Ms Rajinder Kaur, Panchkula V. ACIT, Panchkula

ITA 765/CHANDI/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8889 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 20-09-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 10-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGHDR
• Keywords: Reopening of assessment; Business income; Tangible material; Fair market value; Valuation report; Revised return; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 765/CHD/2015 ASSESSMENT YEAR : 2008-09 MS. RAJINDER KAUR, VS THE ACIT, HOUSE NO. 133, SECTOR 6, PANCHKULA CIRCLE, PANCHKULA. PANCHKULA. PAN: ABCPK6493N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI MANJIT SINGH,DR DATE OF HEARING : 07.12.2016 DATE OF PRONOUNCEMENT : 21.12.2016 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS), PANCHKULA DATED 31.07.2015 FOR ASSESSMENT YEAR 2008-09 ON SIX GROUN DS OF APPEAL. 2. THE ASSESSEE HAS ALSO MADE A REQUEST FOR ADMISSION OF THE ADDITIONAL GROUNDS AS UNDER : 1. THAT THE LD. ASSESSING OFFICER HAS ERRED IN RE OPENING THE CASE U/S 148. 2 2. THAT THE REOPENING OF THE CASE U/S 148 IS BAD IN LA W SINCE THE REOPENING COULD NOT HAVE BEEN MADE ONLY ON THE BASIS OF REPORT OF THE DISTRICT VALUATION OFFICER, WITHOUT THERE BEING ANY OTHER INDEPENDENT MATERIAL ON RECORD. 3. THAT EVEN THE REFERENCE TO THE VALUATION CELL BY THE ASSESSING OFFICER IS BAD IN LAW, SINCE ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE, NO REFERENCE CO ULD HAVE BEEN MADE TO THE VALUATION CELL. 4. NOTWITHSTANDING THE ABOVE SAID GROUNDS OF APPE AL, THERE WAS NO INDEPENDENT SATISFACTION OF THE ASSESSING OFFI CER FOR FORMING A REASON TO BELIEVE ABOUT THE ESCAPEMENT OF INCOME.' 3. BRIEFLY THE FACTS OF THE CASE ARE THAT RETURN OF INCOME WAS FILED BY ASSESSEE ON 31.07.2008 DECLARIN G INCOME OF RS. 3,78,010/-. LATER ON, PROCEEDINGS UN DER SECTION 147 OF THE ACT WERE INITIATED BY RECORDING REASONS ON 26.03.2013, COPY OF WHICH IS FILED AT PA GE 1 OF THE PAPER BOOK. NOTICE UNDER SECTION 148 WAS SE RVED UPON ASSESSEE. THE ASSESSING OFFICER ISSUED QUESTIONNAIRE TO THE ASSESSEE AND ASSESSEE ATTENDED THE PROCEEDINGS BEFORE ASSESSING OFFICER AND FILED REQU ISITE DOCUMENTS TIME TO TIME. DURING ASSESSMENT PROCEEDINGS, THE CASE OF THE ASSESSEE WAS REFERRED UNDER SECTION 55A TO THE DISTRICT VALUATION OFFICER (DVO) CHANDIGARH FOR ASCERTAINING THE FAIR MARKET VALUE (FMV) AS IN 1981 OF PLOT NO. 8, INDUSTRIAL AREA, PH ASE-I CHANDIGARH. THE DVO VIDE HIS REPLY DATED 24.01.201 4 HAS STATED THAT FAIR MARKET VALUE AS ON 01.04.1981 ON THE SAME PROPERTY HAS ALREADY BEEN EVALUATED BY DVO , CHANDIGARH IN THE CASE OF SHRI ARUN MUNDRE AND ENCLOSED COPY OF THE SAID VALUATION REPORT. AS PER VALUATION REPORT FILED BY DVO, VALUE OF THE LAND 3 WAS TAKEN AT RS. 511.38 PER SQ.YD. AND NO COMMENT H AS BEEN GIVEN BY DVO REGARDING COST OF CONSTRUCTION AS THE STRUCTURE IN QUESTION HAD BEEN DEMOLISHED BY THE ASSESSEE. FURTHER, ASSESSING OFFICER HAS CALCULATE D THE VALUE OF THE SAME BUILDING @ RS. 250/- PER SQ.FT. I N THE SAID ORDER. THE COPY OF THE ORDER IN THE CASE OF S HRI ARUN MUNDRE WAS CALLED FOR AND PLACED ON RECORD. T HE ASSESSING OFFICER ON PERUSAL OF THE SAID ORDER OBSE RVED THAT IN THE LIGHT OF THE REPORT SUBMITTED BY DVO, T HE RATE OF LAND WAS TAKEN AT RS. 511.38 PER SQ.YD. AND COST OF CONSTRUCTION WAS TAKEN AT RS. 250/- FOR CALCULAT ION OF CAPITAL GAINS. THE CAPITAL GAIN WAS ACCORDINGLY, COMPUTED IN A SUM OF RS. 2,83,91,283/- AND ASSESSME NT WAS COMPLETED IN A SUM OF RS. 2.87 CR. THE ASSESSE E CHALLENGED THE ADDITION AND FINDING OF THE ASSESSIN G OFFICER BEFORE LD. CIT(APPEALS) AND APPEAL OF THE ASSESSEE HAS BEEN PARTLY ALLOWED. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ADDITIONAL GROUNDS OF APPEAL ARE LEGAL IN NATURE THEREFORE, SAME MAY BE ADMITTED FOR THE PURPOSE OF DISPOSAL OF THE APPEAL. HE HAS RELIED UPON DECISIO N OF HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERM AL POWER CO. LTD. 229 ITR 383. ON THE OTHER HAND, LD. DR OBJECTED TO THE ADMISSION OF THE ADDITIONAL GROUND OF APPEAL AND SUBMITTED THAT IF ADDITIONAL GROUND IS ADMITTED, IT WOULD PREJUDICE THE DEPARTMENT AND REL IED 4 UPON DECISION OF HON'BLE PUNJAB & HARYANA HIGH COUR T IN THE CASE OF ARAVALI ENGINEERS 335 ITR 508 5. WE HAVE HEARD RIVAL CONTENTIONS. IT IS WELL SET TLED LAW THAT THE VALIDITY OF NOTICE UNDER SECTION 148 O F THE ACT HAS TO BE DETERMINED WITH REFERENCE TO THE REAS ONS RECORDED FOR RE-OPENING OF THE ASSESSMENT UNDER SEC TION 148 OF THE ACT. THE ASSESSEE CHALLENGED THE RE-OPE NING OF THE ASSESSMENT UNDER SECTION 148 OF THE ACT IN A LL ADDITIONAL GROUNDS OF APPEAL WHICH IS LEGAL IN NATU RE. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON DECISI ON OF HON'BLE SUPREME COURT IN THE CASE OF M/S DHARIYA CONSTRUCTION COMPANY 328 ITR 515 IN WHICH IT WAS HE LD THAT RE-OPENING CANNOT BE MADE MERELY ON THE BASIS OF VALUATION REPORT OF THE DVO. SINCE THE ADDITIONAL GROUNDS OF APPEAL RELATE TO RE-OPENING OF THE ASSES SMENT UNDER SECTION 148 OF THE ACT WHICH IS LEGAL GROUNDS OF APPEAL AND NO NEW FACTS ARE LIKELY TO BE INVESTIGAT ED THEREFORE, THE ADDITIONAL GROUNDS SHALL HAVE TO BE ADMITTED IN VIEW OF THE JUDGEMENT OF HON'BLE SUPREM E COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD . (SUPRA). THE LD. DR RELIED UPON DECISION OF HON'BL E PUNJAB & HARYANA HIGH COURT IN THE CASE OF ARAVALI ENGINEERS PVT. LTD. VS CIT (SUPRA) IN WHICH THE ASS ESSEE RAISED THE PLEA OF ASSESSMENT BEING TIME BARRED BY LIMITATION ON THE GROUND THAT NOTICE UNDER SECTION 143(2) OF THE ACT WAS NOT SERVED WITHIN THE STIPULA TED TIME. THE TRIBUNAL HELD IN THIS CASE THAT ASSESSEE DID 5 NOT RAISE THE PLEA EARLIER INSPITE OF OPPORTUNITY B EING AVAILABLE AND ON A QUESTION OF FACT, SUCH A PLEA CO ULD NOT BE ALLOWED TO BE RAISED FOR THE FIRST TIME BEFO RE THE TRIBUNAL. HON'BLE PUNJAB & HARYANA HIGH COURT CONFIRMED THE ORDER OF TRIBUNAL BEING A QUESTION OF FACT RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL IN TH E LIGHT OF LEGISLATIVE AMENDMENT ADDING SECTION 292BB OF TH E INCOME TAX ACT. THIS QUESTION WAS, THEREFORE, ANSW ERED AGAINST THE ASSESSEE. THEREFORE, THIS DECISION WOU LD NOT SUPPORT THE CASE OF THE REVENUE. 6. CONSIDERING THE ABOVE DISCUSSION IN THE LIGHT OF THE JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. (SUPRA) AND CONSIDE RING THAT ADDITIONAL GROUNDS ARE LEGAL IN NATURE, WE ADM IT THE ADDITIONAL GROUNDS OF APPEAL FOR THE PURPOSE OF DISPOSAL OF THE APPEAL. THE APPLICATION OF THE ASS ESSEE REQUESTING ADMISSION OF ADDITIONAL GROUNDS OF APPEA L IS ALLOWED. 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS ON THE ISSU E OF ABOVE ADDITIONAL GROUNDS OF APPEAL. THE COPY OF THE REASONS RECORDED UNDER SECTION 148 OF THE ACT FOR T HE PURPOSE OF RE-OPENING OF THE ASSESSMENT HAS BEEN FI LED AT PAGE 1 OF THE PAPER BOOK WHICH READS AS UNDER : REASONS RECORDED FOR ISSUE OF NOTICE U/S 148 OF TH E I.T.ACT, 1961 IN THE CASE OF SMT. RAJINDER KAUR, # 133, SECTOR-06, P ANCHKULA- AY 2008-09. 6 RETURN OF INCOME IN THIS CASE WAS FILED ON 31.07.20 08 DECLARING INCOME OF RS.3,78,010/-WHICH WAS PROCESSED U/S 143(1) ON THE RETURNED INCOME. SUBSEQUENTLY IT WAS SEEN THAT THE ASSESSEE SOLD A C OMMERCIAL PROPERTY, PLOT NO.8, INDL.AREA, CHANDIGARH DURING THE YEAR AND FIL ED REGD. VALUER'S REPORT FOR ASCERTAINING THE CAPITAL GAINS ON THE SALE OF T HIS PROPERTY. ACCORDING TO THE REPORT OF THE REGD. VALUER THE DATE FOR INDEXAT ION OF COST HAS BEEN ADOPTED 01.04.1986 WHEREAS THE PROPERLY WAS ALLOTTE D TO THE ASSESSEE ON 04.09.1952. THE DATE FOR INDEXATION PURPOSES SHOULD HAVE BEEN RECKONED FROM 01.04.1981. ON ENQUIRIES IT HAS BEEN FOUND THA T CHANDIGARH ADMINISTRATION ALLOTTED COMMERCIAL PLOTS @ 5463 PER SQ.. YD. AS ON JANUARY, 1985. THE VALUE OF COMMERCIAL PROPERTY IF TAKEN @ 1 000/- PER SQ. YD. AS ON 01.04.1981 AND THE COST OF BUILDING IF TAKEN AT RS. L00/- PER SQ. FEET THEN THE COST OF THIS BUILDING AS ON 01.04.1981 WORKS OUT AS BELOW : AFTER ADOPTING THE DATE OF INDEXATION AS 01.04.1981 , THE FOLLOWING DIFFERENCE IS NOTICED : I) LAND 4713.11 @ 1000 PER SQ.YD. 4713100X551/100 = 25969181/- II) BUILDING 31579.302 SQ.FT. @ 100 PER SQ.FT. 3157930X551/100= 17400194/- TOTAL =43369375 AS SUCH THE LONG TERM CAPITAL GAIN WORKS OUT TO RS. L76630625/- ( 22,00,00,000-43369375), I.E., TOTAL SALES CONSIDE RATION - INDEXED COST). ASSESSEE'S SHARE IN THIS PROPERTY IS 176 TH WHICH WORKS OUT TO RS.29438437/- IN VIEW OF FACTS GIVEN ABOVE, I HAVE REASON TO BELI EVE THAT INCOME TO THE TUNE OF RS.29060427/- ( 29438437-3,78,010/- HAS ESC APED ASSESSMENT FOR THE ASSESSMENT YEAR 2008-09. ISSUE NOTICE U7S 148 FOR T HE ASSESSMENT YEAR 2008-09. SD/- DCIT 26.03.2013 8. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSING OFFICER HAS MENTIONED IN THE REASONS ABOU T SALE OF COMMERCIAL PROPERTY IN INDUSTRIAL AREA CHANDIGARH AND FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN, THE VALUE AS PER REGISTERED VALUER, H AD BEEN ADOPTED BY THE ASSESSEE FOR INDEXATION PURPOSE . 7 FURTHER, IT HAS BEEN MENTIONED IN THE REASONS THAT ON INQUIRIES FROM CHANDIGARH ADMINISTRATION, THE COMMERCIAL PLOTS WERE ALLOTTED @ RS. 5463/- PER SQ. YD. AS ON JANUARY,1985 AND THEN, WITHOUT ANY BASIS, THE ASSESSING OFFICER HAS MENTIONED IN THE REASONS THAT VALUE OF THE COMMERCIAL PROPERTY SHOULD BE TAKEN AT RS. 1000/- PER SQ.YD. AS ON 01.04.1981 AND VALUE OF THE BUILDING WHICH WAS BUILT IN 1985-86 SHOULD BE TAKEN AT RS. 100/- PER SQ.FT. AND THE ASSESSING OFFICER ACCORDINGLY CALCULATED 1/6 TH SHARE OF THE CAPITAL GAIN AND ISSUED NOTICE AGAINST THE ASSESSEE. FROM THE B ARE READING OF THE REASONS, IT IS CLEAR THAT THERE WERE NO REASONS TO BELIEVE WITH THE ASSESSING OFFICER TO AS SUME JURISDICTION UNDER SECTION 148 OF THE INCOME TAX AC T. THERE IS NO COGENT MATERIAL, MUCH LESS THE INFORMAT ION WITH THE ASSESSING OFFICER FOR FORMING THE REASON T O BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. THERE IS NO BASIS FOR ADOPTION OF RATE OF LAND FOR COMMERCIAL PROPERTY @ RS. 1000/- PER SQ.YD . FOR BUILDING @ RS. 100/- PER SQ.FT. THE ASSESSING OFFI CER IS NOT A TECHNICAL PERSON AND HOW HE HAS REASON TO BEL IEVE WITHOUT ANY MATERIAL ON RECORD AND WITHOUT LOOKING AT THE BUILDING OR MAKING ANY INQUIRY TO FORM A REASON TO BELIEVE ABOUT THE FAIR MARKET VALUE OF LAND AND BUI LDING AS ON 01.04.1981. HE HAS RELIED UPON ORDER OF ITAT CHANDIGARH BENCH IN THE CASE OF SMT. SARIKA JAIN VS ITO REPORTED IN 46 ITR (TRIBUNAL) 246 (CHD) IN WHIC H IT HAS BEEN HELD THAT , THERE WAS NOTHING IN REASONS, 8 RECORDED TO SHOW ANY TANGIBLE MATERIAL HAD COME INT O POSSESSION OF THE ASSESSING OFFICER SUBSEQUENT TO I SSUE OF INTIMATION. THEREFORE, RE-OPENING WAS HELD TO BE BAD IN LAW AND RE-OPENING OF ASSESSMENT WAS QUASHED. 9. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT FOR VALID RE-OPENING OF THE ASSESSMENT, THERE SHOULD BE TANGIBLE MATERIAL ON RECORD TO JUSTIFY THE CONCLUSI ON THAT THERE WAS ESCAPEMENT OF INCOME. THEREFORE, TH E VERY BASIS OF FORMATION OF THE REASON TO BELIEVE BE ING NOT THERE AND THE REASONS BEING VAGUE AND THERE IS NO NEXUS OR LINK WHICH IS SINE-QUA FOR FORMATION OF TH E BELIEF FOR THE PURPOSE OF RE-OPENING OF THE ASSESSM ENT AND THEREFORE, THE ASSESSING OFFICER HAS WRONGLY ASSUMED THE JURISDICTION AND THE RE-ASSESSMENT MADE THEREAFTER DESERVES TO BE QUASHED. RELIANCE WAS PLA CED ON THE JUDGEMENT OF HON'BLE SUPREME COURT IN THE CA SE OF LAKHMANI MEWAL DASS REPORTED IN 103 ITR 437 BECAUSE NO LIVE LINK OR CLOSE NEXUS OR ANY MATERIAL WAS THERE BEFORE ASSESSING OFFICER TO FORM ANY BELIEF A BOUT ESCAPEMENT OF INCOME. THE LD. COUNSEL FOR THE ASSE SSEE ALSO RELIED UPON FOLLOWING DECISIONS : I) DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CA SE OF INDUCTOTHERM (INDIA) P. LTD, AS REPORTED IN 356 ITR 481 IN WHICH, IT HAS BEEN HELD AS UNDER:- 'THE POWER TO REOPEN AN ASSESSMENT IS AVAILABLE EIT HER IN A CASE WHERE A RETURN HAS BEEN ACCEPTED UNDER SECTION 143( 1) OF THE INCOME TAX ACT, 1961, OR A SCRUTINY ASSESSMENT HAS BEEN FRAMED 9 UNDER SECTION 143(3) OF THE ACT. A COMMON REQUIREME NT IN BOTH CASES IS THAT THE ASSESSING OFFICER SHOULD HAVE REA SON TO BELIEF THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSES SMENT. THERE SHOULD BE TANGIBLE MATERIAL TO COME TO THE CONCLUSI ON THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT REASONS MUST H AVE A LIVE LINK WITH THE FORMATION OF THE BELIEF.' II) DECISION OF HON'BLE PUNJAB A HARYANA HIGH COURT IN THE CASE OF CIT VS SMT. PARAMJIT KAUR AS REPORTED IN 311 IT R 38 IN WHICH IT WAS HELD AS UNDER:- 'HELD, THAT THE ASSESSING OFFICER HAD NOT EXAMINED THE INFORMATION RECEIVED FROM THE SURVEY CIRCLE BEFORE RECORDING HIS OWN SATISFACTION OF ESCAPED INCOME AND INITIATING R EASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAD THUS ACTED O NLY ON THE BASIS OF SUSPICION AND IT COULD NOT BE SAID THAT IT WAS B ASED ON BELIEF THAT THE INCOME CHARGEABLE TO TAX HAD ESCAPED INCOM E. THE ASSESSING OFFICER HAD TO ACT ON THE BASIS OF 'REASO NS TO BELIEVE' AND NOT ON 'REASONS TO SUSPECT'. THE TRIBU NAL RIGHTLY CONCLUDED THAT THE ASSESSING OFFICER HAD FAILED TO INCORPORATE THE MATERIAL AND HIS SATISFACTION FOR REOPENING THE ASSESSMENT AND, THEREFORE, THE ISSUANCE OF NOTICE UNDER SECTIO N 148 OF THE ACT FOR REASSESSMENT PROCEEDINGS WAS NOT VALID. III) DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF SIGNATURE HOTELS P. LTD. VS ITO 338 ITR 51 IN WHICH IT WAS HE LD AS UNDER:- 'THE REASONS DID NOT SATISFY THE REQUIREMENTS OF SE CTION 147 OF THE ACT. THERE WAS NO REFERENCE TO ANY DOCUMENT OR STAT EMENT, EXCEPT THE ANNEXURE. THE ANNEXURE COULD NOT BE REGARDED AS A MATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWED OR EST ABLISHED NEXUS OR LINK WHICH DISCLOSED ESCAPEMENT OF INCOME.' IV) DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CI T VS. ATUL KUMAR SWAMI 362 ITR 693 IN WHICH, IT WAS HE LD AS UNDER: 10 'A VALID REOPENING OF ASSESSMENT HAS TO BE BASED ON LY ON TANGIBLE MATERIAL TO JUSTIFY THE CONCLUSION THAT THERE IS ES CAPEMENT OF INCOME. THE REASONS RECORDED BY THE ASSESSING OFFICER DID C ONFIRM THE APPREHENSION ABOUT THE HARM THAT A LESS STRICT INTE RPRETATION OF THE WORDS 'REASONS TO BELIEVE' VIS-A-VIS AN INTIMAT ION ISSUED UNDER SECTION 143(1) COULD CAUSE TO THE TAX REGIME. THERE WAS NOTHING IN THE REASONS RECORDED TO SHOW THAT TANGIBLE MATERIAL HAD COME INTO THE POSSESSION OF THE ASSESSING OFFICER SUBSEQUENT TO THE ISSUE OF THE INTIMATION. V) DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS ATLAS CYCLE INDUSTRIES 180 IT R 319 IN WHICH IT WAS HELD AS UNDER : 'HELD, (I) THAT THE TRIBUNAL WAS RIGHT IN CANCELLIN G THE REASSESSMENT AS BOTH THE GROUNDS ON WHICH THE RE-ASSESSMENT NOTI CE WAS ISSUED WERE NOT FOUND TO EXIST, AND, THEREFORE, THE INCOME -TAX OFFICER DID NOT GET JURISDICTION TO MAKE A RE-ASSESSMENT. 9(I) HE HAS FURTHER SUBMITTED THAT RE-OPENING CANNO T BE MADE MERELY ON THE BASIS OF REPORT OF DVO AND RELIE D UPON DECISION OF HON'BLE SUPREME COURT IN THE CASE OF DHARIYA CONSTRUCTION CO. 328 ITR 515 AND SUBMITTED THAT THERE WERE NO COGENT MATERIAL AVAILABLE ON REC ORD TO JUSTIFY FORMATION OF THE BELIEF. THE ASSESSING OFF ICER HAS ADOPTED THE RATES OF LAND AND BUILDING WITHOUT ANY BASIS AND WITHOUT POINTING OUT ANY DEFECTS IN THE R EPORT OF THE REGISTERED VALUER. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT ASSESSEE BEING AN O LD LADY AND SENIOR CITIZEN AND IN ORDER TO AVOID ANY K IND OF LITIGATION, HAD FILED A LETTER DATED 13.02.2014, CO PY OF 11 WHICH IS FILED AT PAGE 2 AND 3 OF THE PAPER BOOK AN D HAD STATED THAT SINCE IN THE REASONS, THE ASSESSING OFF ICER HAS HIMSELF MENTIONED ABOUT THE RATE OF LAND AS OBTAINED FROM CHANDIGARH ADMINISTRATION @ RS. 5463/ - PER SQ.YD. AND BY ADOPTING THE RATE AS THE BASE AND FOR APPLYING THE REVERSE COST INDEX, THE RATE PER SQ.YD . OF THE LAND COMES TO RS. 4370/- PER SQ.YD. AND THEN, ACCORDINGLY REVISED RETURN OF INCOME BY ADOPTING TH E RATE AT RS. 4370/- PER SQ.YD. OF THE LAND AGAINST T HE RATE OF RS. 11,500/- PER SQ.YD. ON THE BASIS OF REP ORT OF REGISTERED VALUER. THIS WAS DONE ONLY TO AVOID LIT IGATION AND FOR FINALITY OF THE MATTER IN VIEW OF THE ADVAN CE AGE OF THE ASSESSEE. HOWEVER, ASSESSING OFFICER DID NO T AGREE TO THE PROPOSAL AND MADE ARBITRARY ASSESSMENT . THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMIT TED THAT THERE WERE NO REASONS TO BELIEVE FOR THE ASSES SING OFFICER TO ASSUME JURISDICTION UNDER SECTION 148 OF THE ACT. NO RE-OPENING COULD BE MADE ON THE BASIS OF DIFFERENCE IN VALUATION. THERE IS NO BASIS FOR MAK ING ANY REFERENCE OF THE RATES OF CHANDIGARH ADMINISTRA TION WITHOUT ANY BASIS. THE LD. COUNSEL FOR THE ASSESSE E, THEREFORE, SUBMITTED THAT THE RE-OPENING OF THE ASSESSMENT UNDER SECTION 148 OF THE ACT MAY BE SET ASIDE AND QUASHED. 9(II) ON THE OTHER HAND, LD. DR SUBMITTED THAT ASSE SSING OFFICER HAS REASON TO BELIEVE THAT INCOME CHARGEABL E TO TAX HAS ESCAPED ASSESSMENT. THE ASSESSING OFFICER HAS 12 PRIMA-FACIE INFORMATION ABOUT ESCAPEMENT OF INCOME. HE HAS RELIED UPON FOLLOWING DECISIONS : I) DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RAYMOND WOOLLEN MILLS LTD. VS ITO 236 ITR 34 ON THE PROPOSITION THAT, THE COURTS HAVE TO SEE WHETHER THERE WAS A PRIMA FACIE SOME MATERIAL ON THE BASIS OF WHICH DEPARTMENT COULD REOPEN THE CASE. THE SUFFICIENCY OR CORRECTNESS OF THE MATERIAL IS NOT A THING TO BE CONSIDERED AT THIS STAGE. II) DECISION OF DELHI HIGH COURT IN THE CASE OF RAJAT EXPORT IMPORT INDIA PVT. LTD. 341 ITR 135 IN WHICH IT WAS HELD FOOL PROOF CASE FOR MAKING ADDITION NOT NECESSARY. INFORMATION RECEIVED BY THE ASSESSING OFFICER FROM INVESTIGATION WING GIVING INSTRUMENT NUMBER, DATE, NAME OF BANK AND BRANCH AND ACCOUNT NUMBER, INDICATING ASSESSEE HAD TAKEN ACCOMMODATION ENTRY FROM ENTRY PROVIDER, RE- OPENING OF ASSESSMENT ON BASIS OF INFORMATION PROPER. III) DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SWARAJ ENGINE LTD. VS ACIT 260 ITR 202 IN WHICH IT WAS HELD THAT AT THE STAGE OF NOTICE, THE COURT CAN ONLY CONSIDER WHETHER THERE IS A PRIMA FACIE CASE FOR RE- 13 ASSESSMENT AND RE-OPENING OF PROCEEDINGS CANNOT BE QUASHED. IV) DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF BALRAM JAKHAR VS CIT 250 ITR 393 IN WHICH IT WAS HELD THAT NOTICE BASED ON REASONABLE BELIEF COURT WILL NOT INTERFERE. V) DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF GURERA GAS CYLINDERS PVT. LTD. VS CIT 258 ITR 170 IN WHICH IT WAS HELD THAT A PERUSAL OF REASONS RECORDED SHOWED THAT ASSESSING OFFICER HAD APPLIED HIS MIND TO THE RELEVANT MATERIAL AND FORMED A BELIEF THAT PETITIONER HAD NOT DISCLOSED COMPLETE FACTS WHICH COULD ENABLE IT TO CLAIM DEDUCTION UNDER SECTION 80I AND THEREFORE, INCOME HAD NOT BEEN PROPERLY ASSESSED. AT THE STAGE, THE COURT COULD NOT GO INTO THE SUFFICIENCY OR ADEQUACY OF THE REASONS RECORDED. 10. WE HAVE CONSIDERED RIVAL SUBMISSIONS. IT IS WE LL SETTLED LAW THAT VALIDITY OF RE-ASSESSMENT PROCEEDI NGS TO BE DETERMINED WITH REFERENCE TO THE REASONS RECORDE D. THE REASONS FOR RE-OPENING OF THE ASSESSMENT ARE REPRODUCED ABOVE. IT WOULD SHOW THAT ASSESSEE FILE D THE RETURN OF INCOME DECLARING INCOME INCLUDING CAPITAL GAINS ON SALE OF PROPERTY. THE CAPITAL GAIN WAS 14 CALCULATED ON THE BASIS OF REPORT OF REGISTERED VAL UER. COPY OF WHICH IS ALSO FILED IN THE PAPER BOOK. THE ASSESSING OFFICER NOTED IN THE REASONS THAT ON INQU IRIES, IT HAS BEEN FOUND THAT CHANDIGARH ADMINISTRATION ALLOTTED COMMERCIAL PLOTS @ 5463/- PER SQ.YD. AS ON JANUARY,1985. THE LD. DR WAS ASKED TO SPECIFY AS T O WHAT IS THE BASIS OF INQUIRY CONDUCTED BY THE ASSES SING OFFICER, WHETHER INQUIRIES HAVE BEEN CONDUCTED IN WRITING OR ORAL FROM THE CHANDIGARH ADMINISTRATION FOR GETTING THIS INFORMATION. THE LD. DR, HOWEVER, WAS NOT ABLE TO EXPLAIN IT WHETHER ANY INQUIRIES HAVE BEEN MADE BY ASSESSING OFFICER PRIOR TO RECORDING OF REASONS IN WRITING OR ORALLY. THE LD. DR, HOWEVER, SUBMITTED THAT THE ASSESSEE HAS FILED A REPORT OF REGISTERED VALUE R FOR THE PURPOSE OF COMPUTING CAPITAL GAINS ALONGWITH TH E RETURN OF INCOME IN WHICH THE REGISTERED VALUER HAS ATTACHED NEWSPAPER CUTTINGS. THEREFORE, ASSESSING OFFICER MIGHT HAVE GONE THROUGH THE CUTTINGS ATTACH ED WITH THE REGISTERED VALUER REPORT FOR THE PURPOSE O F GETTING THE RATES @ 5463/- PER SQ.YD. THIS SUBMISS ION SHOWS THAT THERE WAS NO BASIS FOR THE ASSESSING OFF ICER TO REFER TO THE RATES OF COMMERCIAL PLOTS @ 5463/- PER SQ.YD. AS ON JANUARY,1985 BECAUSE THERE IS NO MATER IAL AVAILABLE ON RECORD TO SHOW HOW THE ASSESSING OFFIC ER CAME TO KNOW ABOUT THESE RATES FROM CHANDIGARH ADMINISTRATION. WHEN REPORT OF REGISTERED VALUER IS AVAILABLE ON RECORD, THE ASSESSING OFFICER DID NOT ACCEPT THE REPORT OF THE REGISTERED VALUER BUT THE NEWSPAP ER 15 CUTTING ATTACHED WITH THE REGISTERED VALUER AS PER SUBMISSION OF LD. DR HAVE BEEN TAKEN INTO CONSIDERA TION FOR THE PURPOSE OF MAKING REFERENCE OF VALUE OF THE COMMERCIAL PLOTS BY CHANDIGARH ADMINISTRATION WHICH IS HIGHLY UNWARRANTED. IT IS NOT IN DISPUTE THAT EARL IER, RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT AND AT THAT TIME, THE REPORT OF REGISTERED VALUER AND THE ANNEXURES WITH THE REPORT OF REGISTERED VALUER WERE AVAILABLE ON RECORD. IT, THEREFORE, APPEARS THAT THE ASSESSING OFFICER MEREL Y ON GOING THROUGH THE REPORT OF REGISTERED VALUER ALONG WITH NEWSPAPER CUTTING, HAD RECORDED THE REASONS FOR RE- OPENING OF THE ASSESSMENT WITHOUT CONDUCTING ANY INQUIRIES FROM THE CHANDIGARH ADMINISTRATION VERIFY ING THE RATES OF COMMERCIAL PLOTS. THERE WAS NOTHING I N THE REASONS RECORDED TO SHOW THAT ANY TANGIBLE MATERIAL HAD COME INTO POSSESSION OF THE ASSESSING OFFICER SUBSEQUENT TO THE ISSUE OF INTIMATION UNDER SECTION 143(1) OF THE INCOME TAX ACT. IT WOULD SHOW THAT N OTICE UNDER SECTION 148 OF THE ACT HAVE BEEN ISSUED IN AN ARBITRARY MANNER. WE RELY UPON DECISION OF THE HON 'BLE DELHI HIGH COURT IN THE CASE OF CIT VS ORIENT CRAFT LTD. 354 ITR 536 IN WHICH IT WAS HELD AS UNDER : HELD, DISMISSING THE APPEAL, THAT THE REASONS DISC LOSED THAT THE ASSESSING OFFICER REACHED THE BELIEF THAT THERE WAS ESCAPEMENT OF INCOME 'ON GOING THROUGH THE RETURN OF INCOME FILE D BY THE ASSESSEE AFTER HE ACCEPTED THE RETURN UNDER SECTION 143(1) W ITHOUT SCRUTINY, AND NOTHING MORE. THIS WAS NOTHING BUT A REVIEW OF THE EARLIER PROCEEDINGS 16 AND AN ABUSE OF POWER BY THE ASSESSING OFFICER. THE REASONS RECORDED BY THE ASSESSING OFFICER DID CONFIRM THE APPREHENSION ABOUT THE HARM THAT A LESS STRICT INTERPRETATION OF THE WORDS 'REASON TO BELIEVE' VIS-A-VIS AN INTIMATION ISSUED UNDER SECTION 143(1) COULD CAUSE TO THE TAX REGIME. THERE WAS NOTHING IN THE REASONS RECORDED TO SHOW TH AT ANY TANGIBLE MATERIAL HAD COME INTO THE POSSESSION OF THE ASSESS ING OFFICER SUBSEQUENT TO THE ISSUE OF THE INTIMATION. THE NOTICE REFLECTE D AN ARBITRARY EXERCISE OF THE POWER CONFERRED UNDER SECTION 147. 11. IT MAY ALSO BE NOTED HERE THAT THE ASSESSING OFFICER IN THE REASONS, MERELY ON ASSUMPTION OF CER TAIN FACTS WITHOUT ANY BASIS HAS TAKEN THE VALUE OF COMMERCIAL PROPERTY @ RS. 1000/- PR SQ.YD. AS ON 01.04.1981 AND COST OF BUILDING AT RS. 100/- PER SQ .FT. THERE IS, THUS, NO COGENT MATERIAL, MUCH LESS THE INFORMATION, WITH THE ASSESSING OFFICER FOR FORMING THE REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. THERE IS NO BASIS FOR ADOPTING SUCH RATES OF LAND AND BUILDING. IT IS NOT CLARIFI ED HOW THE ASSESSING OFFICER CAME TO KNOW ABOUT THE RATES OF LAND AND BUILDING AS HAVE BEEN MENTIONED IN THE REASONS FOR THE PURPOSE OF COMPUTING THE CAPITAL GA INS BEING THE ASSESSING OFFICER IS NOT A TECHNICAL PERS ON. THERE IS, THUS, NO VALID REASON FOR RE-OPENING OF T HE ASSESSMENT BECAUSE THERE IS NO TANGIBLE MATERIAL AVAILABLE ON RECORD TO JUSTIFY THE CONCLUSION OF ESCAPEMENT OF INCOME. THERE IS NO FORMATION OF REA SON TO BELIEF, REASONS BEING VAGUE AND THERE IS NO NEXU S OR LIVE LINK WHICH IS A SINE-QUA FOR FORMATION OF BELI EF FOR THE PURPOSE OF RE-OPENING OF THE ASSESSMENT, 17 THEREFORE, THE ASSESSING OFFICER HAS WRONGLY ASSUME D THE JURISDICTION AND THEREFORE, ASSESSMENT MADE DESERVES TO BE QUASHED. THERE IS NO TANGIBLE MATER IAL AVAILABLE ON RECORD TO JUSTIFY RE-OPENING OF THE ASSESSMENT. THE ASSESSING OFFICER HAD ACTED ONLY O N THE BASIS OF SUSPICION AND IT COULD NOT BE SAID THA T IT WAS BASED ON BELIEF THAT INCOME CHARGEABLE TO TAX H AD ESCAPED ASSESSMENT. HON'BLE DELHI HIGH COURT IN TH E CASE OF SIGNATURE HOTELS PVT. LTD. (SUPRA) HAS HELD THAT, EVEN THE ANNEXURE COULD NOT BE REGARDED AS A MATER IAL OR EVIDENCE THAT PRIMA FACIE SHOWED OR ESTABLISHED NEXUS OR LINK WHICH DISCLOSED ESCAPEMENT OF INCOME . 11(I) THE DECISIONS RELIED UPON BY LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SQUARELY APPLY TO THE FACTS AN D CIRCUMSTANCES OF THE CASE. ULTIMATELY THE ASSESSING OFFICER COMPUTED THE INCOME OF THE ASSESSEE ON THE BASIS OF ASSESSMENT FRAMED IN THE CASE OF CO-OWNER SHRI ARUN MUNDRE ON THE BASIS OF REPORT OF THE DVO. THE COPY OF THE ASSESSMENT ORDER IN THE CASE OF SHRI AR UN MUNDRE DATED 25.03.2013 UNDER SECTION 148/143(2) HA S BEEN FILED ON RECORD IN WHICH THERE IS A REFERENCE OF DVOS REPORT RECEIVED BY ASSESSING OFFICER ON 06.03.2013, THEREFORE, THIS REPORT WAS AVAILABLE ON RECORD OF THE REVENUE PRIOR TO RE-OPENING OF THE ASSESSMENT IN THE CASE OF THE ASSESSEE BECAUSE REAS ONS FOR RE-OPENING OF ASSESSMENT HAVE BEEN RECORDED ON 26.03.2013. IN THE CASE OF THE ASSESSEE, THE ASSES SING 18 OFFICER HAS MADE A REFERENCE TO THE DVO FOR THE PUR POSE OF ASCERTAINING FAIR MARKET VALUE OF THE PROPERTY I N QUESTION FOR THE PURPOSE OF COMPUTING CAPITAL GAINS AND THE DVO HAS INTIMATED THE ASSESSING OFFICER THAT DV O HAS ALREADY MADE VALUATION IN THE CASE OF SHRI ARUN MUNDRE, THE CO-OWNER OF THE PROPERTY AND SINCE STRUCTURE HAVE BEEN DEMOLISHED, THEREFORE, NO VALUA TION OF THE BUILDING CAN BE GIVEN. IT WOULD SHOW THAT T HE REPORT OF THE DVO WAS AVAILABLE TO THE REVENUE DEPT T. PRIOR TO ISSUE OF NOTICE UNDER SECTION 148 OF THE A CT AND THERE WAS NO OTHER MATERIAL AVAILABLE ON RECORD TO JUSTIFY THE RE-OPENING OF THE ASSESSMENT. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, RIGHTLY RELIED UPON DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F DHARIYA CONSTRUCTION CO. 328 ITR 515 IN WHICH IT WA S HELD THAT, RE-OPENING CANNOT BE MADE MERELY ON THE BASIS OF VALUATION REPORT OF THE DVO. IN THE CASE OF THE ASSESSEE, THE REPORT OF THE REGISTERED VALUER FILED BY ASSESSEE WAS AVAILABLE ON RECORD, THEREFORE, IT IS A CASE OF VALUATION OF THE PROPERTY REPORTED BY THE ASSESS EE AND THE DVO IN THE CASE OF CO-OWNER. THEREFORE, SU CH COULD NOT BE A BASIS FOR FORMATION OF BELIEF OF ESCAPEMENT OF INCOME IN THE MATTER. 12. THE LD. DR RELIED UPON DECISION IN THE CASE OF RAYMOND WOOLLENS MILLS LTD. (SUPRA) IN WHICH IT WAS HELD THAT SUFFICIENCY OR CORRECTNESS OF MATERIAL IS NOT A THING TO BE CONSIDERED AT THE STAGE OF RE-OPENING O F THE 19 ASSESSMENT, HOWEVER, IN THE CASE OF THE ASSESSEE, THERE IS NO MATERIAL ON RECORD TO JUSTIFY THE RE-OPENING OF THE ASSESSMENT, THEREFORE, THERE IS NO QUESTION OF SUFFICIENCY OR CORRECTNESS OF THE MATERIAL TO BE CONSIDERED. NO PRIMA-FACIE CASE HAVE BEEN MADE OUT FOR FORMING THE BELIEF THAT INCOME CHARGEABLE TO TAX HA S ESCAPED ASSESSMENT. IN THE CASE OF RAJAT EXPORT IM PORT CO. P.LTD. (SUPRA), THERE WAS MATERIAL AVAILABLE ON RECORD INDICATING ASSESSEE HAD TAKEN ACCOMMODATION ENTRY FROM THE ENTRY PROVIDER. OTHER DECISIONS CIT ED BY LD. DR ALSO WOULD NOT SUPPORT CASE OF THE REVENUE. 13. CONSIDERING THE ABOVE DISCUSSION, IT IS CLEAR T HAT THERE WAS NO BASIS OR MATERIAL ON RECORD TO CALCULA TE THE VALUE OF LAND @ RS. 1000/- PER SQ.YD. AND OF THE CO ST OF CONSTRUCTION AT RS. 100/- PER SQ.FT. AS IS NOTED IN THE REASONS. THERE IS NO MATERIAL, WHAT TO SAY OF TANG IBLE MATERIAL AVAILABLE ON RECORD TO JUSTIFY RE-OPENING OF THE ASSESSMENT. THE ASSESSING OFFICER MERELY ON ASSUMPTION, PRESUMPTION, RECORDING VAGUE AND NON- EXISTING REASONS, RECORDED THE REASONS FOR RE-OPENI NG OF THE ASSESSMENT WHICH ARE NOT SUFFICIENT TO VALIDATE THE RE-OPENING OF THE ASSESSMENT IN THE MATTER. THUS, THERE IS NO REASON TO BELIEVE WITH THE ASSESSING OFFICER TO ASSUME THE JURISDICTION UNDER SECTION 148 OF THE IN COME TAX ACT. 20 13(I) CONSIDERING THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT REASONS RECORDED UNDER SECTION 148 OF THE ACT REFLECT AN ARBITRARY USE OF POWER CONFERRED UNDER S ECTION 147 OF THE ACT. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND QUASH THE RE- OPENING OF THE ASSESSMENT UNDER SECTION 147/148 OF THE INCOME TAX ACT. THEREFORE, THERE IS NO NEED TO CON SIDER OTHER GROUNDS OF APPEAL ON MERIT BECAUSE THEY ARE L EFT FOR ACADEMIC DISCUSSION ONLY. RESULTANTLY ALL ADDIT IONS WOULD BE DELETED. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( ANNAPURNA GUPTA) (BHAVNESH SAINI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21 ST DECEMBER, 2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR ITAT/CHD