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TMI Blog1984 (5) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... 10,117. Along with her return of income, the assessee filed two statements showing her expenditure at Rs. 40,259 and Rs. 69,898 on the construction of the building during the accounting periods relevant to the assessment years 1973-74 and 1974-75, respectively. These statements indicated the details of the payments made by the assessee to various parties on account of purchase of building materials like bricks, sand, lime, timber, tiles and wood, etc. Along with these statements, the assessee also filed her bank accounts. The assessee further indicated the sources of her investment. The ITO accepted the returns of the assessee and completed the assessments for the assessment years 1973-74 and 1974-75 on 3-2-1974 and 9-2-1977, respectively. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be legally reopened under section 147(a). He also rejected the contention of the assessee that the copy of the report of the survey squad was not furnished to her and as such, the reassessment proceedings were invalid. Keeping in view the report of the survey squad, the ITO made the following additions to the income of the assessee for the assessment years 1973-74 and 1974-75 on account of unexplained investments in the property : Nature of item Addition 1973-74 1974-75 Rs. Rs. (i) Regarding cost of the 'main building' at the rate of Rs. 50 per sq. ft. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original assessment proceedings, she had not given the particulars of the expenditure incurred on the furniture and fixtures and as such, the assessee had not fully and truly disclosed all the material facts necessary for her assessment. He, therefore, held that the ITO had validly reopened the assessment of the assessee for the assessment year 1974-75. On merits, the Commissioner (Appeals) estimated the cost of the main building at the rate of Rs. 46 per sq. ft. and sustained the addition of Rs. 14,000 only on this count. However, he deleted the remaining additions. 6. The department and the assessee have came up in appeal against the orders of the AAC and the Commissioner (Appeals) for the assessment years 1973-74 and 1974-75, respectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration and so the ITO could not reopen the assessments under section 147(a). In support of his contention, he relied upon the decision of the Ahmedabad Tribunal in the case of Dr. A. Khadia [WT Appeal Nos. 2009, 2010 and 2012 (Ahd.) of 1979] and the decision of the Madhya Pradesh High Court in the case of Jawaharlal Daryavbuxmal v. CIT [1982] 137 ITR 54. On merits, he submitted that the report of the survey squad was without any basis and that even the estimates of the ITO which differed from the report of the survey squad, were not based upon any satisfactory data. He further submitted that the estimates regarding the cost of construction varied from officer to officer, i.e., Rs. 56 per sq. ft. as per the survey squad, Rs. 50 per sq. ft. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 34(1)(a) of the Indian Income-tax Act, 1922 will not lie merely on the ground that the ITO had raised an inference which he may later regard as erroneous. This authority further lays down that if the assessee had disclosed its books of account and evidence from which material facts could be discovered, it was under no obligation to inform the ITO about the possible inferences that might be raised against it. It was for the officer to raise such an inference and if he had not done so in the original assessment, the income that escaped assessment could not be brought to tax under section 34(1)(a). To the same effect is the view taken by the Andhra Pradesh High Court in the case of CIT v. Jeskaran Bhuvalka [1970] 76 ITR 128. Accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by her is not sufficient to hold that she did not disclose the 'material facts'. If the ITO did not believe the statements and submissions of the assessee, he could have made further inquiries regarding the expenditure incurred by the assessee on the construction of the building, but he did not do so. In the alternative, he could have referred the matter to the Departmental Valuation Officer, but he did not take even this step. In such a situation, it cannot be said that any income of the assessee escaped assessment on account of non-disclosure of material facts on her part. We are, therefore, of the opinion that the ITO was not justified in reopening the assessment of the assessee for the assessment years under consideration. The case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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