Narayan Shukla, J. - (1.) HEARD Mr. Jaideep Narayan Mathur, learned Senior Counsel assisted by Mr. Vaibhav Pandey and Mr. Mudit Agarwal, learned counsel for the petitioners and Mr. Manish Mishra, learned counsel for the Income Tax Department. The instant writ petition is directed against the order dated 26 November 2013 issued by Deputy Commissioner of Income -tax, Range -VI, Lucknow in exercise of power provided under section 147 of the Income -tax Act. The facts of the case as have been undraped are that in exercise of power under section 147 of the Act the Assessing Officer reopened the assessment proceeding for the assessment year 2006 -07 on the ground that he has reason to believe that assessee has stated its income which is chargeable to tax has escaped assessment. The Assessing Officer recorded the reasons for reopening the case in the notice issued under section 148 of the Act. The reasons recorded by the Assessing Officer are quoted herein under: - - "1. The assessee filed return for A.Y. 06 -07 on 14.03.2007 declaring total income at NIL. Net receipt from operation has been shown at NIL. No scrutiny assessment has been made for A.Y. 06 -07. During the relevant year share capital increases from 4782000 (as at 31.03.2005) to 58,82,000/ - included share capital of Rs. 25 lacs & share application of Rs. 33.82 lacs Secured loans increases from Rs. 1,23,54,001/ - to Rs. 2,78,21,882/ - i.e. increase of Rs. 1,54,67,871/ - Investment in building, increase from Rs. 7,09,770/ - to 1,50,99,423/ - source of which remained unexplained. Other current assets increases from Rs. 2,14,645/ - to 24,10,521/ - i.e. increase of Rs. 21,95,876/ -. The source of these share application money source of collaterals which have been hypothecated by assessee for raising secured loan of Rs. 1,54,67,871/ - & source of work -in -progress & other current assets are remained unexplained.
(2.) DURING the assessment proceedings for A.Y. 2008 -09 then the A.O. After not being satisfied with the investment shown in institute cum hospital building of assessee Co. referred it to valuation cell for estimating cost of investment. The DVO vide its report dated 02.08.2011 estimated the total investment in the construction of Hospital building during the A.Y. 2006 -07 at Rs. 1,75,73,800/ - against the investment declared by the assessee at Rs. 1,50,99,423/ -. The onus lies on the assessee to establish its investment only upto Rs. 1,50,99,423/ - with complete bills & vouchers before the DVO but the assessee had failed to discharge its onus. The assessee has furnished nothing on the basis of which its investment at Rs. 1,50,99,423/ - during the relevant year may be relied upon. Therefore, I have reason to believe, that investment in the said property in A.Y. 2006 -07 was Rs. 1,75,73,800/ - and assessee has underestimated its investment and income. In view of above, I have reason to believe that assessee has understood its income and income chargeable to tax has escaped assessment accordingly it is a fit income and income chargeable to tax has escaped assessment accordingly it is a fit case to be reopened u/s. 147 of the Income -tax Act, 1961". 2. The petitioner filed objection against the reopening of assessment submitting therein that for the assessment year 2006 -07 he was only required to furnish return of income without any enclosures, however, he produced all the vouchers and receipts before the Assessing Officer. He further stated that for the period from 01.04.2007 to 31.03.2008 (assessment year 2008 -09) the Deputy Commissioner of Income -tax, Range -VI, Lucknow examined the records in the course of regular assessment proceeding under section 143(3) of the Act and duly accepted it. It was also stated by him that the report of the Valuation Officer is based on no material and more over without rejection of books of account. The valuer report cannot be read as evidence for reopening of the case. Thus he submits that the books of account were not rejected. He further submitted that the opinion of the District Valuation Officer is not an opinion recognized under the law for the purpose of reopening under section 147 of the Act. The Assessing Officer was under statutory obligation to apply his own mind to form the opinion if any and express the reason of his belief to reopen the assessment. However, it was not done so far. The Deputy Commissioner of Income -tax considered the petitioner's objection but ultimately rejected it on the ground that the assessee had not maintained complete details in respect of his accounts of cost of construction and has under estimated the investment in construction of the hospital building and the income chargeable to tax in respect of source of investments has indicative of escaped assessment. Learned counsel for the petitioner submits that petitioner filed its return of income for the assessment year 2005 -06, 2006 -07, 2007 -08 and 2008 -09 regularly and Books of Account have always been accepted with minor disallowance for assessment year 2008 -09. For the assessment year 2006 -07, since the hospital was under construction, the return filed by the petitioner had shown the income "Nil" and the return was proposed under section 143(1) of the Act. The details of balance sheet, profit and loss accounts including the investment made were duly incorporated in the return. It is stated by him that for the assessment year 2008 -09 assessment order under section 143(3) of the Act has been passed on the basis of the figures of the loss disclosed by the petitioner without rejecting the books of account therefore, in the light of the several decisions of the Hon'ble Supreme Court the matter could not be open for reassessment. Through rejoinder affidavit he has also brought on record the return for the assessment year 2006 -07 and submitted that from the return filed by him as well as balance sheets as on 31st March 2006 it is obvious that all the books of the capital profit and loss tally with each other. Therefore, it cannot be said that the petitioners income chargeable to tax has escaped assessment.
(3.) PER contra Mr. Manish Mishra, learned counsel for the Income Tax Department submitted that it is not in dispute that for the assessment year 2006 -07 the return was proposed under section 143(1) of the Act, but no copy of the balance sheet, profit and loss accounts etc. were filed, rather those have been mentioned in the return for 2006 -07 annexed with rejoinder affidavit itself. Since the assessment is still under process, it is obvious that no order of assessment has been passed. However, at this stage there is no question to challenge the examination of balance sheet, profit and loss accounts etc. He further submitted that the proceeding of each and every assessment year is independent. Therefore, the books of account loans etc. have been examined for the assessment year 2007 -08 has no concerned with the assessment year 2006 -07. He further stated that since the assessee did not furnish any detail to establish and substantiate its declared investment therefore, the amount of Rs. 1,50,99,423/ - has been taken as under estimated income and since this amount has escaped from assessment in the assessment year 2006 -07 the same is taken into account. He further submitted that no scrutiny was done under section 143(1) of the Act for the assessment year 2006 -07, what ever has been filed by the assessee was simply examined by the department without verifying the same. It is further stated by him that the notice issued under section 147 of the Act is not based on District Valuation Report. It has categorically been stated by the department that since the source of share application money, source of collaterals and other investments have been unexplained for the assessment year 2006 -07 and came to the knowledge of the respondent department only when the assessee/petitioner filed his returned for the assessment year 2008 -09 as during scrutiny the petitioner showed the complete books of account from which it emerges that there is an unexplained income which amounts to escape assessment for the assessment year 2006 -07 and this was the foundation of reason to belief of the assessing officer, and this material fact had not been examined by the department in any assessment year. Thus, he submits that prima facie there is a material on the basis of which the Assessing Officer has reason to reopen the proceeding.;