2012 (6) TMI 676 - HC - Income Tax

Reopening of assessment under section 147 - based on the valuation report - cost of construction Held that - section 142A of the Act is not attracted to the facts of the present case - Initiation of reassessment proceedings on the basis of report of the DVO cannot legally be sustained - against the Revenue

Summary

Issues:
1. Validity of reopening assessment under section 147 based on valuation report.
2. Whether the report of the Departmental Valuation Officer is 'information' for initiating proceedings under section 147.

Analysis:
1. The case involved the Revenue's appeal under section 260A of the Income-tax Act, 1961, challenging the Tribunal's order on the reopening of assessment for the assessment year 1992-93. The Assessing Officer had initiated proceedings under section 147/148 as income had allegedly escaped assessment. The Departmental Valuation Officer (DVO) determined that Rs. 16,91,200 had escaped assessment due to construction costs. The Tribunal accepted the assessee's plea, leading to the Revenue's appeal.

2. The key contention was whether the Assessing Officer could validly reopen the assessment based on the DVO's report. The Revenue's counsel failed to establish the validity of this action under any relevant provision except section 55A of the Act. The court rejected this argument, citing the Supreme Court's decision in Smt. Amiya Bala Paul v. CIT, which disallowed Assessing Officers from referring to DVO reports for construction cost assessments. Additionally, the court clarified that section 142A of the Act was not applicable in this case, further undermining the Revenue's position.

3. The court referenced previous judgments, including CIT v. Nabha Solvex (P) Ltd., to support its conclusion that the initiation of reassessment based on the DVO report was legally unsustainable. Consequently, the court dismissed the Revenue's appeal, ruling against the Revenue on the substantial questions of law raised in the case. The judgment emphasized the limitations on Assessing Officers in relying on DVO reports for reassessment purposes, ensuring procedural fairness and adherence to legal provisions in income tax assessments.