Commissioner of Income Tax vs Smt. Prem Kumar Surana

K.C. Agrawal, C.J.—The following question has been referred u/s 256 of the income tax Act, 1961 (''the Act'') by the Tribunal for opinion, to the High Court:

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the ITO was not justified in starting proceedings u/s 147(b) of the income tax Act, 1961?

The year of assessment was 1972-73. The assessee purchased a plot of land measuring 2077.80 sq. yards in the retreat area of Prithviraj Road, SMS Highway, near Hospital on 20-6-1975 from Vinaychand Pravind Chand (HUF). As the income tax authorities felt that the land was sold at a lower price, the matter was referred to the Executive Engineer, Valuation, Unit-I, Jaipur, u/s 53A of the income tax Act, read with section 16A(5) Wealth-tax Act, 1957. The valuation was estimated at Rs. 1,58,400 Since the assessee had claimed that she purchased the land for R.1,04,000, the case was reopened u/s 147(b) of the Act on the ground that the assessee declared a lesser amount than actually paid. The ITO was no: satisfied with the explanation of the assessee; consequently, a sum o Rs. 54,400 had escaped assessment and it was added in the hands of the assessee. Against the order of the ITO, an appeal was filed u/s 210 of the Act before the AAC. The AAC found that Rs. 54, 400 had been added in the hands of the assessee.

In the further appeal the Tribunal, by taking a view different than what has been taken by the authorities below, allowed the appeal and quashed the orders of the two authorities below. Against this order, the department moved the application for referring of two questions, out of which, one of them referred was quoted above.

The learned counsel for the department urged that as the value of the All and purchased was deliberately underestimated and was not correctly shown, the department u/s 147(b) could take proceedings of reassessment. It is also contended that valuer''s report was ''information'' within the meaning of that expression used in section 147(b), therefore, the reassessment proceedings could be initiated against the assessee on that basis.

The Tribunal was of the view that it had not been proved by the revenue that the assessee had invested Rs. 1,04,000 in the purchase of plot. The Tribunal further held that whereas the case was of the year 1971-72, the report was obtained in 1974.

On the ground that valuer''s report was not conclusive, the escapement was not found established and as such the advantage made by the AAC was not unjustified. Hence, the reference is liable to be answered against the revenue on the ground that the controversy raised by it was of fact and was beyond the scope of section 256(1). On appraisal of evidence the Tribunal found that no escapement had been established. As the final determination of the issue did not involve the application of any principle of law, an interference with the judgment of the Tribunal would be that of facts. Consequently, this question deserves to be decided against the revenue on this ground.

In J.K. Synthetics Ltd. Vs. Commissioner of Income Tax, Kanpur, the Supreme Court reversed the High Court''s judgment, which interfered on a question of fact.

Apart from what has been said above, on merits also, we find the- question to be answered against the department on the ground that no proceedings u/s 147(b) could be initiated on the basis of the valuer''s report. It is only information, which without being substantiated by convincing evidence or circumstances, could not be the basis for reopening of assessment order. In L.B. Kharawala v. ITO [1984] 147 ITR 671 (Guj.), Dinkarrai Anantrai Mankadw ITO [1985] 155 ITR 4062 (Guj.) and Sardar Kehar Singh v. CIT [1992] 195 ITR 7691 (Raj.) it has been held that valuation report did not construe information justified under clause (b) of section 147 and as such the same cannot be a valid basis for reassessment. For the reasons given above, the question referred to is answered against the revenue and in favour of the assessee holding that valuation report did not amount to information within the meaning of that expression used in section 147(6). Hence, the reassessment proceedings taken on it basis would be against the said section. The respondent-assessee would be entitled to get costs of Rs. 300.