ITO, WD-49(4), KOLKATA, Kolkata V. Shri Anil Kumar Loharuka, Kolkata

ITA 1315/KOL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3651 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 10-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANJOY MODI
• Keywords: Reopening of assessment; Unexplained investment; Depreciation; Fair market value; Difference of opinion; Valuation report; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 14A; 208; 147; 69; 148; 139

Judgement Text

ITA NO. 1315/KOL/2016 ASSESSMENT YEAR: 2007-2008 SHRI ANIL KUMAR LOHARUKA 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 1315/KOL/2016 ASSESSMENT YEAR: 2007-2008 INCOME TAX OFFICER,..................... .................APPELLANT WARD-49(4), KOLKATA, UTTARAPAN SHOPPING COMPLEX, MANICKTOLA CIVIC CENTRE, ULTADANGA, KOLKATA-700 054 -VS.- SHRI ANIL KUMAR LOHARUKA,RESPO NDENT DC-9/28, SHASTRI BAGAN, DESHBANDBHU NAGAR, BAGUIATI, KOLKATA-700 059 [PAN:AAWPL5808R] APPEARANCES BY: SHRI NICHOLAS MURMU, ADDL.CIT, D.R , FOR THE APPELLANT SHRI SANJOY MODI, C.A., FOR THE RESPONDEN T DATE OF CONCLUDING THE HEARING : JULY 17, 2019 DATE OF PRONOUNCING THE ORDER : AUGUST 28, 2019 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ):- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-15, KOLKATA DA TED 31.03.2016, WHEREBY HE CANCELLED THE ASSESSMENT MADE BY THE ASS ESSING OFFICER UNDER SECTION 147/143(3) BY HOLDING THE SAME AS BAD -IN-LAW. 2. THE RELEVANT FACTS OF THIS CASE GIVING RISE TO T HIS APPEAL ARE THAT THE ASSESSEE IS AN INDIVIDUAL, WHO FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 23.11.2007 DECLARING TOTAL I NCOME OF RS.2,19,191/-. IN THE ASSESSMENT COMPLETED UNDER SE CTION 143(3) VIDE AN ORDER DATED 29.12.2009, THE TOTAL INCOME OF THE ASS ESSEE WAS DETERMINED BY THE ASSESSING OFFICER AT RS.7,67,970/-. DURING T HE YEAR UNDER ITA NO. 1315/KOL/2016 ASSESSMENT YEAR: 2007-2008 SHRI ANIL KUMAR LOHARUKA 2 CONSIDERATION, THE ASSESSEE ALONG WITH OTHER FAMILY MEMBERS HAD PURCHASED A SEVEN-STORIED BUILDING AT LOHARUKA POIN T FOR TOTAL CONSIDERATION OF RS.2,29,60,000/- WITH ASSESSEES 1 /4 TH SHARE BEING RS.57,40,000/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, A REFERENCE WAS MADE BY THE ASSESSING OFFICER TO THE DISTRICT V ALUATION OFFICER (DVO) UNDER SECTION 131(1)(D) OF THE ACT IN ORDER TO DETE RMINE THE FAIR MARKET VALUE OF THE BUILDING PURCHASED BY THE ASSESSEE. TH E VALUATION REPORT OF THE DVO, HOWEVER, WAS RECEIVED BY THE ASSESSING OFF ICER ONLY AFTER THE COMPLETION OF ASSESSMENT UNDER SECTION 143(3) VALUI NG THE SAID BUILDING AT RS.10,85,59,651/- WITH ASSESSEES 1/4 TH SHARE BEING RS.2,71,39,913/-. ACCORDING TO THE ASSESSING OFFICER, THERE WAS THUS UNDER-VALUATION OF HIS SHARE OF PROPERTY BY THE ASSESSEE TO THE EXTENT OF RS.2,13,99,913/-. HE, THEREFORE, REOPENED THE ASSESSMENT AFTER RECORDING THE REASONS AND AFTER OBTAINING THE APPROVAL OF THE CONCERNED CIT, HE ISS UED A NOTICE UNDER SECTION 148 OF THE ACT TO THE ASSESSEE. IN RESPONSE TO THE SAID NOTICE, A PETITION WAS FILED BY THE ASSESSEE REQUESTING THAT THE RETURN ORIGINALLY FILED BY HIM ON 23.11.2007 MAY BE TREATED AS THE RE TURN FILED IN RESPONSE TO NOTICE UNDER SECTION 148. DURING THE COURSE OF A SSESSMENT PROCEEDINGS, VARIOUS OBJECTIONS WERE RAISED BY THE ASSESSEE IN RESPECT OF VALUATION OF HIS PROPERTY AS MADE BY THE DVO IN HIS VALUATION REPORT. THE ASSESSING OFFICER, HOWEVER, DID NOT FIND THE SAID O BJECTIONS TO BE SUSTAINABLE AND OVERRULING THE SAME, HE MADE AN ADD ITION OF RS.2,13,99,913/- UNDER SECTION 69 OF THE ACT ON ACC OUNT OF UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE IN THE PURCHASE OF BUILDING IN THE ASSESSMENT COMPLETED UNDER SECTION 147/143(3) OF TH E ACT VIDE AN ORDER DATED 24.03.2014. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 147/143(3) OF THE ACT, AN APPEAL WAS PREFERRED BY T HE ASSESSEE BEFORE THE LD. CIT(APPEALS) CHALLENGING THE VALIDITY OF TH E SAID ASSESSMENT AS WELL AS DISPUTING THE ADDITION MADE THEREIN UNDER S ECTION 69. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT( APPEALS), THE FOLLOWING ITA NO. 1315/KOL/2016 ASSESSMENT YEAR: 2007-2008 SHRI ANIL KUMAR LOHARUKA 3 SUBMISSIONS WERE MADE ON BEHALF OF THE ASSESSEE WHI LE CHALLENGING THE VALIDITY OF THE ASSESSMENT MADE BY THE ASSESSING OF FICER UNDER SECTION 147/143(3) OF THE ACT:- (1) AS REGARDS THE SECOND GROUND OF APPEAL CLAIMIN G THAT THE NOTICE ISSUED BY THE LEARNED ASSESSING OFFICER U/S 148 OF THE INCOME TAX ACT, 1961 BEING BAD IN LAW, ALL SUBSEQUE NT PROCEEDINGS CONDUCTED PURSUANT TO THE SAID NOTICE A RE AB-INITIO VOID, WE WOULD LIKE TO POINT OUT THE FOLLOWING: A) A PERUSAL OF THE FACTS OF THE CASE VIS-A-VIS THE REASONS FOR REOPENING RECORDED U/S 148(2) BY THE AO WILL MAKE IT AMPLY CLEAR THAT THE ISSUE FORMING THE BASIS FOR REOPENING, HAS ALREADY BEEN THE SUBJECT MATTER OF EXAMINATION DURING THE COURSE OF ASSESSME NT PROCEEDINGS U/S 143(3). MOREOVER, THE SAID ISSUE WA S ALSO THE SUBJECT MATTER OF EXAMINATION AND CONSIDERATION IN THE APPELLATE PROCEEDINGS BEFORE T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) XXXII, KOLKATA WHO AFTER EXAMINING THE PURCHASE AND SALE PRICE OF THE APPELLANT'S PROPERTY IN QUESTION GRANT ED FULL RELIEF IN RESPECT OF THE ADDITION MADE BY THE AO. B) IN THIS REGARD, YOUR HONOURS ATTENTION IS INVITE D TO THE PROVISIONS OF SECTION 147 WHICH IS REPRODUCED HEREUNDER FOR READY REFERENCE: 147 . IF THE [ASSESSING] OFFICER [HAS REASON TO BELIEVE ] THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURS E OF THE PROCEEDINGS UNDER THIS SECTION, OR RE-COMPUT E THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT Y EAR CONCERNED (HEREINAFTER IN THIS SECTION AND IN SECTI ONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR): PROVIDED THAT WHERE AN ASSESSMENT UNDER SUBSECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FO R THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TA KEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS F ROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON TH E PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB- SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DIS CLOSE ITA NO. 1315/KOL/2016 ASSESSMENT YEAR: 2007-2008 SHRI ANIL KUMAR LOHARUKA 4 FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT, FOR THAT ASSESSMENT YEAR: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRS T PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA, CHARGEABLE TO TA X, HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR: PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVI NG MATTERS WHICH ARE THE SUBJECT MATTERS OF ANY APPEAL , REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX A ND HAS ESCAPED ASSESSMENT. WITHOUT PREJUDICE TO OUR ABOVE CONTENTIONS, WE WOUL D ALSO LIKE TO STATE THAT AS PER THE SECOND PROVISO TO SECTION 147 IT IS CLEAR THAT INCOME/MATTERS WHICH HAVE BEEN DECIDED IN APPE AL / ARE SUBJECT MATTER OF ANY APPEAL, REFERENCE OR REVISION , SHALL NOT BE RE ASSESSED UNDER THE PROVISIONS OF THIS SECTION. C) YOUR HONOURS ATTENTION IS ALSO DRAWN TO THE DECI SION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF COMMISSIO NER OF INCOME TAX VS.P.G. FOILS LTD. 356 ITR 594 (GUJ) WHE REIN IT WAS HELD THAT THE ASSESSING OFFICER HAD RECORDED THREE REASONS WHICH PERTAINED TO THE EXTENT OF EARNINGS EXEMPT FR OM INCOME TAX, WHICH THE REVENUE CONTENDED SHOULD HAVE BEEN D ISALLOWED UNDER SECTION 14A OF THE ACT AND THE ADDITION OF UN UTILIZED CENVAT IN VALUATION OF THE CLOSING STOCK. BOTH THES E ISSUES HAD BEEN EXAMINED BY THE ASSESSING OFFICER IN THE ORIGI NAL ASSESSMENT. THERE WERE FACTUAL FINDINGS CONCURRENTL Y ARRIVED AT BY THE COMMISSIONER (APPEALS) AS WELL AS THE TRIBUN AL. THE NOTICE PERTAINING TO THESE TWO ISSUES WAS NOT VALID . YOUR HONOUR, THE REASSESSMENT NOTICE IN THIS ALSO C ASE ALSO RELATES TO THE ISSUE WHICH HAD BEEN EXAMINED AT THE TIME OF ORIGINAL ASSESSMENT AND THERE IS FACTUAL FINDINGS A RRIVED AT BY THE COMMISSIONER (APPEALS). THUS, IN VIEW OF THE PR OVISION OF LAW AND THE ABOVE JUDGMENT THE NOTICE ISSUED IN THI S CASE IS NOT VALID. D) A PERUSAL OF THE FACTS OF THE CASE ALSO MAKES IT ABUNDANTLY CLEAR THAT THERE WAS NO FAILURE ON THE PART OF THE APPELLANT TO FURNISH ANY INFORMATION OR EXPLANATION AT THE TIME OF REGULAR ASSESSMENT PROCEEDINGS. A PLAIN READING OF THE FIRS T PROVISO TO SECTION 147 MAKES IT CLEAR THAT IN CASES WHERE AN A SSESSMENT HAS BEEN MADE U/S 143(3) AND THERE IS NO FAILURE ON THE PART OF THE APPELLANT TO DISCLOSE FULLY AND TRULY ALL MATER IAL FACTS NECESSARY FOR ASSESSMENT FOR THE YEAR, PROCEEDINGS U/S 148 SHALL NOT BE INITIATED AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. MOREOVER, THE REASONS RECORDED BY THE ASSESSING OFFICER NOWHERE SUGGEST THAT THERE HAS BEEN A ITA NO. 1315/KOL/2016 ASSESSMENT YEAR: 2007-2008 SHRI ANIL KUMAR LOHARUKA 5 FAILURE ON THE PART OF THE APPELLANT TO DISCLOSE FU LLY AND TRULY MATERIAL FACTS NECESSARY FOR THE PURPOSE OF ASSESSM ENT. IN THIS REGARD, YOUR HONOURS ATTENTION IS DRAWN TO THE OBSERVATIONS OF THE HON'BLE COURT IN THE CASE OF HI NDUSTAN LEVER LTD. V. R.B. WADKAR [2004J 268 ITR 332 1 (BOM .), A DIVISION BENCH HAS OPINED THUS:- THE REASONS RECORDED BY THE ASSESSING OFFICER SHOUL D BE CLEAR AND UNAMBIGUOUS AND SHOULD NOT SUFFER FROM ANY VAGUENESS. THE REASONS RECORDED MUST DISCLOSE HIS MIND. REASONS ARE THE MANIFESTATION OF MIND OF THE ASSESSING OFFICER. THE REASONS RECORDED SHOULD BE SELF-EXPLANATORY AND SHOULD NOT KEEP THE ASSESSEE GUESSING FOR THE REASONS. REASONS PROVIDE THE LINK BETWEEN CONCLUSION AND EVIDENCE. THE REASONS RECORDED MUST BE BASED ON EVIDENCE. THE ASSESSING OFFICER, IN THE EVENT OF CHALLENGE TO THE REASONS, MUST BE ABLE TO JUSTIFY THE SAME BASED ON MATERIAL AVAILABLE ON RECORD. HE MUST DISCLOSE IN THE REASON S AS TO WHICH FACT OR MATERIAL WAS NOT DISCLOSED BY T HE ASSESSEE FULLY AND TRULY NECESSARY FOR ASSESSMENT O F THAT ASSESSMENT YEAR SO AS TO ESTABLISH THE VITAL L INK BETWEEN THE REASONS AND EVIDENCE. THAT VITAL LINK I S THE SAFEGUARD AGAINST ARBITRARY REOPENING OF THE CONCLUDED ASSESSMENT. THE REASONS RECORDED BY THE ASSESSING OFFICER CANNOT BE SUPPLEMENTED BY FILING AN AFFIDAVIT OR MAKING AN ORAL SUBMISSION, OTHERWISE, THE REASONS WHICH WERE LACKING IN THE MATERIAL PARTICULARS WOULD GET SUPPLEMENTED, BY THE TIME THE MATTER REACHES TO THE COURT, ON THE STRENGTH OF AFFIDAVIT OR ORAL SUBMISSIONS ADVANCED.' [EMPHASIS SUPPLIED]. YOUR HONOUR, IT IS AN ESTABLISHED PROCEDURE THAT WH ILE RE- OPENING AN ASSESSMENT COMPLETED U/S 143(3) AFTER TH E EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THE REASONS TO BE RECORDED U/S 148(2) FOR ISSUING A NOT ICE U/S 148(1) MUST DISCLOSE WHICH MATERIAL FACTS WERE NOT FULLY AND TRULY DISCLOSED BY THE ASSESSEE. AND IF THERE WAS N O SUCH FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE THE MATERIA L FACTS, RE- OPENING WAS NOT JUSTIFIED AT ALL. THE AR OF THE ASSESSEE FURTHER RELIED ON THE FOLLOW ING JUDGMENTS: ORIENT BEVERAGES LTD. VS. INCOME TAX OFFICER & ORS. 208 ITR 509 (CAL); G. N. SHAW (WINE) PVT. LTD. VS. ITO & ORS. 260 ITR 513 (CAL); ITA NO. 1315/KOL/2016 ASSESSMENT YEAR: 2007-2008 SHRI ANIL KUMAR LOHARUKA 6 CLIANTHA RESEARCH LTD. V. DEPUTY COMMISSIONER OF INCOME-TAX, AHMEDABAD CIRCLE-I [2013] 35 TAXMANN.COM 61 (GUJARAT); CIT V. USHA INTERNATIONAL LTD. {2012J 348 ITR 485/210 TAXMAN 188/25 TAXMANN.COM 200; KAMALA PROPERTIES VS. IAC {1994J TAX LR 468 (CAL.); CIT VS. SMT. MEENA DEVI MANSINGHKA (2008) 303 ITR 351 (RAJ.); BRITANIA INDUSTRIES LIMITED V. DY. CIT {1999J238 IT R 57 (CAL); KAJARIA INVESTMENT & PROPERTIES (P) LTD. V. ITO {2001J250 ITR 619 (CAL); CIT V. SHIRINIBAI ABDULLABHAI {1998] 232 ITR 895 (CAL); SMT. UMA DEVI JHAWAR V. ITO {1996J 218 ITR 573 (CAL ); ITO VS. SANTOSH KUMAR DALMIA 208 ITR 337 (CAL); SMT. TARAWATI DEVI AGARWAL V. ITO {1986J162 ITR 606 (CAL); RASIKLAL JIVANLAL SHAH V. ITO {1982] 133 ITR 476 (C AL); BHOLA NATH MAJUMDAR V ITO {1996J 221 ITR 608 (GAU); JAWAHARLAL DARYAVBUXMAL V. CIT {1982J137 ITR 54 (MP); TOLARAM GANGARAM V. ITO {1 985J 155 ITR 55 (GUJ); SMT. AMALA DAS V. CIT (1984)146 ITR 216 (P&H); ABDUL MAJID V. ITO [1989] 178 ITR 616 (MP); GULABARI HANUMANBUXV. WTO/ITO [1989]178 ITR 519 (GAU). THUS, IT WAS CONTENDED THAT THE REOPENING OF THE AB OVE COMPLETED ASSESSMENT ON THE BASIS OF THE VALUATION REPORT IS NOT PROPER AS VALUATION REPORT IS ONLY AN OPINION R EGARDING THE COST OF PURCHASE/CONSTRUCTION OR THE FAIR MARKET VA LUE OF THE PROPERTY. A MERE CHANGE IN OPINION CANNOT BE THE GR OUND TO REOPEN A COMPLETED ASSESSMENT. THE SAME DOES NOT AM OUNT TO INFORMATION, NOR CAN IT FORM A GROUND FOR REASONS T O BELIEVE THAT THE ASSESSEE FAILED TO DISCLOSE HIS INCOME FUL LY AND TRULY WITHIN THE MEANING OF SEC. 147. ITA NO. 1315/KOL/2016 ASSESSMENT YEAR: 2007-2008 SHRI ANIL KUMAR LOHARUKA 7 IN THIS REGARD, YOUR HONOUR ATTENTION IS INVITED TO THE DECISION IN THE CASE OF TARAWATI DEBI AGARWAL VS. ITO 162 IT R 606 (CAL) WHEREIN THE ASSESSEE HAD CONSTRUCTED A HOUSE PROPER TY. NECESSARY FACTS REQUIRED FOR ASSESSMENT WERE DISCLO SED TO ITO AND ALL THE DETAILS REQUIRED BY HIM WERE FURNISHED. A.O. REFERRED THE MATTER TO DEPARTMENTAL VALUER AND MEAN WHILE COMPLETED THE ASSESSMENT ON THE BASIS OF VALUATION BY THE ASSESSEE. IT WAS HELD THAT A VALUATION REPORT OF TH E GOVERNMENT VALUER ESTIMATING THE COST OF CONSTRUCTION OF, OR O F REPAIR TO, A PROPERTY AT A HIGHER FIGURE THAN THAT SHOWN BY THE ASSESSEE DOES NOT, WITHOUT OTHER EVIDENCE, ENTITLE THE A.O. TO TAKE ACTION IX] 147. COURT OBSERVED, 'IN ANY EVENT, VALUATION IS A QUESTION OF OPINION AND UNLESS THERE IS A CLEAR FINDING ON T HE BASIS OF THE MATERIALS THAT THE ASSESSEE INVESTED IN THE PURCHAS E/ CONSTRUCTION OF THE HOUSE PROPERTY MORE THAN WHAT H AD BEEN SHOWN BY HER IN THE COURSE OF THE ASSESSMENT PROCEE DINGS, THE ITO CANNOT PROCEED MERELY ON THE BASIS OF THE VALUA TION REPORT OF THE DEPARTMENTAL VALUER. BEFORE TAKING ACTION U/ S 147 THE A.O. HAS TO REJECT THE ASSESSEE'S VALUATION ASSIGNI NG REASON THEREFOR. ON THE BASIS OF THE DIFFERENCE IN ESTIMAT E, IT CANNOT BE SAID THAT THE ASSESSEE ACTUALLY INVESTED MORE THAN WHAT HAS BEEN SHOWN BY HER. YOUR HONOUR'S ATTENTION IS ALSO DRAWN TO THE DECISI ON OF HONOURABLE ANDHRA PRADESH HIGH COURT IN THE CASE OF S. SREERAMACHANDRA MURTHY V. DY. CIT [2000] 243 ITR 42 7 (AP). IN THE INSTANT CASE THE ASSESSEE CONSTRUCTED SHOPPI NG COMPLEX WHICH WAS DISCLOSED IN RETURN OF INCOME AND THE ASS ESSMENT WAS COMPLETED ON 10.3.1993. COST OF CONSTRUCTION AN D SOURCES OF INVESTMENT WERE SPECIFICALLY GONE INTO BY THE AO AT THE TIME OF ORIGINAL ASSESSMENT. IN COURSE OF SUBSEQUENT SEA RCH PROCEEDINGS NO ADVERSE OR INCRIMINATING MATERIAL HA VING A BEARING ON THE COST OF CONSTRUCTION HAD COME TO LIG HT. REASSESSMENT PROCEEDINGS WERE, HOWEVER, INITIATED S OLELY ON THE BASIS OF ESTIMATE OF CONSTRUCTIONAL COST MADE B Y THE DEPARTMENT'S VALUER LONG AFTER SEARCH OPERATION. RE OPENING SOLELY ON THE BASIS OF HIGHER ESTIMATE OF COST OF C ONSTRUCTION MADE BY THE DEPARTMENTAL VALUER LONG AFTER SEARCH W AS NOT VALID. IN OUR CASE ALSO YOUR HONOUR WE HAD SHOWN TH E SAID PROPERTY IN OUR BALANCE-SHEET AND THE ASSESSMENT WA S COMPLETE ON 31.03.2007. IN COURSE OF SEARCH PROCEEDINGS, NO ADVERSE OR INCRIMINATING MATERIAL HAVING A BEARING ON THE COST OF CONSTRUCTION HAD COME TO LIGHT. SO, THE REASSESSMEN T SHOULD NOT INITIATE, IN OUR OPINION, ON THE BASIS OF HIGHER ES TIMATE OF COST OF CONSTRUCTION MADE BY THE DEPARTMENTAL VALUER. IN PRAKASH CHAND VS. DY. CIT & ORS. (2004) 269 ITR 260 (MP)(ASST YR 1997-2001) IT WAS HELD THAT A.O. HAD N O JURISDICTION TO REOPEN THE CONCLUDED ASSESSMENTS ON THE STRENGTH OF VALUATION REPORT OF VALUATION OFFICER O BTAINED SUBSEQUENTLY AND THAT TOO NOT IN EXERCISE OF POWERS U/S 55A AND QUASHED THE IMPUGNED NOTICES UNDER S. 148. ITA NO. 1315/KOL/2016 ASSESSMENT YEAR: 2007-2008 SHRI ANIL KUMAR LOHARUKA 8 IN GIRDHAR GOPAL GULATI VS. UOI (2004) 269 ITR 45 ( ALL)(ASST YR 1996-1998 TO 1999-2000) IT WAS HELD THAT THE ASS ESSING AUTHORITY HAVING MADE A DETAILED ENQUIRY BEFORE MAK ING THE ASSESSMENT OF THE PETITIONER U/S. 143(3) THE IMPUGN ED NOTICE U/S. 148 WAS ISSUED ONLY ON THE BASIS OF CHANGE OF OPINION AND WAS THEREFORE, INVALID, NOTICE WAS ALSO ILLEGAL ON THE GROUND THAT IT WAS BASED ON THE VALUATION REPORT OF COST OF CONSTRUCTION. IN CIT VS. SMT. MEENA DEVI MANSIGHKA (2008) 303 ITR 351 (ASST YR 1995-1997 TO 1998-1999) IT WAS HELD THAT M ERE DVO'S REPORT CANNOT CONSTITUTE REASON TO BELIEVE TH AT INCOME HAS ESCAPED ASSESSMENT FOR THE PURPOSE OF IN ITIATING REASSESSMENT AND THEREFORE TRIBUNAL WAS JUSTIFIED O N HOLDING THAT THE REASSESSMENT PROCEEDINGS INITIATED ON THE BASIS OF DVO'S REPORT WERE INVALID-AB-INITIO, MORE SO WHEN IT HAS FOUND THAT THE DVO'S REPORT SUFFERS FROM VAR IOUS DEFECTS AND MISTAKES. IN ITO V. SANTOSH KUMAR DALMIA (1994) 208 ITR 337 (CAL.)(ASST YR 1973-1974) AS ALSO IN ITO V SHIV SHA KTI BUILD HOME ( P) LTD (2011) 141 TTJ 123 (JODHPUR) ( TRIB.) IT WAS HELD THAT WHERE APART FROM THE VALUATION REPORT WHI CH WAS RELIED UPON BY THE ITO THERE WAS NO MATERIAL BEFORE HIM TO COME TO THE PRIMA FACIE CONCLUSION THAT THE ASSESSE E HAD RECEIVED THE HIGHER CONSIDERATION THAN WHAT HAD BEE N STATED IN THE SALE DEED, REASSESSMENT WOULD NOT BE JUSTIFIED. IN ASSISTANT COMMISSIONER OF INCOME-TAX VS. DHARIYA CONSTRUCTION CO. (2010) 328 ITR 0515IT HAS BEEN HEL D THAT IN CASE OF REOPENING OF THE ASSESSMENT BASED ON THE OPINION GIVEN BY THE DISTRICT VALUATION OFFICER, OPINION OF THE DVO PER SE IS NOT INFORMATION FOR THE PURPOSES OF REOPE NING ASSESSMENT UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961. IT WAS HELD THAT THE ASSESSING OFFICER HAS TO APPLY HIS MIND TO THE INFORMATION, IF ANY, COLLECTED AND MUST FORM A BELIEF THEREON- DEPARTMENT WAS NOT ENTITLED TO REOPEN THE ASSESSMENT. IN MAHASHAY CHUNNILALV DEPUTY COMMISSIONER OF INCOM E TAX 44 TAXMANN.COM 321 (DELHI) IT WAS HELD BY THE HONOURABLE COURT THAT OPINION OF DVO IS PER SE NOT AN INFORMATION FOR THE PURPOSE OF REOPENING OF AN ASSE SSMENT. THUS IN OUR OPINION THE REOPENING OF THE ABOVE COMP LETED ASSESSMENT ON THE BASIS OF THE VALUATION REPORT IS NOT PROPER AS VALUATION REPORT IS ONLY AN OPINION REGARDING TH E COST OF CONSTRUCTION OR THE FAIR MARKET VALUE OF THE PROPER TY. YOUR HONOUR BASED ON ABOVE FACTS, LEGAL PROVISIONS AND JUDICIAL PRONOUNCEMENTS WE ARE OF THE OPINION THAT THE ITA NO. 1315/KOL/2016 ASSESSMENT YEAR: 2007-2008 SHRI ANIL KUMAR LOHARUKA 9 INITIATION OF PROCEEDING U/S. 148 IN THIS CASE IS N OT VALID AND AS SUCH ALL OTHER PROCEEDINGS IN RELATION THERETO A RE ALSO AB INITIO VOID. 4. IN ADDITION TO THE ABOVE SUBMISSIONS, THE VALIDI TY OF REOPENING OF ASSESSMENT WAS ALSO CHALLENGED BY THE ASSESSEE ON T HE BASIS OF LACK OF SATISFACTION RECORDED BY THE CONCERNED LD. CIT WHIL E ACCORDING HIS SANCTION BY MAKING THE FOLLOWING SUBMISSIONS:- THIS IS IN CONTINUATION OF OUR EARLIER SUBMISSION FILED ON 20TH NOVEMBER 2015 AND WE WOULD FURTHER LIKE TO SUBMIT A S FOLLOWS: YOUR HONOUR IN CONTINUATION TO OUR SUBMISSION REGARDING OUR OBJECTION TO ASSUMPTION OF JURISDICTI ON U/ S. 148, WE HAD APPLIED ON 23/2/2016 UNDER THE RIGHT TO INFORMATION, ACT, 2005' FOR THE 'COPY OF ORDER OF SATISFACTION ACCORDED BY LD CIT ALONG WITH NECESSAR Y ENCLOSURES' AND THE SAME WAS PROVIDED TO US VIDE LE TTER DATED 26.02.2016. A COPY OF THE SAME IS ATTACHED HEREWITH FOR YOUR PERUSAL. A PERUSAL OF THE SAME REVEALS THAT THE LEARNED COMMISSIONER OF INCOME TAX HAS ACCORDED HIS SANCTIO N BY ONLY PUTTING HIS SIGNATURE ON THE WRITTEN PROPOS AL FORWARDED BY THE ASSESSING OFFICER WITHOUT RECORDIN G HIS SATISFACTION ON THE SAID PROPOSAL. THUS, THE LE ARNED COMMISSIONER DID NOT APPLY HIS MIND AT ALL WHILE GRANTING SANCTION. YOUR HONOUR, THE SATISFACTION OF THE SANCTIONING AUTHORITY HAS TO SHOW OBJECTIVITY WITH REGARDS TO THE FACTS OF THE CASE AND THE MATERIAL O N RECORD. IN THIS REGARD WE WOULD LIKE TO INVITE YOUR HONOUR' S ATTENTION TO THE DECISION OF MADHYA PRADESH HIGH CO URT IN THE CASE OF COMMISSIONER OF INCOME TAX, -JABALPU R V. S. GOYANKA LIME & CHEMICALS LTD. 56 TAXMANN.COM 390 (MADHYA PRADESH) WHEREIN IT WAS HELD THAT 'WHETHER WHERE JOINT COMMISSIONER RECORDED SATISFACTION IN MECHANICAL MANNER AND WITHOUT APPLICATION OF MIND, IN ORDER TO ACCORD SANCTION FOR ISSUING NOTICE UNDER SECTION 148, ASSUMPTION OF JURISDICTION TO REOPEN B LOCK ASSESSMENT WAS INVALID. THE SPECIAL LEAVE PETITION FILED AGAINST THIS DECIS ION HAS BEEN REJECTED BY THE HONOURABLE APEX COURT. YOUR HONOUR, WE WOULD ALSO LIKE TO DRAW YOUR ATTENT ION TO THE DECISION OF HONOURABLE HIGH COURT IN THE CAS E OF ARJUN SINGH V. ASSTT DIT: [2000] 246 ITR 363 (MP). YOUR ITA NO. 1315/KOL/2016 ASSESSMENT YEAR: 2007-2008 SHRI ANIL KUMAR LOHARUKA 10 HONOUR IN THIS 'THE COMMISSIONER ACTED, OF COURSE, MECHANICALLY IN ORDER TO DISCHARGE HIS STATUTORY OBLIGATION PROPERLY IN THE MATTER OF RECORDING SANC TION AS HE MERELY WROTE ON THE FORMAT 'YES I AM SATISFIE D' WHICH INDICATES AS IF HE WAS TO SIGN ONLY ON THE DO TTED LINE. EVEN OTHERWISE ALSO, THE EXERCISE IS SHOWN TO HAVE BEEN PERFORMED IN LESS THAN 24 HOURS OF TIME WHICH ALSO GOES TO INDICATE THAT THE COMMISSIONER DID NOT APPL Y HIS MIND AT ALL WHILE GRANTING SANCTION. THE SATISFACTI ON HAS TO BE WITH OBJECTIVITY ON OBJECTIVE MATERIAL.' WE WOULD ALSO LIKE TO DRAW YOUR HONOURS ATTENTION T O THE DECISION OF DELHI TRIBUNAL IN THE CASE OF DY. C IT VS. DHARAMPAL SATYAPAL LTD. (DELHI 'B' ) 175 TTJ 663 WHEREIN IT WAS HELD THAT 'ADDL. CIT AND THE CIT HAV ING SIMPLY WRITTEN 'YES, I AM SATISFIED' ON THE SAME DA Y WHILE ACCORDING SANCTION UNDER SEC 151, IT DOES NOT IN ANY MANNER SHED ANY LIGHT AS TO WHETHER THERE WAS A NY APPLICATION OF MIND AT ALL BY THE TWO SENIOR OFFICE RS. THEREFORE, SANCTION GRANTED BY THE CIT IS INVALID A ND CONSEQUENTLY, THE NOTICE UNDER S. 148 ISSUED BY THE AO IS BAD IN LAW'. THIS GOES TO PROVE BEYOND DOUBT THAT SANCTION U/S. 151 WAS ACCORDED IN THIS CASE IN A MECHANICAL MANNER WITHOU T APPLICATION OF MIND AND THEREFORE, THE PROCEEDINGS U/S 147 INITIATED IN THIS CASE BY ISSUING NOTICE U/ S 148 I S VOID AB INITIO. YOUR HONOUR IS REQUESTED TO CONSIDER THESE ADDITION AL FACTS AND JUDICIAL DECISIONS BESIDES THE ONE SUBMITTED BY US ON 20 TH NOVEMBER 2015, AND WOULD REQUEST YOUR HONOUR TO KIN DLY GRANT NECESSARY RELIEF IN THE CASE. 5. THE LD. CIT(APPEALS) FOUND MERIT IN THE LAST POI NT RAISED BY THE ASSESSEE WHILE CHALLENGING THE VALIDITY OF REOPENIN G OF ASSESSMENT AND ACCORDINGLY QUASHED THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 147/143(3) OF THE ACT FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORDER:- I HAVE GONE THROUGH THE ABOVE SUBMISSION OF THE AR OF THE ASSESSEE. I HAD ALSO CALLED FOR THE CASE RECORDS OF THE ASSESSEE. IT IS SEEN FROM THE FILE THAT WHEN THE PROPOSAL FOR RE OPENING THE ASSESSMENT WAS SUBMITTED TO THE CIT-17, KOLKATA BY THE ITO WARD 49(4), KOLKATA THROUGH THE JCIT, RANGE-49 KOLKATA, THE CIT HAS ONLY SIGNED OVER THE PROPOSAL WITHOUT RECORDING HER SATISFACTION AS TO HOW AND WHY THIS IS A FIT CASE FOR REOPENING THE ASSESSMENT AFTER A LAPSE OF 4 YEARS SPECIALLY WHEN THE EARLIER ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT. THIS HAS BEEN BRO UGHT ON RECORD BY THE AR OF THE ASSESSEE BY OBTAINING THOSE DOCUME NTS UNDER THE ITA NO. 1315/KOL/2016 ASSESSMENT YEAR: 2007-2008 SHRI ANIL KUMAR LOHARUKA 11 RTI ACT FROM THE OFFICE OF CIT -17, KOLKATA. IN VIE W OF THE CASE- LAWS RELIED UPON BY THE AR OF THE ASSESSEE, IT IS H ELD THAT THE ASSESSMENT PROCEEDINGS WERE NOT VALIDLY INITIATED. IN VIEW OF ABOVE, THE RE-ASSESSMENT ORDER PASSED IS QUASHED. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN SUPPORT O F THE REVENUES CASE ON THE ISSUE UNDER CONSIDERATION, THE LD. D.R. HAS REL IED ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF PREM CHAND SHAW (JAISWAL) VS.- ACIT [383 ITR 597]. HE HAS CONTENDED THAT THE SAID DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IS SQUARELY APPLI CABLE IN THE PRESENT CASE AS IT WAS HELD BY THEIR LORDSHIPS THAT THE MER E FACT THAT THE ADDITIONAL COMMISSIONER DID NOT RECORD HIS SATISFAC TION IN SO MANY WORDS SHOULD NOT RENDER INVALID THE SATISFACTION GRANTED UNDER SECTION 151(2) OF THE ACT. HOWEVER, AS RIGHTLY CONTENDED BY THE LD. C OUNSEL FOR THE ASSESSEE, THE SAID CASE CITED BY THE LD. D.R. IS DISTINGUISHA BLE ON FACTS, INASMUCH AS, THE ASSESSEE IN THE SAID CASE HAD RESTRICTED HIS CH ALLENGE TO THE VALIDITY OF NOTICE UNDER SECTION 148 ONLY ON THE GROUND THAT SA NCTION UNDER SECTION 151 WAS NOT VALID AND THE BASIS FOR REASONS FURNISH ED BY THE ASSESSING OFFICER IN THE NOTICE UNDER SECTION 148 WAS NEVER I N DISPUTE. KEEPING IN VIEW THIS FACTUAL POSITION PREVALENT IN THE SAID CA SE, IT WAS HELD BY THE HONBLE JURISDICTIONAL HIGH COURT THAT THE MERE FAC T THAT THE ADDITIONAL COMMISSIONER DID NOT RECORD HIS SATISFACTION IN SO MANY WORDS SHOULD NOT RENDER INVALID THE SATISFACTION GRANTED UNDER SECTI ON 151(2) OF THE ACT WHEN THE REASON ON THE BASIS OF WHICH SANCTION WAS SOUGHT FOR COULD NOT BE ASSAILED. IN THE PRESENT CASE, THE FACTS INVOLVE D, HOWEVER, ARE MATERIALLY DIFFERENT, INASMUCH AS, THE VALIDITY OF REOPENING OF ASSESSMENT WAS CHALLENGED BY THE ASSESSEE ON VARIOUS GROUNDS B Y MAKING A DETAILED SUBMISSION AND THE RELEVANT JUDICIAL PRONOUNCEMENTS IN SUPPORT OF THE SAID SUBMISSION WERE ALSO CITED BEFORE THE LD. CIT( APPEALS). AS RIGHTLY CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE, THE DECISION OF THE HONBLE ITA NO. 1315/KOL/2016 ASSESSMENT YEAR: 2007-2008 SHRI ANIL KUMAR LOHARUKA 12 CALCUTTA HIGH COURT IN THE CASE OF THE PREM CHAND S HAW (JAISWAL) (SUPRA) THUS IS NOT APPLICABLE IN THE PRESENT CASE BEING DI STINGUISHABLE ON FACTS. ON THE OTHER HAND, THE RATIO OF THE JUDICIAL PRONOU NCEMENTS CITED ON BEHALF OF THE ASSESSEE IN THE SUBMISSION MADE BEFOR E THE LD. CIT(APPEALS) IN SUPPORT OF HIS CASE ON THIS ISSUE IS SQUARELY AP PLICABLE AND KEEPING IN VIEW THE SAME, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) CANCELLING THE ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER SECTION 147/143(3) BY HOLDING THE SAME TO BE INVALID ON THE GROUND THAT THE REQUIRED APPROVAL UNDER SECTION 151 (2) WAS GRANTED BY THE CONCERNED LD. CIT WITHOUT RECORDING HER SATISFA CTION. WE ACCORDINGLY UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) O N THIS ISSUE AND DISMISS THIS APPEAL FILED BY THE REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 28, 2 019. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP ) JUDICIAL MEMBER V ICE-PRESIDENT (KZ) KOLKATA, THE 28 TH DAY OF AUGUST, 2019 COPIES TO : (1) INCOME TAX OFFICER, WARD-49(4), KOLKATA, UTTARAPAN SHOPPING COMPLEX, MANICKTOLA CIVIC CENTRE, ULTADANGA, KOLKATA-700 054 (2) SHRI ANIL KUMAR LOHARUKA, DC-9/28, SHASTRI BAGAN, DESHBANDBHU NAGAR, BAGUIATI , KOLKATA-700 059 (3) COMMISSIONER OF INCOME TAX (APPEALS)-15, KOLKA TA, (4) COMMISSIONER OF INCOME TAX, KOLKATA- , KOLKATA; (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.