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TMI Blog2024 (9) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... aged in the business of trading of real estate development and running of hotels. 3. A search and seizure operation under Section 132(1) of the Act was conducted at Plot No. 4, Sector-13, Dwarka City Center on 14.09.2010. For the AY 2010-11, petitioner filed its return of total income under Section 139 (1) of the Act on 15.10.2010, declaring 'Nil' income and for the AY 2011-12, the return of total income under Section 139 (1) of the Act, was filed on 29.03.2012, declaring the income of Rs. 12,87,070/-. 4. The Assessing Officer ["AO"] issued notice (s) under Section 153A of the Act on 15.09.2012 in respect of AY 2010-11 and on 26.09.2012 in respect of AY 2011-12. 5. During the course of Original Assessment Proceedings, petitioner filed complete books of account, bill and vouchers for the verification by the AO. The assessment for the AY 2010-11 was framed by the AO on 28.03.2013 at a total income of Rs. 35 Crores as against the declared income of Nil and for AY 2011-12, the Order of Assessment was framed on 28.03.2013 at a total income of Rs. 14,76,960/-. 6. Petitioner preferred appeals against the aforesaid Orders of Assessment before the Commissioner of Income Tax (Appeals), w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. It is submitted that proceedings under Section 147 of the Act can be initiated only on the basis of tangible material and not on the basis of assumptions and presumptions. It is submitted that even the report of the DVO is without application of mind, as in his report, it has been stated that the petitioner has shown the investment as 'Nil' without taking note that the cost of the property has been declared by the petitioner under the "Fixed Assets and Capital WIP" at Rs. 592,13,59,681/- as on 31.03.2011. It is averred that the DVO has estimated the cost of the property only at Rs. 211,99,57,449/-, whereas, the petitioner has declared the value of the aforesaid property under the head "Fixed Assets and Capital WIP" at Rs. 592,13,59,681/-. Since the petitioner has correctly recorded the cost of the property which is much more than the value estimated by the DVO, as such, the assumption that the income of the petitioner has escaped assessment is wholly arbitrary and misconceived and hence unsustainable. It is submitted that had the AO applied his mind to the report of the DVO and examined the books of the petitioner, then it could have been found that the cost of the property dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belief which he was to form regarding the escapement of the income of the assessee. Once there exists reasonable grounds for the Assessing Officer to form the belief, that would be sufficient to clothe him with jurisdiction to issue notice. The Court is not to investigate whether the grounds are adequate or not. The sufficiency of grounds which induce the AO to act is not a justiciable issue. However, it is open to the assessee to contend that AO did not hold the belief that there had been such non-disclosure. The existence of the belief can be challenged but not the sufficiency for the reasons to believe. Expression "reasons to believe" does not mean a purely subjective satisfaction on the part of the AO. The reason must be held in good faith and cannot be merely a pretence. 16. In the case of Bawa Abhai Singh (supra), it was observed that valuation report received after assessment can constitute a valid basis for initiation of reassessment proceedings. It was held that information, however, must be more than mere rumour, gossip or a hunch and there should be some material which may be regarded as justification for action under Section 147 of the Act. Court had further observed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the District Valuation Officer per se was not sufficient and other corroborated evidence was required. 19. The Supreme Court in the case of Asst. CIT v. Dhariya Construction Co. (2010) 328 ITR 515 (SC) observed (page 515): "Having examined the record, we find that in this case, the Department sought reopening of the assessment based on the opinion given by the District Valuation Officer (DVO). The opinion of the DVO per se is not an information for the purposes of reopening assessment under section 147 of the Income-tax Act, 1961. The Assessing Officer has to apply his mind to the information, if any, collected and must form a belief thereon. In the circumstances, there is no merit in the civil appeal. The Department was not entitled to reopen the assessment. 20. The ratio discernible from the aforesaid decision is that the Assessing Officer has to apply his mind to any information in the form of the valuation report and must form a belief thereon that there is escapement of income. The opinion of the DVO is per se not an information for the purpose of reopening of an assessment. The Assessing Officer has to apply his mind to the report of the DVO and only if on applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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