9911796707
TMI Blog1992 (12) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... started construction of a house thereon which was completed in October, 1968. The said building was constructed at a total cost of Rs. 1,46,363.11 paid by the appellant in four years from 1967 to 1970. In the course of the assessment proceedings for the said assessment year 1967-68, the appellant furnished details of the said cost of construction in each year and also filed a valuation report dated November 21, 1968, of J. Ganguli and Co., surveyor and valuer. In this connection, the appellant also filed a letter dated March 16, 1972, explaining the cost of construction. By an order of assessment dated March 23, 1972, made under section 143(3) of the Act the appellant was assessed for the said assessment year 1967-68 on a total income of Rs. 13,670. In the course of the said assessment proceedings, the appellant disclosed the fact of purchase and construction of the said house property. It is relevant to point out here that in the assessment for the assessment year 1969-70, the Income-tax Officer, on the basis of a valuation report dated November 21, 1968, estimated the said cost of construction of the said house property and made an addition of Rs. 48,182. The said addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel appearing was not called upon to make any submission with reference to the records produced by the respondents, in spite of the request for the same made by the appellant's counsel. The learned judge, by the judgment and order dated May 17, 1989, dismissed the writ petition. The learned judge was of the view that even the records produced do not contain any material so as to effectively help in the adjudication of the matter in dispute. The records produced showed that reasons have been recorded that inasmuch as on a plot of land at 51/1 Gariahat Road, there was construction of a house during the financial years 1966-67 to 1968-69 and the assessee had disclosed the cost of construction thereof at Rs. 1,46,363, the officer being the valuation officer of the Income-tax Department had determined the cost of such construction at Rs. 2,84,000 and since there is a gap of Rs. 1,37,637 and since there is concealment of income, the Income-tax Officer had reasons to believe that the income of Rs. 22,664 had escaped assessment for the year 1967-68. Thus, the court was satisfied upon looking into the relevant files that the grievance of the appellant as to the issuance of the no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resently refer. On the other hand, the contention of the learned advocate for the Revenue is that the learned judge came to a correct finding on the basis of the material in possession of the Assessing Officer. It has not been seriously disputed that the inspection of the records which were considered by the learned judge was not given to the learned advocate for the appellant. We have considered the rival contentions. Notice under section 148 is not a show-cause notice. Such a notice can be issued only if the conditions precedent for assumption of jurisdiction under section 147(a) are satisfied. For invocation of jurisdiction under section 147(a), two conditions are to be satisfied ; firstly, the Income-tax Officer has reason to believe that income, profits or gains chargeable to income-tax have escaped assessment, and secondly, he must have also reason to believe that such escapement has occurred by reason of either (i) omission or failure on the part of the assessee to make a return of his income under section 139 or (ii) omission or failure on the part of the assessee to disclose fully and truly all the material facts necessary for his assessment for that year. Both the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... privileged documents. In our view, the learned judge was not right in denying inspection of the records to the assessee. No litigant should have a feeling that the procedure adopted by the court has denied him a reasonable opportunity of hearing. Unless a document is privileged, if the court looks into such document for the purpose of deciding the merits of the respective contentions, inspection of such document cannot be withheld from the adversary. Let us now examine the merits of the contentions raised as to whether the Income-tax Officer had jurisdiction to initiate the proceedings under section 147(a). As indicated earlier, no affidavit-in-opposition was filed by the Income-tax Officer and, accordingly, no materials were disclosed. However, an affidavit-in-opposition to the stay application has been filed by the Income-tax Officer, Ward 4(1), in the appeal court. In the said affidavit-in-opposition in paragraph 5, the reasons recorded by the Income-tax Officer have been disclosed which are as follows : " On a plot of land at 51/E, Gariahat Road, the assessee constructed a house during the financial years 1966-67 to 1968-69. The assessee had disclosed the cost of constructi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced. In the assessee's valuer's report the valuation of the out-houses amounting to Rs. 11,544 has been included which cannot be taken into consideration for the purpose of cost of construction of the new building. Apart from that the valuer has valued the property in the month of November, 1968. This would not indicate the correct valuation as the construction started in 1966. Hence, the valuer's report does not reflect the correct valuation. Since the assessee maintained books of account with full details supported by voucher the Income-tax Officer cannot reject the same without pointing out any defects. In the circumstances, the Appellate Assistant Commissioner was perfectly justified in accepting the valuation shown by the assessee. We do not find any error in the order of the Appellate Assistant Commissioner. Accordingly, we uphold the order of the Appellate Assistant Commissioner. " The departmental reference application against the said appellate order of the Tribunal was rejected by the Tribunal. The said findings of the Tribunal have become final and are binding on the respondents. The said decision of the Tribunal was arrived at prior to the issue of the impugned notic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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