2017 (4) TMI 722 - AT - Income Tax

Reopening of assessment - validity and the jurisdiction of the AO to have issued notice under section 148 - Held that - As can be seen from the objections raised by the assessee during the reassessment proceedings that there was no challenge to the validity of the notice with respect to the grounds raised in the present appeal i.e. (i) reopening on the basis of valuation report (ii) material obtained subsequent to assessment order for issuance of notice under section 148. There were no objections taken by the assessee in the reassessment proceedings on aforesaid grounds. It is settled law that if the assessee chooses not to challenge the notice issued under section 148 of the Act the same is to be treated as valid and final. The objections raised by the assessee pertain to the sufficiency of reasons for issuance of notice under section 148. The same cannot be gone into at the stage of reassessment. The judgment relied upon by the assessee is not applicable in the present case in view of the failure of the assessee to challenge the validity of the notice under section 148 - Decided against assessee Correctness of the valuation report - AR contends that the revenue was not justified to accept the value mentioned in the sale deeds relied upon by the Valuation Officer and rejecting the comparable cases given by the assessee - Held that - The valuation report the said objections raised by the assessee have been elaborately considered and required adjustments/deductions with respect to location, shape, size and co-ownership were given to determine the net rate per sq. meter. The Ld. AR has failed to point out any specific defect in the said report. The objections are neither substantiated nor supported by evidence.- Decided against assessee

Summary

Issues:
1. Validity and jurisdiction of AO to issue notice under section 148
2. Challenge to the correctness of the valuation report

Issue 1: Validity and jurisdiction of AO to issue notice under section 148:

The appeal before the Appellate Tribunal ITAT DELHI arose from the assessment year 2008-09, where the assessee challenged the reassessment proceedings initiated by the AO based on a valuation report. The assessee contended that all required documents were submitted during the original proceedings, and material obtained subsequent to the assessment order cannot be a valid ground for reopening the assessment. However, during the reassessment proceedings, the objections raised by the assessee did not challenge the validity of the notice specifically on the grounds related to the valuation report or material obtained post-assessment. The Tribunal held that if the assessee chooses not to challenge the notice issued under section 148, it is considered valid and final. The Tribunal referred to relevant case laws emphasizing the importance of the reasons given for issuance of notice and the need for a reasonable belief by the AO. The Tribunal dismissed the grounds related to the validity of the notice under section 148.

Issue 2: Challenge to the correctness of the valuation report:

The grounds raised by the assessee regarding the correctness of the valuation report focused on the comparison of the property in question with a property located at a different site and its commercial viability. The objections raised during the assessment highlighted various discrepancies in the valuation report, such as differences in location, shape, size, and co-ownership of the properties. However, upon reviewing the valuation report, the Tribunal found that the objections raised by the assessee were not substantiated with evidence and failed to point out any specific defects in the report. Consequently, the Tribunal dismissed the grounds related to the correctness of the valuation report.

In conclusion, the Appellate Tribunal ITAT DELHI upheld the reassessment proceedings initiated by the AO based on the valuation report and dismissed the appeal of the assessee for the assessment year 2008-09.