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TMI Blog2015 (11) TMI 1313X X X X Extracts X X X X X X X X Extracts X X X X ..... y assumption of jurisdiction under section 147 of the Act on the part of the Assessing Officer by issuing the impugned notice under section 148 of the Act is without authority of law, and hence, the impugned notice cannot be sustained. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... formed the belief that income chargeable to tax has escaped assessment and hence, the assumption of jurisdiction on the part of the Assessing Officer by issuance of notice under section 148 of the Act is without authority of law. Reliance was also placed upon the decision of the Supreme Court in the case of Sargam Cinema v. Commissioner of Income Tax, (2010) 328 ITR 513 (SC), wherein the court held that the Tribunal decided the matter rightly in favour of the assessee, inasmuch as, the Tribunal came to the conclusion that the assessing authority could not have referred the matter to the Departmental Valuation Officer without the books of account being rejected. The court noted that in the facts of the said case, a categorical finding was recorded by the Tribunal that the books were never rejected. The court, accordingly, held that the reliance placed upon the report of the DVO was misconceived. It was submitted that in the facts of the present case, the Assessing Officer has referred the matter to the DVO without rejecting the books of account and hence also, no reliance can be placed upon such report of the DVO. 4. Vehemently opposing the petition, Mr. Nitin Mehta, learned Senio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court cannot examine the sufficiency of the material. On facts, the court was of the opinion that the reference made to the Departmental Valuation Cell for the purposes of determination of the investment in the construction of building cannot be said to be without the authority of law. The valuation report disclosed higher investments in the constructions which had not been disclosed in the books of account. Thus, there was escaped assessment. The court was of the opinion that the Departmental Valuer's report constitutes material for entertaining a belief of escaped income in the years under consideration. Reliance was placed upon the decision of the Delhi High Court in the case of Bawa Abhai Singh v. Deputy Commissioner of Income Tax, (2002) 253 ITR 83, wherein, it was held that the report of the District Valuation Officer constitutes the reasons for entertaining a belief about escapement of an income. The court held that there was material on record to form the belief that there was escaped assessment for the assessment years under consideration. It was submitted that the above decision would be squarely applicable to the facts of the present case and therefore, the notice issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4/1001 dated 13.03.2014, the DVO has determined the cost of construction as ₹ 30,68,87,047/- in place of ₹ 27,73,76,009/- claimed by the assessee. Therefore, there is difference of ₹ 2,95,11,038/- in total cost of construction as claimed by assessee and as estimated by DVO. As per DVO"s report yearwise cost of construction is as follows: Financial Year Cost of Investment (Rs.) 2006-07 Rs. 1,12,99,370/- ₹ 1,35,76,068.44 2007-08 ₹ 8,30,30,382/- ₹ 9,40,35,567.90 2008-09 Rs.14,89,87,108/- Rs.16,38,51,540.39 2009-10 ₹ 3,16,64,004/- ₹ 3,30,74,509.01 2010-11 ₹ 18,71,192/- ₹ 18,36,932.23 2011-12 ₹ 5,23,953/- ₹ 5,12,429.23 Total Rs.27,73,76,009/- Rs.30,68,87,047.30 Assessee has submitted that it has incurred expenses of ₹ 1,12,99,370/- during the F.Y. 2006-07. It is seen from the return of income for A.Y. 2007-08 that no expenses have been debited in the P & L Account by the assessee. Also in the balance sheet part of the return of income, no inventory or stock in progress is seen. Therefore, in the F.Y. 2006-07 relevant to A.Y. 2007-08, the assessee has under reported the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the respondents that the Assessing Officer has duly applied his mind by referring to the return of income and noting that no expenses have been debited in the profit and loss account and also that the balance sheet or the return of income does not indicate any inventory or stock in process. Therefore, there is application of mind on the part of the Assessing Officer to the report of the DVO warranting assumption of jurisdiction under section 147 of the Act. 8. The record of the case reveals that for the year under consideration, the petitioner had not claimed any deduction under section 80IB (10) of the Act and therefore as there was no profit, the same was not indicated in the profit and loss account for the year under consideration. While the assessment is sought to be reopened on the ground that the petitioner has under reported the cost of construction, from the reasons recorded, there is nothing to indicate that the Assessing Officer has independently applied his mind to the record of the case to ascertain as to whether the cost of investment as declared by the assessee was in fact under reported as recorded therein. The entire basis for reopening the assessment is the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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