read with section 147(a), valuation of property, disclosure of full and relevant facts necessary for assessment.

Assessment under section 143(3) read with section 144B:
The petitioner, a limited company, was assessed for the assessment year 1975-76. The assessment was completed under section 143(3) read with section 144B. The petitioner had purchased a property known as New Excelsior Theatre Building for Rs. 61,00,000. The departmental valuer valued the property at Rs. 1,04,80,000 in the case of the seller, S. P. Builders. The petitioner's assessment was sought to be revised under section 263, treating the difference in property value as undisclosed income. The Tribunal set aside this order, stating it had merged with the appellate order.

Revision under section 263:
The Tribunal's order was dated January 30, 1984. Subsequently, a notice under section 148 read with section 147(a) was issued to the petitioner, requiring a return. Gift-tax proceedings were also initiated against S. P. Builders, with a different valuation of the property. The petitioner filed a petition challenging the notice, arguing that the valuation reports were opinions and not facts, and there was no failure to disclose material facts for assessment.

Notice under section 148 read with section 147(a):
The petitioner contended that the Income-tax Officer lacked sufficient basis to believe income had escaped assessment based solely on property valuation differences. The petitioner had disclosed the sale deed during the original assessment, and the new valuation did not indicate non-disclosure of relevant information. The Court held that the condition for assuming jurisdiction under section 148/147(a) was not satisfied, quashing the notice.

This judgment highlights the importance of disclosing full and relevant facts for assessment, the distinction between opinions and facts in property valuation, and the conditions necessary for the reassessment under section 147(a).