1989 (3) TMI 118 - HC - Income Tax

Summary

Issues Involved:
1. Whether the Revenue should inform the assessee of the reasons for reopening the assessment.
2. Whether the Revenue is entitled to reopen the assessment based on the facts of the case.

Summary:

Issue 1: Whether the Revenue should inform the assessee of the reasons for reopening the assessment.
The first question debated was whether the Revenue should inform the assessee of the reasons for reopening the assessment. The Revenue maintained that, according to a Supreme Court decision, they need not set out their reasons for reopening the assessment. The court suggested that the better course of procedure for the Revenue is to inform the assessee of the grounds on which the assessments are sought to be reopened. This would result in an orderly proceeding. However, the court acknowledged that the subject is covered by the Supreme Court's decision, which states that there is no requirement to communicate the reasons to the assessee at the notice stage.

Issue 2: Whether the Revenue is entitled to reopen the assessment based on the facts of the case.
The principal question was whether the Revenue is entitled to reopen the assessment. The court held that the Revenue is not entitled to reopen the two sets of assessments. The assessees had disclosed all necessary material facts, including the purchase price of the land, construction details, and valuation reports. The Revenue had accepted the valuation after inquiry and concluded the assessments. It was not open to the Revenue to reopen the concluded issue based on a complaint from the Special Survey Squad or a report from the District Valuation Officer. The court cited several Supreme Court decisions to support this view, emphasizing that once the assessee has disclosed all material facts necessary for assessment, the same issues cannot be reopened later. The court quashed the notices served in the fifteen cases and allowed the writ petitions.

The plea of limitation raised by the assessees did not survive, and therefore, it was not dealt with. The group of fifteen writ petitions was allowed with no costs.