Law:

Section:

Section 147(a) of the Income-tax Act, 1961 - Reassessment - Nondisclosure of primary facts - Assessment year 1977-78 - Land for assessee-hotel was provided by HUF whereas building was constructed by one D -In appeal in case of D against addition on account of cost of construction declared and that determined by ITO, it was held by Tribunal that assessee was responsible for explaining said difference - Whether observations made in a , though not complying with Explanation 3 to section 153, read with section 150, may yet lead ITO to believe that income chargeable to tax had escaped assessment within meaning of clause (a) of section 147 - Held, yes - Whether jurisdictional facts for reopening of assessee's assessment under section 147(a) following order of Tribunal in D's appeal were present - Held, yes Section 151 of the Income-tax Act, 1961 - Reassessment - Sanction for issue of notice - Assessment year 1977-78 - Whether in a case where assessment is sought to be reopened after eight years, approval of both Board and Chief Commissioner or Commissioner should be obtained -Held, no - Whether once approval of Board is obtained there is no question of obtaining approval of Chief Commissioner or Commissioner over again Held, yes FACTS The land for the assessee-hotel was provided by a HUF whereas the building was constructed by one D who was an individual. The said HUF and the individual had entered into an agreement to form and promote the assessee-company. By a resolution, the Board of directors of the assessee approved the total expenditure incurred by D and directed that the same be incorporated in the books of the assessee for the year ended 30-6-1976 by crediting to the account of D. In its return for the assessment year 1977-78 the assessee disclosed the amount spent on the construction of the building. In the assessment proceedings of D for the assessment years 1975-76 to 1977-78, the ITO refused to accept the figure disclosed by the said individual as the amount spent on construction. On the basis of the opinion of the Valuation Officer, the ITO was of the opinion that the total amount spent on construction was Rs. 14,11,485 and not Rs. 10,04,292 as claimed…

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