Shanti Dubey, Ranchi V. ITO, Ranchi

ITA 288/RAN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0426 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 07-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHOUDHARY ORAON
• Assessee Lawyers: R K KAUSHAL
• Keywords: Reopening of assessment; Valuation report; Reason to believe
• Section: 142(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI CIRCUIT BENCH, RANCHI BEFORE SHRI N.S. SAINI, HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 288/RAN/2014 (ASST. YEAR : 2005-06) SMT. SHANTI DUBEY, W/O SRI SURESH DUBEY, H.NO. 905, RAM NAGAR, RAILWAY COLONY, CHUTIA, RANCHI. VS. ITO, WARD-1(3), RANCHI. PAN NO. AEMPD 1572 Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.K. KAUSHAL CA DEPARTMENT BY : SHRI CHOUDHARY ORAON - DR DATE OF HEARING : 02/11/2015. DATE OF PRONOUNCEMENT : 02/11/2015. O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), RANCHI, DATED 15/07/2014. 2. GROUND NO.1 OF THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE REOPENING OF THE ASSESSMENT UNDER SECTION 148 OF THE ACT BY THE ASSESSING OFFICER. 3 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE O RDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, ON PERUSAL OF INFORMATION RECEIVED FROM THE S P, CBI, ACB, RANCHI THAT THE ASSESSEE HAD CONSTRUCTED A DOUBLE STORIED BUILDING AT RAM NAGAR, CHUTIA AND THE SAID BUILDING WAS EVALUATED B Y THE CPWD, RANCHI TO THE TUNE OF RS. 20,56,482/- AND FROM PERUSAL OF THE ASSESSEES 2 ITA NO. 288/RAN/2014 RECORDS, THE ASSESSEE HAD DECLARED COST OF CONSTRUC TION AT RS.3,05,000/- UPTO ASSESSMENT YEAR 2004-05. IN VIE W OF THE DIFFERENCE BETWEEN THE COST OF CONSTRUCTION AS PER CBI WHICH W AS EVALUATED BY THE CPWD AND THE COST OF CONSTRUCTION AS DECLARED IN TH E BALANCE SHEET AS ON 31/01/2014, THE CASE WAS REOPENED BY THE ASSESSI NG OFFICER UNDER SECTION 147 OF THE ACT BY ISSUING NOTICE UNDER SECT ION 148 OF THE ACT. 4. BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), T HE ASSESSEE CHALLENGING THE REOPENING OF THE ASSESSMENT UNDER S ECTION 147 OF THE ACT SUBMITTED THAT THE ASSESSEE FILED WRITTEN SUBMI SSION AND ASKED FOR REASON RECORDED FOR REOPENING OF THE ASSESSMENT VID E LETTER DATED 23/04/2007 AND RECEIVED BY THE DEPARTMENT ON 24/04/ 2007. THE ASSESSING OFFICER HAD NOT SUPPLY THE REASONS RECORD ED BY HIM TO THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT NOTICE UND ER SECTION 142(1) DATED 18/06/2007 WAS RECEIVED BY THE ASSESSEE ON 21 /06/2007 AND THE ASSESSEE REITERATED TO ISSUE THE REASONS FOR REOPEN ING OF THE ASSESSMENT AGAIN AND AGAIN, ON 02/07/2007 PRAYED TO THE ASSESSING OFFICER FOR ISSUANCE OF CERTIFIED COPY OF REASON FO R REOPENING OF THE CASE. IT WAS FURTHER SUBMITTED THAT ON 02/08/2007, THE AS SESSING OFFICER SUPPLIED CERTIFIED COPY OF THE REASON FOR REOPENING OF THE CASE. THE ASSESSEE, THEN REQUESTED FOR CERTIFIED COPY OF VALU ATION REPORT OF CPWD, RANCHI, ON THE BASIS OF WHICH REOPENING WAS DONE. THE ASSESSEE THEN FILED LETTER DATED 07/09/2007 OBJECTING REOPENING O F THE CASE ON THE GROUND OF VALUATION REPORT OF CPWD, RANCHI AS THERE WAS NO YEAR-WISE DEVIATION WAS MENTIONED IN THE NOTICE NOR THEY ARE AUTHORIZED TO DO THE VALUATION AND THE CASE WAS REOPENED ON GENERALIZED GROUND WHICH WAS NOT AS PER THE SPIRIT OF LAW. 5. THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER CON SIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT THE ASSESSING OFFICER HAD ISSUED NOTICE TO THE ASSESSEE, BUT HAD NOT GIVEN CERTIFIED COPY OF THE APPROVAL OBTAINED FOR ISSUANCE OF NOTICE AS REQUEST FOR CERT IFIED COPY IS NOT AS PER PROCEDURE. ON PERUSAL OF REMAND REPORT FROM THE AS SESSING OFFICER, IT IS SEEN THAT HE SOUGHT DUE APPROVAL UNDER SECTION 1 51(2) ON 3 ITA NO. 288/RAN/2014 29/03/2007 TO ISSUE NOTICE UNDER SECTION 148 OF THE ACT FOR THE ASSESSMENT YEARS 2000-01 & 2001-02, WHEREAS FOR ASS ESSMENT YEARS 2002-03 TO 2005-06 WERE WITHIN THE REALMS OF ASSESS ING OFFICERS REASON TO BELIEVE THE ESCAPEMENT OF INCOME THAT REQ UIRED ASSESSMENT AS PER THE INFORMATION AVAILABLE AND AS PER THE ACT , THE ASSESSING OFFICER HAD TO MAKE ASSESSMENT. THEREFORE, HE HELD THAT REOPENING OF THE ASSESSMENT IS WITHIN LAW AND DISMISSED THE GROU ND OF APPEAL OF THE ASSESSEE. 6 . BEFORE US, AUTHORIZED REPRESENTATIVE OF THE ASSES SEE SUBMITTED THAT IN THE INSTANT CASE, THE VALUATION OF THE BUIL DING WAS DONE BY THE CPWD, RANCHI, BUT NO VALUATION REPORT OF THE DVO WA S OBTAINED. THERE WAS NO OPINION OF THE ASSESSING OFFICER HIMSELF, BU T RE-OPENING WAS DONE ON THE BASIS OF THE INFORMATION RECEIVED FROM THE CBI. THEREFORE, REOPENING OF ASSESSMENT MADE FOR THE YEAR UNDER CON SIDERATION WAS BAD IN LAW. HE FURTHER ARGUED THAT THE VALUATION O F THE BUILDING HAS TO BE DONE AS PER STATE PWD RATES AND NOT AS PER CPWD RATES AS HELD BY THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RAJ KUMAR [182 ITR 436 (ALLBAD)] WHEREIN IT WAS HELD THAT ONCE IT IS HELD THE STATE PWD RATES ARE TO BE APPLIED INSTEAD OF CPWD RATES, THEN THE QUESTION ARISES ABOUT THE ADJUSTMENT TO BE ALLOWED FOR CONVERTING T HE VALUATION OF THE PROPERTY DONE BY THE DVO FROM THE CPWD TO STATE PWD RATES. IT WAS HELD THAT THE ADDITION SHOULD NOT BE MADE UPTO 30% ON THE DIFFERENCE BETWEEN THE VALUE ADOPTED BY THE DVO AND RECORDED B Y THE ASSESSEE IN ITS BOOKS OF ACCOUNTS. 7 . ON THE OTHER HAND, DEPARTMENTAL REPRESENTATIVE SU PPORTED THE ORDERS OF THE LOWER AUTHORITIES. 8 . WE FIND THAT THE HON'BLE SUPREME COURT IN THE CAS E OF CIT VS. DHARIYA CONSTRUCTION CO. (2010) 328 ITR 515 HAS HELD THAT 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 REOPENIN G ASSESSMENT 4 ITA NO. 288/RAN/2014 UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961. THE ASSESSING OFFICER HAS TO APPLY HIS MIND TO THE INFORMATION, IF ANY, C OLLECTED AND MUST FORM A BELIEF THEREON. IN THE CIRCUMSTANCES, THERE IS NO MERIT IN THE CIVIL APPEAL. THE DEPARTMENT WAS NOT ENTITLED TO RE OPEN THE ASSESSMENT. THE HON'BLE SUPREME COURT IN THE CASE OF DHARIYA CONSTRUCTION CO. (SUPRA) HAS HELD THAT OPINION OF THE DVO IS NOT INFORMATION FOR THE PURPOSES OF RE-OPENING OF THE A SSESSMENT UNDER SECTION 147 OF THE ACT. THE ASSESSING OFFICER HAS TO APPLY HIS MIND TO THE INFORMATION, IF ANY, COLLECTED AND FORM HIS BEL IEF THEREON. IN THE INSTANT CASE, THE ASSESSING OFFICER HAS REOPENED TH E ASSESSMENT ONLY ON THE BASIS OF VALUATION REPORT OF THE CPWD WITHOU T APPLYING HIS MIND TO FORM A BELIEF THEREON THAT INCOME CHARGEABLE TO TAX HAS ESCAPED THE ASSESSMENT. IN VIEW OF THE ABOVE FACTS, WE HOLD TH AT THE REOPENING OF THE ASSESSMENT MADE BY THE ASSESSEE IS BAD IN LAW, HENCE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND CANCE L THE RE-ASSESSMENT MADE BY THE ASSESSING OFFICER DATED 27/12/2007 AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 9. IN VIEW OF OUR DECISION ON GROUND NO.1 OF THE APPE AL OF THE ASSESSEE REGARDING RE-OPENING OF THE ASSESSMENT, TH E OTHER GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ON MERITS OF THE ADDIT ION BECOME INFRUCTUOUS AND ARE ACCORDINGLY DISMISSED. 10 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING ON MONDAY, THE 2 ND DAY OF NOVEMBER, 2015 AT RANCHI. SD/- SD/- (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 02 ND NOVEMBER, 2015. VR/- 5 ITA NO. 288/RAN/2014 COPY TO: 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R. 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., RANCHI 6 ITA NO. 288/RAN/2014 DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 02/11/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 03/11/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 03/11/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 03/11/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 03/11/2015 SR.PS 6. DATE OF PRONOUNCEMENT 02/11/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 03/11/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER