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TMI Blog2017 (5) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... be valid. The assessee has tried to take shelter under the exception provided by the above stated proviso where an assessment under sub-section (3) of section 143 has been completed, no action after the expiry of four years from the end of the assessment year can be taken. But as stated above, when the assessee has not disclosed fully and truly the facts necessary for the assessment, this proviso will not come to its rescue. - Decided against assessee Confirming the action of the AO in invoking the provisions of the section 50C - Held that:- Assessee made a request the AO to refer the valuation issue to the valuation cell u/s.50C(2) of the Act, which was not considered by the AO. When this was raised before the Ld.CIT(A), he also rejected it. In our opinion, we find merit in the argument of the ld.A.R. Before considering valuation u/s.50C(1) of the Act, if the assessee requests for reference to Departmental Valuation Officer (DVO), the AO shall refer the matter to the DVO and he cannot overlook it. Hence, we direct the AO to refer the matter to the DVO and thereafter frame the assessment in accordance with law. This ground of assessee is allowed. - I.T.A. No. 1773/Mds./2016 - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er se be reason to reopen. 3.2. The Ld.CIT(A) observed that after the introduction of changes w.e.f. 1st April, 1989, the scope of reassessment was widened vis a vis the position of law as it stood earlier. After the amendment, the main restriction put in the section is reason to believe . The expression reason to believe refers to the belief which prompts the Assessing Officer to apply section 147 to a particular case; that it will depend on the facts of each case; that the belief must be of an honest and reasonable person, based on reasonable grounds; that the Assessing Officer is required to act, nor on mere suspicion, but on direct or circumstantial evidence, that the expression reason to believe does not mean a subjective satisfaction on the part of the Assessing Officer. The word reason in the phrase reason to believe would mean cause or justification. if the AO has a cause or justification to think or suppose that income had escaped assessment, he can be said to have a reason to believe that such income had escaped assessment. 3.3. The words reason to believe , cannot mean that the AO should have finally ascertained the facts by legal evidence. They only mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there is an under assessment only on the basis of the sale deeds that were produced in the course of the original assessment proceedings. d) The AO has referred to Sec. 147(c)(i). Possibly he is referring to Explanation 2(c)(i) to Sec. 147. Even assuming for a moment that there is income chargeable to tax has escaped assessment as mentioned in Explanation 2(c)(i) to Sec. 147; still as per proviso. no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year; unless any income chargeable to tax has escaped assessment for such assessment year by reason the failure on the part of the assessee - to disclose fully and truly all materia1 facts necessary for his assessment e) Even according to the reasons recorded, the re-assessment had been ii on the basis of the 4 sale deeds by which the assessee conveyed the which already forms part of the assessment records. Thus there could be failure attributed to the assessee At best it could be a case where the AO not draw proper inerences as observed by the Honhie Delhi High Court in . Vs. Kelat (IndiJ 256 ITR 1 (Del-FB) affirmed in 3201TR351 (SC). f) It is submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escaped assessment , action u/s 148 can be taken. But obviously, there should be relevant material on which a reasonable man could have formed a requisite belief. Whether this material(s) would conclusively prove the escapement of income is not the concern at that particular stage. So what is required is the subjective satisfaction of the Assessing Officer based on objective material evidence. The reason was recorded as discussed above. The argument of the ld.AR is that u/s 147 in case the assessment order is completed u/s 143(3), as has been done in this case, no action could be taken after the expiry of four years from the end of the relevant assessment year unless the assessee has disclosed fully and truly all material facts necessary for the assessment for that assessment year, inter alia. 6.2 As seen from the reasons recorded, it gived a clear picture that the Assessing Officer has got material evidence to form his opinion for taking recourse to section 147 r.w.s 148 of the Act. There cannot be two opinions. The point of time when the reasons are recorded after forming opinion of escapement of income is only relevant. Hence, this plea of the ld.AR is not tenable in the ey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y amount to a review. The concept change of opinion is an in-built test to check the abuse of power by the Assessing Officer. So, now only when the Assessing Officer has a tangible material to base his conclusion that there is an escapement of income from assessment and the reasons recorded have a link with the formation of his belief, he has the power u/s 147 of the Act. 6.3 Now the most material part which was argued by the ld.AR is regarding the time lag which is provided in first proviso to section 147 which states that where an assessment u/s sub-section(3) of section 143 has been made for the relevant assessment year, which is 2006-07, in this case, no action shall be taken u/s 147 after the expiry of four years from the end of the relevant assessment year unless any income chargeable to tax has escaped assessment for such assessment year by the reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. There are two other conditions which are not relevant for deciding the legal issue under appeal. We have to see as to what failure of the assessee to disclose fully and truly al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer of accounts 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 . It is possible that with due diligence the Assessing Officer would have ascertained this fat at the time of original assessment also, but in view of the explanation (1) it does not mean that there was no default on the part of the assessee. Hence, reopening u/s.147 is held to be valid. The assessee has tried to take shelter under the exception provided by the above stated proviso where an assessment under sub-section (3) of section 143 has been completed, no action after the expiry of four years from the end of the assessment year can be taken. But as stated above, when the assessee has not disclosed fully and truly the facts necessary for the assessment, this proviso will not come to its rescue. Consequently, we hold that the entire reassessment proceeding in this case is valid and therefore, the action of the Assessing Officer is upheld. The assessee fails on this legal issue. 7. The next ground is with regard to confirming the action of the AO i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assesses this year. Out of the said 16 flats, the assessee sold 4 fiats during this year. As is the practice, undivided share in the land was transferred to all the 4 of them, the details of which are attached in Annexure -1. The assessee offered the capital gains arising thereon of ₹ 3,10,588 for taxation in the return of income filed on 31.10.2006. The capital gains arising on the sale of built up area of 24,573 sq. ft. was also offered for taxation. Further, ld.A.R submitted that various reasons, advanced by the assessee before the lower authorities, which affects the market value of the land sold had been summarily rejected. 10. On the other hand, ld.D.R relied on the orders of lower authorities. 11. We have heard both the parties and perused the material on record. The main grievance of assessee is that the assessee made a request the AO to refer the valuation issue to the valuation cell u/s.50C(2) of the Act, which was not considered by the AO. When this was raised before the Ld.CIT(A), he also rejected it. In our opinion, we find merit in the argument of the ld.A.R. Before considering valuation u/s.50C(1) of the Act, if the assessee requests for reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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