2020 (9) TMI 1203 - HC - Income Tax

Reopening of assessment u/s 147 - assessment carried out under CASS - valuation of the property not accepted - Objection to the Valuation Report submitted by the Assessee - HELD THAT - There is nothing on record to establish that save and except for the Valuation Report alone there is any other material even prima facie indicating application of mind by the Assessing Officer in arriving at its conclusion necessitating reopening of assessment carried out under CASS. The difference in valuation of the property in the two reports is also not substantial. However we may not be misunderstood of our judgment to be clouded by such fact. The Assessee is a salaried person. He had constructed a residential house on a plot owner by his wife. During the course of proceedings in fact much prior to the passing of the order accepting his return he had submitted the Valuation Report from an approved Valuer. The same was never objected to or rejected. Right from day one he had disclosed full particulars what took the official valuer more than ten months to value the property and why despite the Assessee having submitted his Valuation Report dated 10th of January 2005 request for calling Valuation Report was made only on 19th of October 2006 and why the report reached the officer on 5th of November 2007 are all questions which are not answerable from the record. As such to our mind without meeting the essential ingredient of the officer having applied his mind to the various material necessitating reopening of assessment is missing in the instant case. Hence in the given facts and circumstances we quash and set aside the impugned order - Decided in favour of assessee.

Summary

Issues:
Challenge to order passed under Section 264 of the Income Tax Act, validity of assessment order under Section 143(3) 147, quashing of valuation report, declaration of assessment order under Section 143 as valid.

Analysis:
The High Court of Patna addressed the petition seeking various reliefs, including quashing of orders passed under Sections 264 and 143(3) 147 of the Income Tax Act, and declaration of a previous assessment order as valid. The Court acknowledged the trust deficit between the Department and the Assessee, emphasizing the importance of goodwill and faith in public institutions. The case revolved around the correctness of the orders dated 8th December 2008 and 12th June 2009, concerning reassessment based on a valuation report.

In the background of the case, the Assessee had filed returns for the Financial Year 2003-04, declaring income from salary and providing a valuation report for a residential building constructed on his wife's land. Despite initial acceptance of the assessed income, a subsequent valuation report led to a reassessment notice under Section 147. The Court examined the timeline of events, highlighting discrepancies in the valuation process and the basis for reassessment solely on the new valuation report.

During the proceedings, the Respondent cited legal precedents to support the reassessment, while the Petitioner relied on other judgments favoring the Assessee's case. The Court analyzed Section 147(b) of the Act, emphasizing the necessity for truthful income disclosure and valid grounds for reopening assessments. Referring to relevant case laws, the Court reiterated the requirement for the Assessing Officer to apply their mind before initiating reassessment based on new information.

Ultimately, the Court found that the reassessment lacked sufficient grounds and application of mind by the Assessing Officer. The discrepancies in valuation reports, the Assessee's prompt disclosure, and the delayed valuation process raised doubts about the necessity for reassessment. Consequently, the Court quashed the impugned orders dated 8th December 2008 and 12th June 2009, ruling in favor of the Assessee and disposing of the writ petition accordingly.