9911796707
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Issues Involved:
1. Validity of the reopening of assessment under sections 147/148. 2. Legality of the reassessment order dated 23-1-2004. 3. Computation of capital gains and cost of acquisition. Detailed Analysis: 1. Validity of the reopening of assessment under sections 147/148: The revenue contended that the reopening of the assessment was valid under section 147/148 due to the unexplained deposit of Rs. 11,73,679 and the deemed dividend of Rs. 7,50,000 received by the assessee. The assessee argued that the reopening was based on erroneous assumptions and lacked genuine and definite information. The tribunal noted that the Assessing Officer (AO) had prima facie reasons to believe that income had escaped assessment based on the material available at the time of reopening. The tribunal emphasized that the AO is not required to establish escapement of income at the initiation stage but only to have reasonable grounds for reopening. Subsequent explanations provided by the assessee, which were accepted by the AO, do not invalidate the reassessment proceedings. 2. Legality of the reassessment order dated 23-1-2004: The assessee argued that the reassessment order was illegal as the AO did not make any addition regarding the unexplained deposit of Rs. 11,73,679, which was the basis for reopening the assessment. The tribunal held that the validity of the reassessment should be judged based on the material available at the time of reopening and not on the final outcome of the reassessment proceedings. The tribunal clarified that the AO has the discretion to make additions either of the items on which the assessment was reopened or of the items discovered during the reassessment proceedings. The tribunal rejected the contention that the AO must make an addition of the amount on which the assessment was reopened to validate the reassessment. 3. Computation of capital gains and cost of acquisition: The AO computed the capital gains by rejecting the assessee's valuer's report and adopting a lower rate for the land. The CIT(A) canceled the reassessment order without adjudicating on the quantum of capital gains. The tribunal reversed the CIT(A)'s order canceling the assessment and restored the matter to the CIT(A) to adjudicate the quantum of capital gains based on the material available and to be furnished by the assessee and the AO. Conclusion: The tribunal upheld the validity of the reopening of the assessment under sections 147/148 and clarified that the AO has the discretion to make additions of the items discovered during the reassessment proceedings. The tribunal reversed the CIT(A)'s order canceling the assessment and directed the CIT(A) to adjudicate the quantum of capital gains. The appeal filed by the revenue was allowed for statistical purposes, and the cross-objection filed by the assessee was dismissed.
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