Commissioner of Income Tax vs Ramniklal Popatlal Kakkad

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K.S. Jhaveri, J.—This is an appeal by the appellant-revenue, seeking to challenge the order of the learned ITAT, Rajkot Bench, Rajkot (''the Tribunal'', for short), Dated : 15.10.2005, rendered in ITA No. 266/Rjt/2005 for A.Y. 1994-95.

The brief facts of the case are that the assessment of the assessee was made on 21.03.1997. According to the appellant-revenue, though, the assessee had derived income from house property, business of matchbox, bidi etc., the last item of the assessee''s income towards Capital Gain for the relevant assessment year was shown to be ''Nil''. Hence, the proceedings under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as ''the Act''), came to be initiated against the assessee. During the said assessment proceedings, the appellant-revenue assessed the Capital Gain of the assessee from the property known as ''Tank Manor'' at Rs. 6,38,300/-, i.e. being the 1/4 share of the assessee in the said property.

Being aggrieved with the same, the assessee approached the CIT(A). The CIT(A) dismissed the appeal of the assessee, holding that it had failed to disclose all the facts truly and correctly at the time of original assessment. The assessee, hence, carried the matter before the Tribunal. The Tribunal, after hearing the parties, passed the impugned order. Hence, the appellant-revenue preferred the present appeal, raising the following question of law for our consideration;

"Whether the appellate Tribunal is right in law and on facts in holding that reopening of assessment was barred in law, when pursuant to the DVO''s report it was found by the Assessing Officer that the value of the property declared by the assessee was not proper, thereby, recording a reason that income has escaped assessment due to excess allowance of cost of acquisition?"

Mr. Desai, learned Advocate for the appellant-revenue, submitted that the Tribunal erred in passing the impugned order, inasmuch as it failed to appreciate the material on record in its proper perspective. He, further, submitted that the Tribunal ought to have appreciated the fact that the respondent-assessee did not disclose all the facts truly and correctly at the time of original assessment.

In support of his submissions, Mr. Desai placed reliance on a decision of the Apex Court in M/s. Phool Chand Bajrang Lal and another Vs. Income Tax Officer and another, . In that case, the Apex Court held that acquiring fresh information, specific in nature and reliable in character, relating to concluded assessment which went to expose falsity of the statement made by the assessee, at the time of original assessment, was different from drawing a fresh inference from the same facts and the material available with the Income Tax Officer, at the time of original assessment proceedings and that two situations were distinct and different. The Apex Court, further, held that where the transaction, itself, on the basis of subsequent information, was found to be bogus one, mere disclosure of that transaction at the time of the original proceedings could not be said to be a disclosure of "true" and "full" facts and the concerned officer would have jurisdiction to reopen the concluded assessment in such a case. Mr. Desai, hence, prayed that the appeal be allowed.

Though served, none appears on behalf of the respondent-assessee.

We have heard learned Counsel for the appellant-revenue and perused the material on record. We have also perused the orders of the CIT(A) and the Tribunal. Having gone through the orders of the competent authorities, what first emerges is that the CIT(A) dismissed the appeal of the assessee, holding that there was failure on the part of the assessee to disclose all the facts pertaining to income received towards the 1/4th share of the assessee in an immovable property truly and correctly.

From a perusal of the material on record, it appears that the property, in which the assessee was having 1/4th share, came to be sold during the previous year relevant to the assessment year and that the assessee had claimed value of the same at Rs. 24,92,000/- as on 01.04.1981. The DVO, who had valued the property in question on 31.03.1989, also assessed the value of the property in question at Rs. 24,00,000/-. It is largely because of this reason that the AO hold that the value of the immovable property after a period of about seven years could not be the same and recorded a reason that the income had escaped assessment. It is well settled that an assessment can be reopened only in a case, where the income chargeable to tax escaped assessment due to failure on the part of the assessee to file return under Section 139 or under Section 142(1), which is in response to a notice or under Section 148 or there is failure on the part of assessee in disclosing all facts truly and correctly.

In the case on hand, it is evident from the record that the assessee had not only filed the return of income for the relevant assessment year but had also supplied the report of valuation in respect of the immovable property in question, as on 01.04.1981, which was prepared by a registered valuer. Further, the notice seeking reopening of the original assessment was also issued beyond a period of four years. Moreover, it is neither the allegation of the appellant-revenue nor is there any material on record to show that the assessee willfully did not disclose all the facts truly and correctly. Under the circumstances, we are of the opinion that the Tribunal did not commit any jurisdictional error in passing the impugned order. In view of the above discussion, the judgment relied on by the learned Advocate for the appellant-revenue in "Phool Chand Bajranglal and Anr." (Supra) will not apply to the facts of the case on hand and the appeal deserves dismissal being devoid of merit.

In the result, the question of law raised in this appeal is answered against the appellant-revenue and in favour of the assessee, accordingly. The present appeal fails and is Dismissed. No order as to costs.