9911796707
TMI Blog2014 (2) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... ly not applied his mind to the report of the Valuation Officer - Perusal of the Balance Sheet of the Assessee for the year ending 31.03.2005 shows that the Assessee has shown an amount as an expenditure of capital nature on the Bayadgi Unit towards the School building - The Assessing Officer has taken the amount shown as nil - For the year ending 31.03.2006 the Assessee has shown an investment as expenditure of capital nature on the Bayadgi unit and the value of the school building as on 31.03.2006 – thus, the assessing officer has merely intended to revisit the concluded assessment and it is a clear case of change of opinion which is not permissible in law – Decided in favour of Assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee was asked the following details as per questionnaire: 1. At Sl. No.3 of the questionnaire--Copy of Return of Income for the A.Y.2005-06 with all Annexures as was filed u/s 139(1) of the I.T.Act. 2. At Sl.No.17 of the questionnaire-- Please file details of investments made and also confirm that the investments have been made in the specified assets mentioned in section 11(5) of the I.T.Act. On perusal of record it is seen that assessee has not shown any amount of investments made during the year in school at Byadgi. The valuation of school at Byadgi by Valuation Officer in his report the property has been shown at Rs.36,26,490/- as against NIL shown by assessee. Therefore the investment of Rs.36,26,490/- has escaped assessment. In view of the above, I have reason to believe that by reason of failure on the part of assessee to fully disclose investment in property No. "MDH School Building", Byadgi, Distt. Haveri, Karnataka, income to the tune of Rs.36,26,490/- has escaped assessment for the assessment year 2005-06. Assessment Year 2006 - 07 30.03.10. REASONS FOR ISSUANCE OF NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT 1961 IN THE CASE OF M/s MAHASHAY CHUNNILAL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... framed under Section 153A pursuant to search then the assessment so framed was not an assessment under Section 143(3) and as such was beyond the purview of re-assessment under Section 147/148. The contention of the petitioner is that Section 147 refers to an assessment framed under Section 143(3) and not an assessment framed under Section 153A of the Act. The second objection raised by the petitioner was that the basis or reason for issuance of notices, primarily was the report of the Valuation Officer of the Income Tax Department and the report of the Valuation Officer per se cannot be a basis of issuance of notice under Section 148 of the Act. Another ground raised by the petitioner was that the entire material was before the assessing officer at the time of original assessment and the assessing officer had applied his mind to the same and hence issuance of notice amounted to change of opinion which was not permissible under law. The petitioner had further raised the objection the petitioner Trust, was registered under Section 12A of the Act and as such any income that was applied towards construction of the school building was an application of income towards charitable object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Byadgi were found during the search and the assessing officer came to the conclusion that the value of the school declared by the assessee was less than the actual value and, therefore, during the assessment proceedings, the assessing officer referred the matter of valuation of the school to the District Valuation Officer (DVO). 12. Perusal of the assessment order above shows that the assessing officer while framing the said assessment at a loss Rs.1,77,03,110/- had issued notice to the assessee requiring the assessee to file the requisite details and documents from time to time. The assessing officer after perusal and verification of the documents had passed the assessment order. 13. The Assessing Officer at the time of original assessment was fully conscious and aware of the construction undertaken, the extent of construction and the expenditure declared/claimed. In case of doubt, he should have obtained valuation report before the assessment order was passed. He did not obtain the valuation report and completed the assessment, without making any addition on the said ground. The valuation report was received subsequently and became the sole ground for reopening. 14. A Divi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1992 as base 100 was approved by the CBDT vide circular No. 1671 and as per instructions dated 13.12.1998 for working out basic cost of building. This cost has to be enhanced on the basis of weighted average cost index worked out of the locality based on then prevailing rate of men and materials and also bills/ vouchers produced by the assessee. On this basis, weighted average cost index was taken as 210 and by this method cost of construction of building on local market rate was arrived. The period of construction as per valuation report was between May,2004 to March,2006 and as per the break-up furnished, 47.8% of the construction cost was incurred in the financial year 2004-2006 and 52.2% of the expenditure was incurred in the financial year 2005-06. 16. The valuation report of this nature requires some statement or an averment by the Assessing Officer as to what was the basis and why he should proceed on the valuation report, its contents and why he should rely on the same while recording reasons to believe. This in the present case is lacking and absent. 17. The contention of the Revenue that the report submitted by the District Valuation Officer was material on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the declared value of Rs.24,41,776/- lakhs as shown in the balance sheet as on 31.03.06. The A.O. has further recorded that on perusal of record it is seen that assessee has not shown any amount of investments made during the year in school at Byadgi and that the valuation of school at Byadgi by Valuation Officer in his report the property has been shown at Rs.36,26,490/- as against NIL shown by assessee. The A.O. has thus recorded that the investment of Rs.36,26,490/- has escaped assessment. 22. In the reasons recorded for the year 2006 - 07 the Assessing Officer has recorded that the valuation officer has worked out the value of the property at Rs.75,86,800/- against the declared value of Rs.24,41,776/- lakhs as shown in the balance sheet as on 31.03.06. The A.O. has further recorded that on perusal of record the assessee has shown an amount of Rs.24,41,776/- in the assets side of balance sheet under the head 'School building' of Byadgi unit and that as per books of the assessee and the information given by Valuation Officer in his report the property has been undervalued by the assessee by Rs.51,45,024/- (75,86,800/- Minus 24,41,776/-) in its return of income. The A.O. has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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