Law:

Section:

Section 147 of the Income-tax Act, 1961 - Reassessment - General - Assessment years 1970-71 to 1973-74 - Assessee-HUF started construction of a house in 1968 which was continued up to 1975 - For assessment years 1968-69 to 1976-77, assessee disclosed investments made on construction supported by a valuation report - Assessments for assessment years 1968-69 to 1975 - 76 were completed - While completing assessment pertaining to assessment year 1976-77, ITO noticed that report of valuation officer was not received On reference to valuation officer ITO found that valuation estimated by departmental valuation officer was much more than investments disclosed by assessee - He, therefore, reopened assessments pertaining to assessment years 1974-75 and 1975-76 - He worked out difference between value estimated by valuation officer and value disclosed by assessee and made additions in total income of assessee - Tribunal held that valuation report could not be basis for reopening of assessment and quashed reassessment - Revenue's application under section 256(2) was also rejected by High Court - Whether on facts reassessment proceedings initiated for assessment years 1970-71 to 1973-74 on same grounds would be invalid and thus were liable to be set aside - Held, yes FACTS The assessee-HUF purchased a plot in 1968. Construction started on it in 1969 was continued up to 1975. In the course of the assessment proceedings for the assessment years 1968-69 to 1976-77 the assessee disclosed investments made on the construction and also submitted a valuation report of an approved valuer. The ITO accepted the valuation and completed the assessments for the assessment years 1968-69 to 1975-76. While framing the assessment for the assessment year 1976-77 the ITO noted in the order sheet that the report of the Valuation Officer regarding investments had not been received despite several reminders. He completed the assessment as per the figures returned by the assessee to avoid delay. Subsequently he received the Valuation Officer's report which showed that higher investments were made in construction than those disclosed by the assessee. The ITO, thereupon initiated reassessment…

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