Law: Income Tax Act, 1961

Section: 55A,147,148

(a) Income-tax---Reassessment---Failure to disclose material facts necessary for assessment---Effect of S.147(a) & 148---Construction of house by assessee--¬Assessee disclosing cost of construction and submitting contractors bills, etc., in evidence---Valuation certificate obtained from an approved valuer--¬Valuation under RABB of Wealth Tax Rules accepted---Subsequent reassessment proceedings on basis of a report of an LT valuer obtained after some years---No failure to disclose material facts necessary for assessment--¬Reassessment proceedings were not valid---Indian Income Tax Act, 1961, Ss.55-A, 147 & 148. A harmonious reading of sections 147 and 148 of the Income Tax Act, 1961, would make it clear that for the purpose of issuing a notice under section 148 for assessment of income, there should be a reason for the Assessing Officer to believe that a particular income had escaped assessment. A mere reason, cannot by itself, be sufficient to satisfy the existence of a jurisdictional fact for issuing a notice under section 148 of the Act, but such reason should be a believable one. The petitioner constructed a house. The construction was completed before the end of March 31, 1982. The petitioner duly submitted his return of income for the year 1982-83 relating to the accounting year ended March 31, 1982, disclosing the value of the said house. Necessary evidence. viz., vouchers, contractors bills, etc., showing the cost of construction at Rs.8 lakhs relating to the construction of the property were also produced and accepted by the Assessing Officer. The assessments for 1983-84 and 1984-85 were completed on that basis. For wealth tax purposes, the valuation of the property was made in accordance with rule 1-BB of the Wealth Tax Rules, 1957, and, accordingly, the wealth tax assessment for the assessment year 1982-83 was also completed. But during the course of the proceedings for assessment to income-tax for the assessment year 1985-86 and the assessment to wealth tax for the year 1983-84, the respondent required the petitioner to produce the valuation report once again for the house and the petitioner submitted a valuation report, dated January 16,…

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