Law:

Section:

Section 148 of the Income-tax Act, 1961 – Income escaping assessment – Issue of notice for – Assessment year 1961-62 – In return assessee disclosed investment on land and building for cold storage plant – Valuation Officer estimated cost of investment including wooden staging, which was in excess of Rs. 50,000 over amount disclosed by assessee – Whether wooden staging in cold storage could not be regarded as part of building and since after excluding value of wooden staging estimated by Valuation Officer, investment on building of cold storage did not exceed amount shown by assessee by more than Rs. 50,000, ITO could not issue notice under section 148 beyond eight years from date of close of relevant assessment year – Held, yes FACTS In the relevant assessment year, the assessee disclosed investment on land and building of cold storage at Rs. 54,852. In the course of investigation the Valuation Officer, who estimated the investment in the construction of the building portion at Rs. 1,46,530. Out of the total value of the investment of Rs. 1,46,530 on the cold storage, as estimated by the valuation officer, the sum of Rs. 64,352 was the investment on the wooden staging. The ITO, on a perusal of that report, issued a notice to the petitioner under section 148 stating that he had reason to believe that for the relevant assessment year income chargeable to tax, far in excess of Rs. 50,000, had escaped assessment by reason of failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for that year. On writ : HELD The wooden staging in the petitioner's cold storage could not be regarded as a part of the building. If the value of wooden staging estimated by the Valuation Officer was excluded, the total investment on the buildings of the cold storage, even according to the valuation officer, would be only Rs. 82,178. Hence, there was no basis for any reasonable belief by the ITO that the petitioner's investment on buildings during the relevant assessment year exceeded the amount shown by him, i.e., Rs. 54,852, by more than Rs. 50,000. Hence, he could not issue a notice under section 148 beyond 8 years from the date…

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