G.S.SINGHVI, J. - (1.) THIS is a petition for quashing of the notices dt. 4th March, 2000, issued by the ITO, Ward No. 1, Sirsa, (respondent No. 1) under S. 148 of the IT Act, 1961 (for short "the Act"), for assessment/reassessment of the income of the petitioner in relation to the asst. years 1993 94, 1994 95 and 1995 96.
(2.) THE facts of the case are that the petitioner, Grover Nursing Home, Sirsa, is a partnership firm consisting of two partners, namely, Dr. B.D. Grover and Dr. Ramesh Kumari, both of whom are assessees under the Act. The firm came into existence in pursuance of the deed of partnership executed on 10th Sept., 1992. Prior to this, Dr. B.D. Grover was carrying on independent practice and was filing returns in his capacity as the proprietor of Grover Maternity and Nursing Home, Sirsa. He filed a return on 30th Nov., 1993, for the asst. year 1993 94 declaring an income of Rs. 49,429. For the asst. year 1994 95, he filed the return on 18th Oct., 1994, showing an income of Rs. 55,222. For the asst. year 1995 96, he filed the return dt. 31st Jan., 1996, declaring an income of Rs. 75,580. All these returns were processed under S. 143(1)(a) of the Act. The return of income on behalf of the petitioner was filed for the first time on 31st Aug., 1995, for the asst. year 1995 96 (for the period from 24th Oct., 1994, to 31st March, 1995). The same was also processed by the competent authority under S. 143(1)(a) of the Act. In the meanwhile, the Assistant Director of Income tax, Investigation (respondent No. 2) issued letters/notices dt. 2nd Dec., 1993, 24th Oct., 1994, and 2nd Feb., 1995, to Dr. B.D. Grover asking the details and sources of investment on the building of a nursing home. Dr. Grover filed replies dt. 26th Dec., 1993, 30th Nov., 1994, and 9th Feb., 1995, and furnished the details of the constructed area of the plot, the break up of construction made in different years and the various outstanding loans. He also got done valuation from a registered valuer. Therefore, respondent No. 2 authorised Shri R.L. Aggarwal, Valuation Officer of the Department, to inspect the properties of Dr. B.D. Grover and to make investigation under S. 131(1)(d) of the Act. The Valuation Officer issued notice dt. 28th July, 1995 (annexure P 16) to Grover Hospital and Maternity Nursing Home, Dabwali Road, Sirsa, to furnish various documents and information mentioned therein. To this, a reply dt. 9th Nov., 1995, was sent by Dr. Grover in his capacity as partner of Grover Nursing Home. Along with the reply, he enclosed the documents mentioned at items Nos. 1 to 6 and 11 of the notice. He also stated that the report of the registered value has been misplaced and a copy thereof shall be submitted later on. The Departmental Valuation Officer submitted a report dt. 6th Aug., 1999, indicating therein that the cost of construction was Rs. 27,72,361. On receipt of the said report, respondent No. 1 issued three notices dt. 16th June, 1999, to Dr. B.D. Grover under S. 142(1) and (3) of the Act asking him to furnish information stipulated in the notices. Dr. Grover submitted a reply dt. 2nd Sept., 1999, stating therein that he had not made any construction whatsoever and had not concealed the particulars of his income in the returns filed for the years 1993 94, 1994 95 and 1995 96. After considering his assertions, respondent No. 1 filed the notices issued to Dr. B.D. Grover in his capacity as proprietor of Grover Maternity and Nursing Home, but at the same time, he issued the impugned notices to the petitioner under S. 148 of the Act for making assessment in relation to the asst. years 1993 94 and 1994 95 and reassessment in relation to the year 1995 96. The petitioner has challenged the notices annexures P 1 to P 3 and the reasons (annexure P 23 collective) communicated by respondent No. 2 along with the letter dt. 18th April, 2000, on the ground that the valuation report submitted by the Departmental Valuation Officer cannot be made the basis for forming an opinion about the escapement of income within the meaning of S. 147 of the Act and in any case, the assessment/reassessment cannot be made after the expiry of the limitation.
(3.) IN the written statement filed on behalf of the respondents, it has been averred that after collecting information regarding the loan obtained by the petitioner from the Haryana Financial Corporation, respondent No. 2 confronted it with the said information and called upon it to furnish details and source of investment on assets pledged with the Corporation. In reply, the petitioner submitted some information regarding the covered area and the total cost of construction. The matter regarding cost of construction was then referred by respondent No. 2 to the Departmental Valuation Officer. On receipt of his comments, notices dt. 27th March, 1998, under S. 148 of the Act were issued to Dr. B.D. Grover in his capacity as proprietor of Grover Maternity and Nursing Home, Sirsa, for the asst. years 1993 94, 1994 95 and 1995 96. In respondent to the notices, Dr. B.D. Grover filed the returns for the relevant assessment years and also submitted that he had not made any construction whatsoever. According to him, the construction had been raised by the petitioner firm in which he was a partner. In view of these assertions, notices issued to Dr. Grover were dropped and proceedings were initiated against the petitioner under S. 147 of the Act as no return of income had been filed for the asst. years 1993 94 and 1994 95 in order to bring to tax the unexplained investment which represented difference in the cost of construction shown over and above what was estimated by the Departmental Valuation Officer of the Department. Notice under s. 148 of the Act was also issued for the asst. year 1995 96 to bring to tax the difference in the return filed by the petitioner and the expenditure made. The respondents have further averred that the property of the petitioner was visited by the Valuation Officer along with Dr. B.D. Grover on 9th Nov., 1995, before estimating the cost of construction and he, i.e., Dr. Grover, did not raise any objection. According to the respondents, the writ petition should be dismissed being premature because the petitioner can raise all objections before the concerned authority. In paras. 13 and 15 of the written statement, the respondents have made the following averments : "13. That is reply to para. 13, it is submitted that proceedings under S. 147 of the Income tax Act were initiated in the hands of the firm, Grover Nursing Home, Sirsa. The proceedings in the case of Dr. B.D. Grover only were dropped as no proceedings were initiated against Dr. R.K. Grover. It was done only when Dr. B.D. Grover produced photocopies of bills of purchase of construction material in his individual name. So the course of action taken in the case of the firm to bring to tax the unexplained investment being deemed income, cannot be said to be bad in law more particularly when the correct fats were brought to the notice of respondent No. 1 by one of the partners of the petitioner firm, namely, Shri B.D. Grover, that no construction was done by him individually but by the petitioner firm Grover Nursing Home, Sirsa. As regards the petitioner's objection regarding the valuation report being in the name of individuals, it is baseless. On going through Sl. No. 4 of the valuation report which refers to the property referred for valuation, it is revealed that the name, number, address and complete location of the property has been mentioned as Grover Hospital Maternity and Nursing Home, Dabwali Road, Sirsa. On Dabwali Road, Sirsa, the property is under the name of Grover Nursing Home owned by two doctors namely Shri B.D. Grover and Smt. Ramesh Kumari. Even the property was visited by the Valuation Officer along with Dr. B.D. Grover on 9th Nov., 1995, before estimating the cost of construction. At no point of time, Dr. B.D. Grover objected that no valuation was possible as the property referred to was different from that to be valued. Moreover, the objection of the petitioner firm is not valid because the slight change in the mentioning of name is simply a technical mistake and mere mentioning of name as Grover Hospital Maternity and Nursing Home against Grover Nursing Home does not change the character of the building. The valuation has been specifically made in respect of the building situated at Dabwali Road, Sirsa, belonging to Grover Nursing Home which is constituted by two doctors, namely, S/Shri B.D. Grover and Ramesh Grover. This fact also gets support from the very initiation of the proceedings by respondent No. 2 vide his letter dt. 2nd Dec., 1993, on the basis of information gathered by him for the office of the Haryana Financial Corporation from where the petitioner firm had raised loan for construction of building. Further, in view of the specific provisions contained in S. 292B of the IT Act, which for the sake of convenience is reproduced below, the proceedings shall not be invalid or deemed to be invalid merely by reason of any omission/defect : 'No return of income, assessment, notice, summons or other proceedings, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act." In view of the above, the issuance of notice under S. 148 of the IT Act in the case of Grover Nursing Home, Sirsa, on the basis of the report of the Valuation Officer leading to the belief that income chargeable to tax has escaped assessment, is quite justified and is valid. ;