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TMI Blog2019 (1) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... xable. In such circumstances, the Assessing Officer is not justified in reopening the assessment and substituting the book value by way of market value of the shares based on valuation report. The Revenue if, aggrieved can prefer appeal against the order of the Tribunal, but cannot nullify the order of the Tribunal in this manner without challenging the order before the Hon’ble High Court. In our opinion, this reason itself is sufficient to hold the reassessment proceeding as invalid and, thus, we are not adjudicating the other grounds or the arguments of the parties challenging the validity of the reassessment proceeding. The ground of the appeal of the Revenue is accordingly dismissed. - ITA No.3652/Del/2015 - - - Dated:- 27-11-2018 - Shri Amit Shukla, Judicial Member And Shri O.P. Kant, Accountant Member For the Appellant : Ms. Rachna Singh, CIT(DR) For the Respondent : Sh. R.M. Mehta, FCA ORDER PER O.P. KANT, AM: This appeal by the Revenue is directed against order dated 30/03/2015 passed by the Ld. Commissioner of Income-tax (Appeals)-3, Delhi [in short the Ld. CIT(A) ] for assessment year 2001-02, raising following grounds: 1. On the facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer completed the reassessment on 29/12/2006 and made addition of ₹ 31,15,87,372/-. 2.3 Before the Ld. CIT(A), the assessee challenged validity of the reassessment as well as merit of the addition. The Ld. CIT(A) held that the reassessment proceeding is based on mere change of opinion and thus being without jurisdiction, he quashed the reassessment proceedings. 3. Before us, the Ld. DR submitted that assessment has been reopened within 4 years from the end of the relevant assessment year and therefore, the first proviso below the section 147 requiring issue notice of without failure on the part of the assessee to disclose fully and truly all material facts is not attracted. According to her, in the original assessment proceedings, the Assessing Officer duly mentioned that the market value of the assets of EHIRC was not in his possession and therefore he determined the addition on the basis of the book value of the assets. On receipt of the valuation report from the DVO, the assessment was reopened and thus it was not on mere change of opinion but it was based on valuation report of an expert valuer. In support of contention, the Ld. DR relied on the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at ₹ 88,11,30,349/- and, accordingly made addition. The relevant finding of the Assessing Officer in original assessment proceeding is reproduced as under: In the case of CIT Vs. Ramprasad 113 ITR 462 (Delhi), it was held that when the assessee devoted his time and attention to the formation and promotion of a company he could be said to be engaged in a vocation/occupation. The Hon'ble Suprme Court went further in the case of Shri P.Krishnamenon Vs. CIT, 35 ITR 48 to hold that the term business includes vocation and receipts even without any profit motive could be held to be taxable income. In the case of M/s Escorts Limited, a charitable trust was first set up in Delhi of which M/s Escorts Limited was the prime promotor. Later on in 1999, a society which was not having charitable purpose was set up in Chandigarh after seeking legal opinion of various leading advocates. This fact came to light when a survey was conducted in group of cases in August, 2003 and papers were found from the premises which indicated that persons of the Escorts group had it in their mind to get control over the assets of the charitable institute of Delhi. For this purpose they wanted to tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9/- in original assessment proceeding, the net addition of ₹ 31,15,87,372/- (119,27,17,721 - 88,11,30,349/-) was made in reassessment proceedings. The Ld. CIT(A) has quashed the reassessment proceeding observing as under: 5. Having gone through the submissions of the appellant, the order of assessment and the material evidences placed on the record, it emerges that during the course of the original assessment completed on 31.03.2004 u/s 143(3) of the Act, the Assessing Officer raised detailed queries on the acquisition by the appellant of the shares of EHIRC, Chandigarh, a society with specific reference to the difference between the cost of acquisition at ₹ 10/ per share and the purported book value of ₹ 550/- per share. After issuing a specific show cause the Assessing Officer proceeded to make an addition of ₹ 88,11,30,349/- by resort to the provisions of section 2(24)(iv) of the Act. These facts emerge from the following observations made in the assessment order: Thus the difference of 80% of the assets transferred from the Delhi Society to Escorts heart Institute And Research Centre Ltd., Chandigarh and the initial investment of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Since the amount in question has been held to be not taxable. We are of the view that the question of valuation of shares as raised in the Revenue's appeal is academic. It is crystal clear that the issue of valuation of shares was consciously considered in detail by three authorities and the Assessing Officer by resort to the provisions of section 148 of the Act seeks to review/revise the said valuation but which is not the mandate of the said provision. The present reassessment in fact is a blatant attempt to enhance an assessment which stands nullified by the order of the ITAT. In effect, the Assessing Officer is trying to overcome the order of a higher appellate authority by resort to the provisions of section 148 of the Act. It is significant to note at this stage that the reasons recorded refer to a single fact namely the report of the DVO in the case of EHIRC, Chandigarh which necessitated the notice u/s 148 of the Act. This needs to be seen in the context of the observations made by the Assessing Officer in the assessment order as also the reasons recorded about the non-availability of the market value and the justification to adopt for the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on' was rejected by the Assessing Officer but his view was reversed by the CIT(A) and whose order was upheld by the Tribunal. On appeal by the revenue u/s 260A of the Act, the Hon'ble High Court held as under:- 16.Applying the principles laid down by the Full Bench of this Court as well as the observation of the Punjab and Horyono High Count, we find that if the entire material had been placed by the Assessee before the Assessing Officer at the time when the original assessment was made and the Assessing Officer applied his mind to that material and accepted the view canvassed by the Assessee, then merely because he did express this in the assessment order, that by itself would not give him a ground to conclude that income has escaped assessment and, therefore, the assessment needed to be reopened. On the other hand, if the Assessing Officer did not apply his mind and committed a lapse, there is no reason why the Assessee should be made to suffer the consequences of that lapse. The case of the assessee is on an even better footing since the entire material had been placed on record, discussed by three authorities, the view of the assessee not accepted by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et value of the assets of EHIRC , cannot be a ground for reopening of the assessment. 3. It is settled in view of the decision of the various courts that the valuer s reports on its own without any other material is a mere opinion and cannot constitute reason to believe justifying the reopening of the assessment . 4. In view of the decisions cited, including decision of the Hon ble Supreme court in the case of Kelvinator of India Ltd. (supra), the action of the Assessing Officer of reopening the assessment was merely a change of opinion. 8. On perusal of the facts of the case, we note that in the reassessment proceeding the Assessing Officer has simply enhanced the value of the addition which was made in the original assessment proceeding. We find that the addition made in the original assessment proceeding has been deleted by the Tribunal. The Tribunal in paragraph 51 of the order dated 31/01/2006 in ITA No. 567 and 1562 has reproduced the submission of the Ld. counsel of the Revenue requesting for sustaining addition made under section 2(24)(vi) of the Act as under: 51. The submissions of the Id. Special Counsel is firstly that if an assessee makes investment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of res judicata ire applicable to income-tax proceedings. In the present case neither the Assessing Officer nor the CIT(Appeals) deemed it plausible to hold the assessee as engaged in the business of holding investments and that the purchase of shares by it at a price less than its value was in the course of such business giving rise to income chargeable under the Act either under section 2(24)(i) read with sec 28(A) of the Act. But this background is only a pointer to the fact that the assessee was never considered as being in the business holding investments either in the past or in the assessment proceedings of the instant year. To conclude otherwise without any enquiry into the primary facts necessary for coming to such a conclusion, would not be proper. In this background, to venture to consider and hold that the assessee was in the business of holding investments would be unjustified. Even assuming that the Annual reports of earlier years were to be considered as material available on record, but on the basis of those records alone it is not possible to conclude that the assessee was engaged in the business of holding investments. In other words, complete evidentiary f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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