2017 (5) TMI 1109 - HC - Income Tax

Reopening of assessment - value estimated by the registered valuer of the assessee as on 1st April 1981 was on the higher side and in variance with the fair market value which has resulted into escapement of income - Held that - Considering the affidavit-in-reply and material on the record so also the order of assessment, it appears that in the case of brother of the assessee and the co-owner of the very land ie., in the case of Shri Ashwinkumar Chimanlal Raval, the Assessing Officer had determined/estimated, and/or considered the fair market value as on 1st April 1981 at ₹ 10,19,250/- and consequently, the assessment order has been passed in the case of co-owner of the very land in question estimating the fair market value at ₹ 10,19,250/- as on 1st April 1981 and accordingly, the long term capital gain has been worked out. It is reported that in the case of co-owner of the very land in question ie., Shri Ashwinkumar Chimanlal Raval, the learned CIT A dismissed the appeal preferred by the said assessee, and therefore, the fair market value which was applied/estimated in the case of co-owner is required to be considered and applied by the Assessing Officer, even in the case of the assessee being the coowner of the very land in question, since there cannot be two different estimations of the fair market value as on 1st April 1981 with respect to the same land but in the case of different assessees/co-owners. Under the circumstances, now when the order of assessment is already passed, in the aforesaid peculiar facts of the case, we refuse to entertain the present petition challenging the order of assessment under Section 147 and relegate the petitioner to prefer the appeal before the CIT A against the order of assessment under Section 147 and keeping all the contentions/defence which would be available to the parties; more particularly available to the petitioner-assessee. As observed as such there cannot be two estimations of the fair market value as on 1st April 1981 in respect of the very land in question, but in case of different assessee/co-owner. Thus without expressing anything further on merits in favour of either parties, we relegate the petitioner to avail alternative statutory remedy available by way of appeal before the CIT A against the order of assessment under Section 147 of the Act.

Issues Involved:
1. Legality of reopening the assessment under Section 148 of the Income-tax Act, 1961.
2. Validity of the assessment order passed under Section 147 of the Income-tax Act.
3. Adequacy of the opportunity given to the petitioner to challenge the reopening of the assessment.
4. Applicability of the report from the Departmental Valuation Officer (DVO) for reopening the assessment.
5. Availability of alternative statutory remedy by way of appeal.

Detailed Analysis:

1. Legality of Reopening the Assessment under Section 148 of the Income-tax Act, 1961:
The petitioner-assessee challenged the notice issued under Section 148 of the Income-tax Act, 1961, for reopening the assessment for the Assessment Year (A.Y.) 2012-2013 on the grounds that the income chargeable to tax had escaped assessment within the meaning of Section 147. The petitioner contended that the reopening was based solely on the DVO's report, which was an estimate and not sufficient to infer that income had escaped assessment. The petitioner cited decisions from the Hon’ble Supreme Court and Division Bench of the High Court to support the argument that reopening based solely on a DVO report is not permissible.

2. Validity of the Assessment Order Passed under Section 147 of the Income-tax Act:
The petitioner argued that the assessment order passed on 26th December 2016 was done in haste without giving sufficient opportunity to challenge the reopening. The respondent-Revenue countered that the order was passed because the assessment was getting time-barred on 31st December 2016. The court noted that the order was passed due to time constraints and that the Assessing Officer had relied on the DVO's report, which had also been used in the assessment of the petitioner’s brother and co-owner of the land.

3. Adequacy of Opportunity Given to the Petitioner to Challenge the Reopening of the Assessment:
The petitioner argued that there was a delay in providing the reasons for reopening and that the assessment order was passed immediately after the objections were overruled, without giving sufficient time to challenge the reopening. The court acknowledged the delay but noted that the assessment was time-barred, necessitating the prompt finalization of the order.

4. Applicability of the Report from the Departmental Valuation Officer (DVO) for Reopening the Assessment:
The petitioner contended that the DVO's report, which estimated the fair market value of the land as on 1st April 1981, was not a valid basis for reopening the assessment. The respondent argued that the DVO’s report was a valid piece of information for reopening the assessment, especially since the original assessment was under Section 143(1) and lacked detailed scrutiny. The court found that the DVO’s report had been used consistently in the case of the petitioner’s co-owner, and thus, the reopening was justified.

5. Availability of Alternative Statutory Remedy by Way of Appeal:
The respondent-Revenue argued that the petitioner had an alternative statutory remedy by way of an appeal before the Commissioner of Income-tax (Appeals) [CIT(A)], and thus, the petition should not be entertained. The court agreed, stating that the petitioner should avail the alternative remedy and that the appellate authority should consider the appeal on its merits without being influenced by the court's observations.

Conclusion:
The court dismissed the petition, allowing the petitioner to pursue an appeal before the CIT(A). The court emphasized that it had not expressed any opinion on the merits of the case and that all contentions and defenses available to the petitioner should be considered by the appellate authority in accordance with the law. The petition was dismissed with the liberty to avail the statutory remedy.

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