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TMI Blog2007 (8) TMI 202X X X X Extracts X X X X X X X X Extracts X X X X ..... obliged to satisfy themselves that there had been sufficient ground to reopen the assessment under section 147 to the extent that there had been an escapement of income from the assessment done in regular process under section 143. Since there was no reason to issue such notice, notice was bad in law. 2. The Revenue filed an affidavit-in-opposition disclosing reason for reopening the assessment. The recording of reasons before issuing of notice under section 148 was annexed to the affidavit-in-opposition. The writ petition thus took a different shape as at the time of hearing the respondent/assessee took the plea that the reason so disclosed by the Revenue were not sufficient to reopen the assessment. The learned single judge after cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC) ; (iii) Amarlal Kishandas v. CIT [2003] 25 ITR 41 Mad) ; and (iv) ITO v. Shree Bajrang Commercial Co. P. Ltd. [2004] 269 ITR 338 (Cal). 5 In addition to the aforesaid decisions Mr. Nizarnuddin also relied on an unreported decision delivered by one of us (Ashim Kumar Banerjee J.) in C. R. Nos. 2553-2554(W) of 1981 dated April 26, 2001 6 Mr. J. P. Khaitan, learned senior counsel while opposing the appeal, contended that on a plain reading of the record of reasons would appear that the notice was issued on the basis of the valuation submitted by the Valuation Officer. The Valuation Officer at the relevant time was not authorised to undertake such valuation as the power conferred upon him under section 142A was introdu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee which would warrant reopening of the assessment. (iii) Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC) : The apex court observed that when there was prima facie some material on the basis of which the Department could reopen the case, sufficiency or correctness of such material was not a thing to be considered at that stage and the notice on the ground of insufficiency of reason could not be held to be invalid. The apex court observed (page 35) " . . . It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Income-tax Officer after completion of the assessment proceeding". (iv) GKN Driveshafts (Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tra the materials placed before the Department. The notice was thus held in law and was quashed. (ix) ITO v. Shree Bajrang Commercial Co. P. Ltd. [2004] 269 ITR 338 (Cal) : In this decision the Division Bench of this court observed that once the Income-tax Officer had reason to belief and formed an opinion that the assessee had not disclosed fully and truly all the material facts at the of the regular assessment such prima facie opinion of the Income tax Officer was not open for judicial review on the ground of insufficiency or inadequacy of the reasons. The Division Bench observed that it was jurisdiction of the Income-tax Officer to consider the materials to in proceedings and when there was, prima facie material at his hands High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 148 at its threshold. Such law is still good law and binding upon us. The apex court in the case of Smt. Amiya Bala Paul in reported [2003] 262 ITR 407, held that either under section 133(6) or under section 142 the Income-tax Officer was not entitled to seek report from the Valuation Officer. Hence, the report of the Valuation Officer could not be the basis of issuance of notice under section 148. The said judgment was delivered by the apex court on July 7, 2003. The Legislature thereafter amended the law by incorporating section 142A by the Finance (No. 2) Act of 2004, making it retrospective from November 15, 1972. Hence the ratio decided by the apex court in the case of Smt. Amiya Bala Paul reported in [2003] 262 ITR 407 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncealed by the assessee and was to be considered as undisclosed source. The assessee offered its explanation on the said valuation being done. The explanation was found to be not convincing. The issue ultimately went up to the Tribunal. The Tribunal, however, reduced the estimated cost of construction to Rs. 10 lakhs and passed appropriate order by holding that Rs. 3.36 lakhs was to be considered income from undisclosed source for the years in which construction was carried out. There was no material before us as to whether the said order was challenged by the assessee. Pertinent to note, the assessee did not file any affidavit-in-reply dealing with the allegation contained in the affidavit-in-opposition filed before the learned single judg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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