Law:

Section:

Section 147, read with section 148, of the Income-tax Act, 1961 - Income escaping assessment - Illustrations - Assessment year 1971-72 - Assessee who was deriving income from house property, filed return of income - Assessing Officer made assessment under section 143(3) - Subsequently, he reopened assessment on ground that there was wide variation in cost of construction of property shown by assessee and value determined by departmental Valuation Officer and accordingly made addition - Tribunal annulled said reassessment proceedings - Whether reassessment proceedings were initiated solely because Assessing Officer changed his opinion on issue of valuation of construction - Held, yes - Whether, therefore, Tribunal was right in law in annulling said reassessment proceedings - Held, yes FACTS The assessee, who was deriving income from house property, filed return. The Assessing Officer made assessment under section 143(3). After about six months, the Assessing Officer issued a notice under section 148 proposing to revise the assessment on the ground that there was wide variation in the cost of construction shown by the assessee in relation to the commercial building constructed by him along with his brother, and the value determined by the Departmental Valuation Officer. The Assessing Officer , therefore, made an addition as unexplained investment being one-half share of the difference in the cost of construction as estimated by the Department Valuation Officer and as shown by the assessee. On appeal, the AAC annulled the order of reassessment by holding that the Assessing Officer did not have the jurisdiction to reopen the assessment by invoking section 147. However, he partly sustained the addition by observing that the cost of construction of the building was higher than that declared by the assessee. He also held that the building being constructed in the assessment years 1969-70, 1970-71 and 1971-72, the addition should be spread over in all the three years. On cross appeal, the Tribunal affirmed the order of the AAC annulling the reassessment proceedings. On reference : HELD It is settled law that an ITO acquires jurisdiction to reopen an assessment under…

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