Nitin R.Bhuva, CHENNAI V. ITO, CHENNAI

ITA 1773/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8175 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 24-11-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 13-06-2016
• Court: TRIBUNAL
• Department Lawyers: ASHISH TRIPATI
• Assessee Lawyers: G BASKAR
• Keywords: Sale consideration of property below Jantri Value; Depreciation; Tangible material; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 50C; 147; 148; 139

Judgement Text

, A/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL A/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ I.T.A.NO.1773 /MDS./2016 ( / ASSESSMENT YEAR :2006-07) NITIN R. BHUVA, NO.243/119, THAMBU CHETTY STREET, CHENNAI. 600 001. VS. THE ITO, BUSINESS WARD IX(1), CHENNAI. PAN AAIPM 6004 G ( / APPELLANT ) ( / RESPONDENT ) ! ' # / APPELLANT BY : MR.G.BASKAR, ADVOCATE $% ! ' # / RESPONDENT BY : MR.ASHISH TRIPATI & ' ' ( ) / DATE OF HEARING : 24.11.2016 *+ ' ( ) /DATE OF PRONOUNCEMENT : 13.01.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-13,CHENNAI DA TED 02.03.2016 PERTAINING TO ASSESSMENT YEAR 2006-07 . ITA NO. 1773/MDS/2016 2 2 . THE FIRST GROUND IN THIS APPEAL IS WITH REGARD T O RE-OPENING OF THE ASSESSMENT U/S.147 OF THE ACT. 3. THE FACTS OF THE ISSUE ARE THAT AFTER ASSESSME NT PROCEEDINGS U/S. 143(3) OF THE ACT, THE ASSESSEE HAD OFFERED LONG TERM CAPI TAL GAIN AND THE SALE CONSIDERATION TAKEN BY THE ASSESSEE IS MUCH LESS TH AN THE GUIDELINE VALUE U/S.50C OF THE ACT AND THERE IS DIFFERENCE IN SALE CONSIDERATION OF CAR PARKING AREA, THAT IS TO SAY, ASSESSEE HAS RECEIVED SALE CO NSIDERATION OF ` 9,05,090/- FOR FOUR PERSONS FOR SALE OF CAR PARKING AREA. THE AO H AS A REASON TO BELIEVE THAT AS THE SAME HAS BEEN MENTIONED IN THE SALE DEED OF THE PROPERTY, IT IS A PART OF SALE CONSIDERATION, THUS, THE INCOME HAS ESCAPED ASSESSM ENT AND THEREFORE AO ISSUED NOTICE U/S. 148 OF THE ACT AND REOPENED THE ASSESSMENT PASSED U/S. 143(3) OF THE ACT. THE ASSESSEE DURING THE APPEAL P ROCEEDINGS HAS OBJECTED THE REOPENING ON THE GROUND THAT THE ASSESSEE HAS DISCL OSED ALL THE MATERIAL FACTS RELATING TO THE CAPITAL GAIN LIKE COPY OF THE SALE DEED, COPY OF THE JOINT VENTURE AGREEMENT ETC., AND DISCUSSED WITH THE SAID ASSESSI NG OFFICER. THE INFERENCE DRAWN SUBSEQUENTLY AFTER THE COMPLETION OF THE ASSE SSMENT IS OBJECTED TO AS THERE IS NO FURTHER OR NEW INFORMATION OR PARTICULA RS ARE AVAILABLE ON THE FILE EXCEPT THOSE GIVE AT THE TIME OF ASSESSMENT. AGGRIE VED WITH THE ABOVE REASONS AND BY THE ASSESSMENT ORDER, THE ASSESSEE CARRIED T HE APPEAL BEFORE THE LD.CIT(A). ITA NO. 1773/MDS/2016 3 3.1 BEFORE LD.CIT(A), THE ASSESSEE HAS PLACED RELI ANCE ON THE JUDGMENT OF THE APEX COURT IN THE CASE O COMMISSIONER OF INCOME TAX VS. KELVINATOR OF INDIA LTD. REPORTED AT 320 ITR 561(SC). THE CONCLUSION DRAWN B Y THE HONBLE SUPREME COURT CITED SUPRA WAS THAT AFTER 1ST APRIL, 1989, T HE ASSESSING OFFICER HAS ONLY POWER TO REOPEN THE ASSESSMENT UNDER S. 147 PROVIDE D THAT THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME HAS ESCAP ED ASSESSMENT AND THERE IS TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT TH ERE IS ESCAPEMENT O INCOME; MERE CHANGE OF OPINION CANNOT PER SE BE REASON TO REOPEN. 3.2. THE LD.CIT(A) OBSERVED THAT AFTER THE INTRODU CTION OF CHANGES W.E.F. 1ST APRIL, 1989, THE SCOPE OF REASSESSMENT WAS WIDENED VIS A VIS THE POSITION OF LAW AS IT STOOD EARLIER. AFTER THE AMENDMENT, THE MAIN RESTRICTION PUT IN THE SECTION IS REASON TO BELIEVE. THE EXPRESSION REASON TO B ELIEVE REFERS TO THE BELIEF WHICH PROMPTS THE ASSESSING OFFICER TO APPLY SECTIO N 147 TO A PARTICULAR CASE; THAT IT WILL DEPEND ON THE FACTS OF EACH CASE; THAT THE BELIEF MUST BE OF AN HONEST AND REASONABLE PERSON, BASED ON REASONABLE GROUNDS; THAT THE ASSESSING OFFICER IS REQUIRED TO ACT, NOR ON MERE SUSPICION, BUT ON D IRECT OR CIRCUMSTANTIAL EVIDENCE, THAT THE EXPRESSION REASON TO BELIEVE D OES NOT MEAN A SUBJECTIVE SATISFACTION ON THE PART OF THE ASSESSING OFFICER. THE WORD REASON IN THE PHRASE REASON TO BELIEVE WOULD MEAN CAUSE OR JUSTIFICATIO N. IF THE AO HAS A CAUSE OR ITA NO. 1773/MDS/2016 4 JUSTIFICATION TO THINK OR SUPPOSE THAT INCOME HAD E SCAPED ASSESSMENT, HE CAN BE SAID TO HAVE A REASON TO BELIEVE THAT SUCH INCOME H AD ESCAPED ASSESSMENT. 3.3. THE WORDS REASON TO BELIEVE, CANNOT MEAN TH AT THE AO SHOULD HAVE FINALLY ASCERTAINED THE FACTS BY LEGAL EVIDENCE. TH EY ONLY MEAN THAT HE FORMS A BELIEF FROM THE EXAMINATION HE MAKES OR ANY INFORMA TION THAT HE RECEIVES. IF HE DISCOVERS OR FINDS OR SATISFIES HIMSELF THAT THE TA XABLE INCOME HAS ESCAPED ASSESSMENT, IT WOULD AMOUNT TO SAYING THAT HE HAD R EASON TO BELIEVE THAT SUCH INCOME HAD ESCAPED ASSESSMENT. THE JUSTIFICATION OF HIS BELIEF IS NOT TO BE JUDGED FROM THE STANDARDS OF PROOF REQUIRED FOR COM ING TO A FINAL DECISION A BELIEF THOUGH JUSTIFIED FOR THE PURPOSE OF INITIAT ION OF THE PROCEEDINGS UNDER SECTION 147, MAY ULTIMATELY STAND ALTERED AFTER HEA RING THE ASSESSEE OR ON THE BASIS OF THE INTERVENING ENQUIRY. AT THE STAGE WHER E THE LD. ASSESSING OFFICER FINDS A CAUSE OR JUSTIFICATION TO BELIEVE THAT SUCH INCOME HAS ESCAPED ASSESSMENT, THE ASSESSING OFFICER IS NOT REQUIRED T O BASE HIS BELIEF ON ANY FINAL ADJUDICATION OF THE MATTER ACCORDINGLY THE ACTION O F ASSESSING OFFICER IS UPHELD. BY CIT(A). AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US, LD.A.R SUBMITTED THE FOLLOWING POINT S IN SUPPORT OF HIS ARGUMENTS. A) THE NOTICE U/S. 148 HAD BEEN ISSUED BEYOND 4 YEA RS FROM THE END OF THE, ASSESSMENT YEAR. WE HAVE ALREADY EXTRACTED THE REAS ONS RECORDED BY THE AO FOR ISSUE OF NOTICE U/S. 148 OF THE ACT. IN SUM AND SU BSTANCE, THE REASON IS THAT THE ITA NO. 1773/MDS/2016 5 GUIDELINES VALUE OF THE LAND SOLD IS MORE THAT THE CONSIDERATION AND HENCE CAPITAL GAINS NEEDS TO BE ENHANCED. B) THERE IS NO AVERMENT THAT THE ASSESSEE FAILED T O FURNISH ANY MATERIAL/DOCUMENT NECESSARY FOR COMPLETION OR ASSES SMENT. PROVISO TO SEC. 147, READS AS UNDER:- PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTIO N (3) OF SECTION 143 OR THIS SECTIN HAS BEEN MADE FOR THE R ELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE O N THE PART OF THE ASSESSCE TO MAKE A RETURN UNDER SECTION 139 OR IN R ESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIALS FACTS NEC ESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR C) IN THE ABSENCE OF ANY ASSERTION/ALLEGATION TO T HE EFFECT THAT UNDER- ASSESSMENT IF ANY HAD OCCASIONED BY REASON OF ANY D EFAULT ON THE PART OF THE ASSESSEE, THE RE-OPENING IS BAD IN LAW. ON THE CONT RARY THE AO COMES TO THE CONCLUSION THAT THERE IS AN UNDER ASSESSMENT ONLY O N THE BASIS OF THE SALE DEEDS THAT WERE PRODUCED IN THE COURSE OF THE ORIGINAL AS SESSMENT PROCEEDINGS. D) THE AO HAS REFERRED TO SEC. 147(C)(I). POSSIBLY HE IS REFERRING TO EXPLANATION 2(C)(I) TO SEC. 147. EVEN ASSUMING FOR A MOMENT THAT THERE IS INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT A S MENTIONED IN EXPLANATION 2(C)(I) TO SEC. 147; STILL AS PER PROVISO. NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR; UNLESS ANY ITA NO. 1773/MDS/2016 6 INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON THE FAILURE ON THE PART O F THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIA1 FACTS NECE SSARY FOR HIS ASSESSMENT E) EVEN ACCORDING TO THE REASONS RECORDED, THE RE-A SSESSMENT HAD BEEN II ON THE BASIS OF THE 4 SALE DEEDS BY WHICH THE ASSES SEE CONVEYED THE WHICH ALREADY FORMS PART OF THE ASSESSMENT RECORDS. THUS THERE COULD BE FAILURE ATTRIBUTED TO THE ASSESSEE AT BEST IT COULD BE A CA SE WHERE THE AO NOT DRAW PROPER INERENCES AS OBSERVED BY THE HONHIE DELHI HI GH COURT IN . VS. KELAT& (INDIJ 256 ITR 1 (DEL-FB) AFFIRMED IN 3201TR351 (SC ). F) IT IS SUBMITTED THAT THE NOTICE U/S.148 BEING A BINITIO VOID, THE RE-ASSESSMENT PROCEEDINGS ARE LIABLE TO BE QUASHED IN TOTO 5. ON THE OTHER HAND, LD.D.R SUPPORTED THE ORDER O F LOWER AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE MAIN CONTENTION OF LD.A.R IS THAT IN THIS CASE THE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT. WHILE FRAMING THE ASSESSMEN T, THE AO VIDE QUESTIONNAIRE DATED 16.10.2008 ENQUIRED ABOUT DETAILS OF IMMOVABL E PROPERTY OWNED, ACQUIRED AND SOLD DURING THE YEAR. THE ASSESSEE HAS FURNISH ED ALL DETAILS TO THE AO AT THE TIME OF ORIGINAL ASSESSMENT AND THERE WAS NO FAILU RE ON THE PART OF THE ASSESSEE ITA NO. 1773/MDS/2016 7 TO DISCLOSE ALL MATERIAL FACTS NECESSARY FOR THE PU RPOSE OF ASSESSMENT. ACCORDING TO LD.A.R, THE REOPENING AFTER 4 YEARS OF END OF RE LEVANT ASSESSMENT YEAR VIDE NOTICE U/S.148 OF THE ACT DATED 01.07.2011, IT IS O NLY A CHANGE OF OPINION. HE SUBMITTED THAT THE AO GOING THROUGH THE SAME DOCUME NTS, WHICH WERE ALREADY ON RECORD, WANTED TO RE-OPEN THE ASSESSMENT, WHICH IS NOTHING BUT REVIEW OF THE EARLIER ASSESSMENT ORDER, WHICH IS NOT POSSIBLE U/S .147 OF THE ACT. IN THIS CASE, THE ASSESSMENT WAS REOPENED AFTER RECORDING THE FOL LOWING REASONS VIDE NOTICE ISSUED U/S.148 DATED 01.07.2011: WHILE GOING THROUGH THE SCRUTINY RECORD, IT IS SEEN THAT ASSESSEE HAS SOLD FOUR(4) FLATS DURING THE YEAR AND THERE ARE TOTAL D IFFERENCE OF ` 12,80,700/- IN SALE CONSIDERATION AS PER GUIDE LINE VALUE ADMITTED IN DOCUMENT. THEREFORE, AS PER SEC.50C OF THE IT ACT THE DIFFERENCE SHOULD BE ASSESSED OR IN OTHER WORDS THE GUIDE LINE VALUE AS ON THE DATE OF SALE SHOULD BE SALE CONSIDERATION. FURTHER, AS PER THE AGREEMENT ENTERED BETWEEN TH E ASSESSEE AND THE PURCHASER IN RESPECT OF SALE OF FLATS, THE SALE CON SIDERATION WORKS OUT TO ` 28,02,720/- BUT THE ASSESSEE HAS OFFERED ONLY ` 21,51,415/- THEREFORE THE DIFFERENCE OF 6,50,305/- HAS TO BE ASSESSED AS ESCAPED ASSESSMENT. 6.1 ADMITTEDLY IN THIS CASE, THE ORIGINAL ASSESSME NT WAS COMPLETED U/S.143(3) OF THE ACT. IT IS A SETTLED LAW THAT ON THE BASIS OF MATERIAL, PRIMA FACIE, AVAILABLE BEFORE THE ASSESSING OFFICER, OPINED THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT CAN BE FORMED. THE WORD REASON IN THE PHRASE REASON TO BELIEVE WOULD MEAN CAUSE OR JUSTI FICATION. IN CASE THE ASSESSING OFFICER HAS A CAUSE OR JUSTIFICATION TO K NOW OR SUPPOSE THAT INCOME HAS ESCAPED ASSESSMENT , ACTION U/S 148 CAN BE TAKEN. BUT ITA NO. 1773/MDS/2016 8 OBVIOUSLY, THERE SHOULD BE RELEVANT MATERIAL ON WHIC H A REASONABLE MAN COULD HAVE FORMED A REQUISITE BELIEF. WHETHER THIS MATERIAL(S) WOULD CONCLUSIVELY PROVE THE ESCAPEMENT OF INCOME IS NOT THE CONCERN AT THAT PARTICULAR STAGE. SO WHAT IS REQUIRED IS THE SUBJECT IVE SATISFACTION OF THE ASSESSING OFFICER BASED ON OBJECTIVE MATERIAL EVIDE NCE. THE REASON WAS RECORDED AS DISCUSSED ABOVE. THE ARGUMENT OF THE LD. AR IS THAT U/S 147 IN CASE THE ASSESSMENT ORDER IS COMPLETED U/S 143(3), AS HAS BEEN DONE IN THIS CASE, NO ACTION COULD BE TAKEN AFTER THE EXPIR Y OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE ASSE SSEE HAS DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR TH E ASSESSMENT FOR THAT ASSESSMENT YEAR, INTER ALIA. 6.2 AS SEEN FROM THE REASONS RECORDED, IT GIVED A CLEAR PICTURE THAT THE ASSESSING OFFICER HAS GOT MATERIAL EVIDENCE TO FORM HIS OPINION FOR TAKING RECOURSE TO SECTION 147 R.W.S 148 OF THE ACT. THERE C ANNOT BE TWO OPINIONS. THE POINT OF TIME WHEN THE REASONS ARE RECO RDED AFTER FORMING OPINION OF ESCAPEMENT OF INCOME IS ONLY RELEVANT. HENCE, THIS PLEA OF THE LD.AR IS NOT TENABLE IN THE EYES OF LAW. IT IS TRUE THAT U/S 147, THE ASSESSING OFFICER CAN EITHER ASSESS OR RE-ASSESS BU T FOR TAKING ACTION THEREUNDER, HE HAS TO RECORD REASONS THAT INCOME CH ARGEABLE TO TAX HAS ESCAPED ASSESSMENT . IT IS ALSO MANDATED BY SECTION 148(2) TO RECORD REASONS IN WRITING. THE REASSESSMENT PROCEEDINGS U/S 147 ARE FURTHER SUBJECT TO SECTIONS 148,149,150,151,152 AND 153. BU T IN THE PRESENT CASE, ITA NO. 1773/MDS/2016 9 WE ARE REQUIRED TO DECIDE THE LIMITED ISSUE REGARDIN G THE VALIDITY OF PROCEEDINGS UNDERTAKEN AFTER FOUR YEARS OF THE ASSE SSMENT YEAR IN QUESTION. THE ASSESSING OFFICER IS REQUIRED TO SEE IF THE CONDITIONS LAID IN EXPLANATION 2(C) BECAUSE IN THIS CASE THE ASSESSMEN T WAS COMPLETED U/S 143(3) ARE SATISFIED OR NOT. IN CASE, (I) INCOME CH ARGEABLE TO TAX HAS BEEN UNDER ASSESSED; OR (II) SUCH INCOME HAS BEEN ASSESS ED AT TOO LOW RATE; OR(III) SUCH INCOME HAS BEEN MADE THE SUBJECTIVE OF EXCESS RELIEF UNDER THIS ACT; OR (IV)EXCESSIVE LOSS OR DEPRECIATION ALL OWANCE OR ANY OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED, THE ASSE SSING OFFICER WOULD HAVE VALID COGNIZANCE U/S 147 OF THE ACT. THE REASON S RECORDED BY THE ASSESSING OFFICER CLEARLY SPEAK FOR THE UNDER ASSES SMENT OF TAX HENCE, THE CONDITIONS LAID ABOVE STAND FULFILLED IN SO FAR AS RE-ASSESSMENT PROCEEDINGS ARE CONCERNED. IN SO FAR AS THE REASONS RECORDED, E XTRACTED IN THE ABOVE PORTION OF THIS ORDER, WE ARE SATISFIED THAT THE ASS ESSING OFFICER HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSM ENT. THIS FACT CONFERS JURISDICTION ON HIM TO REOPEN THE ASSESSMENT. THE PO WER TO RE-ASSESS POST 1ST APRIL, 1989 ARE MUCH WIDER THAN THESE USED TO BE BEFORE. BUT STILL THE SCHEMATIC INTERPRETATION OF THE WORDS REASON TO BEL IEVE FAILING WHICH SECTION 147 WOULD GIVE ARBITRARILY POWERS TO THE ASSE SSING OFFICER TO REOPEN THE ASSESSMENT ON THE BASIS OF MERE CHANGE O F OPINION, WHICH ITA NO. 1773/MDS/2016 10 CANNOT BE, PER SE A REASON TO REOPEN THE CASE. THE ACT HAS NOT GIVEN POWER TO THE ASSESSING OFFICER TO REVIEW BUT HAS ONLY GIVEN POWER TO RE- ASSESS. THERE IS A CONCEPTUAL DIFFERENCE BETWEEN THE TWO ASPECTS AS THE ASSESSING OFFICER HAS NO POWER AT ALL TO REVIEW THE A SSESSMENT. THE REASSESSMENT, AS STATED ABOVE, HAS TO BE BASED ON F ULFILLMENT OF CERTAIN PRE-CONDITIONS BUT THE CONCEPT CHANGE OF OPINION HAS TO BE TAKEN INTO CONSIDERATION OTHERWISE IT MAY GIVE UNBRIDLED POWER T O AN ASSESSING OFFICER TO REOPEN ANY AND EVERY ASSESSMENT ORDER WHI CH WOULD SIMPLY AMOUNT TO A REVIEW. THE CONCEPT CHANGE OF OPINION I S AN IN-BUILT TEST TO CHECK THE ABUSE OF POWER BY THE ASSESSING OFFICER. S O, NOW ONLY WHEN THE ASSESSING OFFICER HAS A TANGIBLE MATERIAL TO BASE H IS CONCLUSION THAT THERE IS AN ESCAPEMENT OF INCOME FROM ASSESSMENT AND THE REASONS RECORDED HAVE A LINK WITH THE FORMATION OF HIS BELIEF, HE HAS THE POWER U/S 147 OF THE ACT. 6.3 NOW THE MOST MATERIAL PART WHICH WAS ARGUED BY THE LD.AR IS REGARDING THE TIME LAG WHICH IS PROVIDED IN FIRST PR OVISO TO SECTION 147 WHICH STATES THAT WHERE AN ASSESSMENT U/S SUB-SECTION (3) OF SECTION 143 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, WHIC H IS 2006-07, IN THIS CASE, NO ACTION SHALL BE TAKEN U/S 147 AFTER THE EX PIRY OF FOUR YEARS FROM ITA NO. 1773/MDS/2016 11 THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY THE REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THA T ASSESSMENT YEAR. THERE ARE TWO OTHER CONDITIONS WHICH ARE NOT RELEVANT FOR DECIDING THE LEGAL ISSUE UNDER APPEAL. WE HAVE TO SEE AS TO WHAT FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS SIGNIFY. THE EXPRESSION FAILURE TO DISCLOSE MATERIAL FACTS HAS BEEN EXPLAINED IN THE TAXMANS DIRECT TAXES MANUAL VOLUME 3. IT IS TRUE THA T EVERY DISCLOSURE IS NOT AND CANNOT BE TREATED TO BE A TRUE AND FULL DIS CLOSURE. A DISCLOSURE CAN BE EVEN FALSE OR TRUE. IT MAY BE A FULL DISCLOSURE OR IT MAY NOT BE A FULL ONE. A PART DISCLOSURE MANY A TIMES MAY BE MISLEADI NG ONE. WHAT IS REQUIRED UNDER THE LAW IS A FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS NECESSARY FOR MAKING ASSESSMENT FOR THAT YEAR. THIS LAW WAS LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF SRI KRISHNA PVT. LTD ETC VS ITO & OTHERS, 221 ITR 538. THE WORDS OMISSION OR FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT F OR THAT YEAR POSTULATES A FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. WHAT FACTS ARE MATE RIAL AND NECESSARY FOR ASSESSMENT WILL DIFFER FROM CASE TO CASE. THE MATERIA L SHOULD NOT ONLY BE ITA NO. 1773/MDS/2016 12 FULL BUT ALSO BE TRUE. IF SOME MATERIAL FOUND IN TH E EVIDENCE PRODUCED BEFORE THE ASSESSING OFFICER WHICH THE ASSESSING OFF ICER COULD HAVE UNCOVERED BUT DID NOT, THEN IT IS THE DUTY OF THE A SSESSEE TO BRING IT TO THE NOTICE OF THE ASSESSING AUTHORITY. THIS OMISSION OR FAILURE MAY BE EITHER DELIBERATE, OR EVEN INADVERTENT, THAT IS IMMATERIAL , BUT IN CASE THERE IS OMISSION TO DISCLOSE THE MATERIAL FACTS THEN SUBJEC T TO THE OTHER CONDITIONS JURISDICTION TO REOPEN IS ATTRACTED. 6.4 IN THE PRESENT CASE, THE ASSESSEE HAS SHOWN SAL ES CONSIDERATION OF PROPERTY LESSER THAN THE VALUATION CONSIDERED FOR R EGISTRATION PURPOSES. IN OUR OPINION, THE PROVISIONS OF THE SECTION 50C IS A PPLICABLE. AS PER EXPLANATION 2 OF SECTION147 IT IS VERY CLEAR THAT D UE TO DISCLOSE LOWER SALE CONSIDERATION BY THE ASSESSEE, THE INCOME CHARGEABL E TO TAX HAD ESCAPED ASSESSMENT. THE ASSESSEE HAS NOT PRODUCED ANYTHING BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) TO SHOW AS TO HO W THIS FACT WAS FULLY AND TRULY DISCLOSED BEFORE THE ASSESSING AUTH ORITY AND THAT THERE WAS NOT FAILURE ON THE PART OF ASSESSEE, ESPECIALLY WHEN PROVISIONS OF THE SECTION 50C IS APPLICABLE. HENCE, THE COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE ACTION OF THE ASSESSING OF FICER IS FULLY COVERED BY ITA NO. 1773/MDS/2016 13 THE PROVISIONS OF EXPLANATION 1 TO SECTION 147 OF T HE INCOME TAX ACT WHICH READS AS UNDER: PRODUCTION BEFORE THE ASSESSING OFFICER OF ACCOUN TS BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD W ITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFF ICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROVISO. IT IS POSSIBLE THAT WITH DUE DILIGENCE THE ASSESSI NG OFFICER WOULD HAVE ASCERTAINED THIS FAT AT THE TIME OF ORIGINAL ASSESS MENT ALSO, BUT IN VIEW OF THE EXPLANATION (1) IT DOES NOT MEAN THAT THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE. HENCE, REOPENING U/S.147 IS HELD TO BE VALID. THE ASSESSEE HAS TRIED TO TAKE SHELTER UNDER THE EXCEPT ION PROVIDED BY THE ABOVE STATED PROVISO WHERE AN ASSESSMENT UNDER SUB-S ECTION (3) OF SECTION 143 HAS BEEN COMPLETED, NO ACTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR CAN BE TAKEN. B UT AS STATED ABOVE, WHEN THE ASSESSEE HAS NOT DISCLOSED FULLY AND TRULY THE FACTS NECESSARY FOR THE ASSESSMENT, THIS PROVISO WILL NOT COME TO ITS RE SCUE. CONSEQUENTLY, WE ITA NO. 1773/MDS/2016 14 HOLD THAT THE ENTIRE REASSESSMENT PROCEEDING IN THI S CASE IS VALID AND THEREFORE, THE ACTION OF THE ASSESSING OFFICER IS U PHELD. THE ASSESSEE FAILS ON THIS LEGAL ISSUE. 7. THE NEXT GROUND IS WITH REGARD TO CONFIRMING THE ACTION OF THE AO IN INVOKING THE PROVISIONS OF THE SECTION 50C OF THE A CT. 8. THE FACTS OF THE ISSUE ARE THAT THE LD. ASSESSING OFFICER NOTICED THAT ASSESSEE HAS SOLD 4 FLATS FOR SALE CONSIDERATION OF ` 9,99,000/- WHEREAS THE GUIDELINE VALUE FOR THE ABOVE FOUR FLATS WAS AMOUNT ING TO ` 22,79,700/-. DURING THE REASSESSMENT PROCEEDINGS, THE ASSESSEE WAS SHOW CAUSED AS TO WHY THE GUIDELINE VALUE AS PER SECTION 50C SHOULD NOT BE TA KEN FOR THE SALE CONSIDERATION OF THE FOUR FLATS. IN RESPONSE, THE ASSESSEE REPLIE D THAT THERE WAS UNDUE DELAY IN SELLING THE FLATS DUE TO ADVERSE ECONOMIC FACTORS. THE ASSESSEE FURTHER STATED THAT IT IS A LOW LYING AREA AND THERE IS A FACTORY ADJACENT TO IT DUE TO WHICH IT WAS REGISTERED AT A LOWER VALUE. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTABLE. FURTHER ASSESSEE REQUESTED TO REFER THE SAME TO THE VALUATION OFFICER FOR THE EXACT VALUE OF THE PROPERTY. THE AO REJECTED THE PL EA OF THE ASSESSEE TO REFER TO THE VALUATION OFFICER AND THEREFORE THE SALE CONSID ERATION WAS TAKEN ON ACCOUNT OF SALE OF UNDIVIDED SHARE OF LAND AT ` 22,79,700/- AS PER GUIDELINE VALUE U/S.5OC ITA NO. 1773/MDS/2016 15 OF THE ACT. THE DIFFERENCE ON THIS ACCOUNT WAS ` 12,80700/- AND THE SAME WAS BROUGHT TO TAX. AGGRIEVED, THE ASSESSEE CARRIED TH E APPEAL BEFORE THE LD.CIT(A). 8.1 ON APPEAL, THE LD.CIT(A) OBSERVED THAT IT IS MANDATORY ON THE PART OF THE AO WHEN THE SALE DEED VALUE SHOWN BY THE ASSESEE IS LESS THAN THE GUIDELINE VALUE WHICH WAS ARRIVED AT FOR THE PURPOSE OF STAMP VALUATION, THE AO IS DUTY BOUND TO ADOPT THE SAME. ACCORDING TO LD.CIT(A), TH E AO HAS RIGHTLY ADOPTED THE SALE CONSIDERATION OF THE PROPERTY AT 50C VALUE OF THE ACT. ACCORDINGLY THE GROUND OF APPEAL ON THIS ISSUE IS DISMISSED. AGAINS T THIS THE ASSESSEE IS IN APPEAL BEFORE US. 9. BEFORE US, LD.A.R ARGUED THAT BY VIRTUE OF A D EED OF PARTITION ENTERED INTO BY THE ASSESSEE WITH HIS PARTNERS ON 08.02.1995, TH E ASSESSEE WAS ALLOTTED VACANT LAND OF AN EXTENT OF 25,096 SQ.FT IN MADHAVA RAM HIGH ROAD, SEMBIURN VILLAGE, CHENNAI THE ASSESSEE ALONG WITH THE CO-OWN ERS ENTERED INTO A JOINT VENTURE AGREEMENT WITH M/S VIJAYASANTHI BUILDERS O N 28 11 1995, ACCORDING TO WHICH IN LIEU OF 62.5% OF LAND AGREED TO BE TRANSFE RRED THE ASSESSEE WOULD GET 37.5% OF THE BUILT UP AREA IN THE PROPOSED CONSTRUC TION. THIS AGREEMENT UNDERWENT MANY CHANGES AND EXTENSIONS THEREAFTER AN D FINALLY THE DEVELOPER HANDED OVER 16 FLATS TO THE ASSESSES THIS YEAR. OUT OF THE SAID 16 FLATS, THE ASSESSEE SOLD 4 FIATS DURING THIS YEAR. AS IS THE P RACTICE, UNDIVIDED SHARE IN THE ITA NO. 1773/MDS/2016 16 LAND WAS TRANSFERRED TO ALL THE 4 OF THEM, THE DETA ILS OF WHICH ARE ATTACHED IN ANNEXURE -1. THE ASSESSEE OFFERED THE CAPITAL GAINS ARISING THEREON OF RS.3,10,588 FOR TAXATION IN THE RETURN OF INCOME FI LED ON 31.10.2006. THE CAPITAL GAINS ARISING ON THE SALE OF BUILT UP AREA OF 24,5 73 SQ. FT. WAS ALSO OFFERED FOR TAXATION. FURTHER, LD.A.R SUBMITTED THAT VARIOUS RE ASONS, ADVANCED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES, WHICH AFFECT S THE MARKET VALUE OF THE LAND SOLD HAD BEEN SUMMARILY REJECTED. 10. ON THE OTHER HAND, LD.D.R RELIED ON THE ORDERS OF LOWER AUTHORITIES. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE MAIN GRIEVANCE OF ASSESSEE IS THAT THE ASSESSEE MAD E A REQUEST THE AO TO REFER THE VALUATION ISSUE TO THE VALUATION CELL U/S.50C(2 ) OF THE ACT, WHICH WAS NOT CONSIDERED BY THE AO. WHEN THIS WAS RAISED BEFORE T HE LD.CIT(A), HE ALSO REJECTED IT. IN OUR OPINION, WE FIND MERIT IN THE A RGUMENT OF THE LD.A.R. BEFORE CONSIDERING VALUATION U/S.50C(1) OF THE ACT, IF TH E ASSESSEE REQUESTS FOR REFERENCE TO DEPARTMENTAL VALUATION OFFICER (DVO), THE AO SHALL REFER THE MATTER TO THE DVO AND HE CANNOT OVERLOOK IT. HENCE, WE DIR ECT THE AO TO REFER THE MATTER TO THE DVO AND THEREAFTER FRAME THE ASSESSME NT IN ACCORDANCE WITH LAW. THIS GROUND OF ASSESSEE IS ALLOWED. ITA NO. 1773/MDS/2016 17 12. THE ASSESSEE RAISE ONE MORE GROUND IS WITH REGA RD TO LEVY OF INTEREST U/S.234B & 234C OF THE ACT. SINCE WE HAVE REMITTED THE ISSUE ON MERIT TO THE FILE OF AO, AT THIS STAGE THIS GROUND IS DISMISSED AS IN FRUCTUOUS. 13. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 13 TH JANUARY, 2017 AT CHENNAI. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 13 TH JANUARY, 2017 . K S SUNDARAM. , ' $(-. /.( / COPY TO: 1 . ! / APPELLANT 3. & 0( () / CIT(A) 5. .3 4 $(5 / DR 2. $% ! / RESPONDENT 4. & 0( / CIT 6. 4 6 7 ' / GF