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2021 (11) TMI 855 - AT - Income TaxValidity of Reopening of assessment u/s 147 - addition on the basis of valuation report of District Valuation Officer (DVO) - reopening of assessment was beyond four years - HELD THAT - Since the allegation of escapement of income is more than ₹ 1 lakh, the reopening cannot be said to be invalid in view of the provision of Section 149(1)(b) of the Act. Thus, the ground of maintainability of the reassessment proceeding as raised by the assessee fails. Reopening of assessment on DVO s report - Where the AO completed assessment under Section 143(3) making certain addition in respect of unexplained investment he could not reopen the said assessment for enhancement of said addition merely on the basis of the report of the DVO. In this regard, we are enlightened by the ratio laid down in AKSHAR INFRASTRUCTURE PVT LTD 2017 (3) TMI 393 - GUJARAT HIGH COURT . Also in MUNIR ISMAIL VORAJI 2017 (5) TMI 684 - GUJARAT HIGH COURT where on the basis of DVO s report reopening notice was issued and challenged before the Court. It was further found that no further enquiry was conducted to find out fair market value, neither was there any tangible material available to the AO to form an opinion that income chargeable to tax has escaped assessment. Ultimately such reopening of assessment merely on the basis of the DVO s report was held to be unjustified. We find similar fact in the case in hand which has been failed to be controverted by the Ld. DR before us. Therefore, we find no merit in the reopening the assessment under Section 147 of the Act merely on the basis of the DVO s report. - Decided in favour of assessee.
Issues:
1. Validity of reopening assessment under Section 147 of the Income Tax Act. 2. Justification of addition based on District Valuation Officer's report. 3. Maintainability of reassessment proceedings. 4. Reliance on DVO's report for reopening assessment. Issue 1: Validity of reopening assessment under Section 147: The appeal challenged the order reopening the assessment under Section 147 of the Income Tax Act for the assessment year 2010-11. The appellant argued that the reopening was beyond the permissible four-year period from the end of the relevant assessment year. The appellant contended that the reopening was not valid and should be quashed. The appellant also raised objections regarding the justification of reopening based on the District Valuation Officer's report. The appellant cited relevant judgments, including the case of National Thermal Power Co. Ltd. vs. CIT, to support their arguments. The Tribunal admitted the additional grounds raised by the appellant based on the cited judgment. Issue 2: Justification of addition based on District Valuation Officer's report: The case involved an addition of &8377; 28,65,935 based on the valuation report of the District Valuation Officer (DVO) after reopening the assessment under Section 148 of the Act. The appellant contested the validity of relying on the DVO's report without rejecting the books of account. The Tribunal considered the appellant's arguments and relied on various judgments, including Sargam Cinema vs. CIT, to conclude that reopening the assessment solely on the basis of the DVO's report was not justified. The Tribunal held that the addition based on the DVO's report was not maintainable in the eyes of the law and quashed the same. Issue 3: Maintainability of reassessment proceedings: The appellant contended that the reassessment proceedings were not maintainable as the reopening was beyond the prescribed time limit. The Departmental Representative argued that the reopening could be made under Section 149(1)(b) of the Act if the escaped income was more than &8377; 1 lakh. The Tribunal considered both parties' submissions and held that since the alleged escapement of income exceeded &8377; 1 lakh, the reopening was not invalid under Section 149(1)(b) of the Act. Issue 4: Reliance on DVO's report for reopening assessment: The Tribunal analyzed the jurisprudence on relying on the DVO's report for reopening assessments. Citing cases like Akshar Infrastructure Pvt. Ltd. vs. ITO and Munir Ismail Voraji vs. ITO, the Tribunal held that reopening an assessment solely based on the DVO's report without conducting further inquiries or having tangible material was unjustified. The Tribunal found no merit in reopening the assessment based solely on the DVO's report and quashed the reassessment proceedings. Consequently, the appeal filed by the assessee was allowed. In conclusion, the Tribunal's decision focused on the validity of reopening the assessment under Section 147, the justification of the addition based on the DVO's report, the maintainability of the reassessment proceedings, and the reliance on the DVO's report for reopening the assessment. The Tribunal quashed the reassessment proceedings, citing precedents and legal provisions, and allowed the appeal filed by the assessee.
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