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TMI Blog2017 (6) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... 148 of the Income Tax Act reflect the arbitrary use of powers conferred under section 147 of the Act. - Decided in favour of assessee. - ITA Nos. 704 to 706/Chd/2017 - - - Dated:- 1-6-2017 - SHRI BHAVNESH SAINI , JUDICIAL MEMBER For The Appellant : Shri Tej Mohan Singh For The Respondent : Shri S.K. Mittal ORDER All the appeals by the assessee are directed against different orders of Ld. CIT(A), Palampur dt. 21/02/2017 for Assessment Years 2006-07, 2007-08 and 2008 09. 2. In all the appeals the assessee challenges the reopening of the assessment as well as certain additions on the merits. 3. The AO noted in the assessment orders that during the course of assessment proceedings for assessment year 2010-11, immovable property of the assessee was referred for valuation to District Valuation Officer (DVO) who as per its report, the year wise break up of cost declared by the assessee vis- vis cost assessed by the DVO was reported and same is reproduced at page no. 1 of the assessment order. In assessment years 2006-07, 2007-08 and 2008-09 the difference in the cost of construction declared by the assessee and estimated by the DVO are ₹ 5,38,049/-, &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 765/Chandi/2015 dated 21/12/2016 in which in para 10 to 13 held as under: 10. We have considered rival submissions. It is well settled law that validity of re-assessment proceedings to be determined with reference to the reasons recorded. The reasons for re-opening of the assessment are reproduced above. It would show that assessee filed the return of income declaring income including capital gains on sale of property. The capital gain was calculated on the basis of report of Registered Valuer. Copy of which is also filed in the Paper Book. The Assessing Officer noted in the reasons that on inquiries, it has been found that Chandigarh Administration allotted commercial plots @ 5463/- per sq.yd. as on January,1985. The ld. DR was asked to specify as to what is the basis of inquiry conducted by the Assessing Officer, whether inquiries have been conducted in writing or oral from the Chandigarh Administration for getting this information. The ld. DR, however, was not able to explain it whether any inquiries have been made by Assessing Officer prior to recording of reasons in writing or orally. The ld. DR, however, submitted that the assessee has filed a report of Registered V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Assessing Officer did confirm the apprehension about the harm that a less strict interpretation of the words reason to believe vis-a-vis an intimation issued under section 143(1) could cause to the tax regime. There was nothing in the reasons recorded to show that any tangible material had come into the possession of the Assessing Officer subsequent to the issue of the intimation. The notice reflected an arbitrary exercise of the power conferred under section 147. 11. It may also be noted here that the Assessing Officer in the reasons, merely on assumption of certain facts without any basis has taken the value of commercial property @ ₹ 1000/- pr sq.yd. as on 01.04.1981 and cost of building at ₹ 100/- per sq.ft. There is, thus, no cogent material, much less the information, with the Assessing Officer for forming the reason to believe that income of the assessee has escaped assessment. There is no basis for adopting such rates of land and building. It is not clarified how the Assessing Officer came to know about the rates of land and building as have been mentioned in the reasons for the purpose of computing the capital gains being the Assessing Officer is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record to justify the re-opening of the assessment. The ld. counsel for the assessee, therefore, rightly relied upon decision of the Hon'ble Supreme Court in the case of Dhariya Construction Co. 328 ITR 515 in which it was held that, Re-opening cannot be made merely on the basis of valuation report of the DVO . In the case of the assessee, the report of the Registered Valuer filed by assessee was available on record, therefore, it is a case of valuation of the property reported by the assessee and the DVO in the case of co-owner. Therefore, such could not be a basis for formation of belief of escapement of income in the matter. 12. The ld. DR relied upon decision in the case of Raymond Woollens Mills Ltd. (supra) in which it was held that sufficiency or correctness of material is not a thing to be considered at the stage of re-opening of the assessment , however, in the case of the assessee, there is no material on record to justify the re-opening of the assessment, therefore, there is no question of sufficiency or correctness of the material to be considered. No prima-facie case have been made out for forming the belief that income chargeable to tax has escaped assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner (Appeals) to enhance the unexplained investment under section 69, relying upon the District Valuation Officer's report, thereafter, it was not open for the Assessing Officer to reopen the assessment under section 147 on the very same ground. Notice issued under section 148 for reopening could not be sustained. 5. On the other hand Ld. DR relied upon the order of the authorities below. 6. After considering the rival submissions, I am of the view that reopening of the assessment is not justified in the matter. It is well settled law that validity of reassessment proceedings to be determined with reference to the reasons recorded. It is an admitted fact that during the assessment proceedings for assessment year 2010-11, the immovable property of the assessee was referred for valuation to DVO who has given his report which is reproduced in the assessment orders and the difference in cost was taken into consideration as reported by the assessee and the cost estimated by the DVO, there were no other material available with the AO to reopen the assessment in the matter. Hon ble Supreme Court in the case of ACIT Vs. Dhariya Construction Co. [2010] 328 ITR 515 (SC) held ..... X X X X Extracts X X X X X X X X Extracts X X X X
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