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TMI Blog2010 (8) TMI 941X X X X Extracts X X X X X X X X Extracts X X X X ..... h explanation has not been accepted by the assessing authority and the sum of ₹ 3,00,000/- has been added as unexplained investment in the construction/renovation of the building. The assessing authority has passed the order on 21.2.2006 It appears that to ascertain the quantum of investment made in the building construction the assessing authority had referred the matter to the valuation officer under Section 142-A of the Act. The Valuation Officer has given its report on 9.5.2006 and has valued the investment as under : F.Y. A.Y. Investment declared By assessee Investment valued by V.O Difference 2002-03 2003-04 300000 505300 205300 2003-04 2004-05 576000 970300 394300 2004-05 2005-06 531900 896000 364100 2005-06 2006-07 70000 117900 47900 As the investment shown by the petitioner was less than the investment estim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 148 read with Section 147 of the Act is in accordance to law and the writ petition is liable to be dismissed. Reliance is placed on the Division Bench decision of this Court in the case of Ram Swarup Cold Storage and Allied Industries v. Assistant Commissioner of Income-Tax and another reported in 192 ITR 537. We have considered the rival submissions of learned counsel for the parties and perused the record. The notice under Section 148 read with Section 147 of the Act has been issued on the basis of valuer report in which it is reported that as against the disclosed investment in the construction of house in the year under consideration at ₹ 3,00,000/- a sum of ₹ 5,05,300/- has been estimated resulting less disclosure of investment by ₹ 2,05,300/-. A perusal of the assessment order under Section 143(3) reveals that the assessing authority has not adjudicated the issue relating to investment in the construction. The assessing authority has made the query from the petitioner asking him to explain the source of investment towards construction, which was shown at ₹ 3,00,000/- and made an addition of ₹ 3,00,000/- towards unexplained investment i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Explanation I. - Production before the Assessing Officer of account of books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2.- For the purposes of the this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:- (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; (b) wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax, Delhi v. M/s. Kelvinator of India Ltd.). The apex Court held as follows : On going through the changes, quoted above made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re-opening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1st April, 1989], they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re-open the assessment. Therefore, post-1st April, 1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words reason to believe failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of mere change of opinion , which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to re- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessed. The learned Single Judge of the Calcutta High Court has held that after deletion of Section 52(2) of the Act share market value was irrelevant for the purposes of capital gain and, therefore, it has been held that initiation of proceeding on the basis of the report of the Valuation Officer estimating the fair market value was not justified. The learned Single Judge has, however, observed that the position would be different if there will be a case of investment in the construction or any fact is suppressed and the income escaped from the assessment. Therefore, this decision of of no help to the petitioner, rather it goes against the petitioner. In the case of Smt. Tarawati Debi Agarwal v. Income-Tax Officer (supra) the assessment years involved were 1966-67 and 1967-68 prior to the amendment in Section 147 of the Act and, therefore, this decision has no relevance. In the case of S. Sreeramachandra Murthy and another v. Deputy Commissioner of Income-Tax and another (supra) the notice under Section 148 of the Act was issued beyond four years. In view of the proviso to Section 147 of the Act, notice beyond four years could be issued only in case if there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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