COMMISSIONER OF INCOME TAX Vs. MEDICAL TRUST HOSPITAL

JUDGEMENT

(1.) THE question raised in the connected appeals is whether the Tribunal was justified in cancelling the reassessment proceedings completed against the assessee under s. 147 for the reason that the officer had no justification to reopen the original assessment.

(2.) WE have heard the senior standing counsel appearing for the appellant and Sri Harishankar V. Menon appearing for the respondent.

(3.) THE assessment involved are for the years 1996 -97, 1998 -99, 1999 -2000 and 2000 -01. In the course of the relevant four previous assessment years, the assessee was engaged in the construction of a hospital building. While completing the original assessment, the AO accepted the accounts pertaining to investments in the construction of the building. However, after completion of original assessment, based on returns filed, the AO referred the building for valuation by the approved valuer. When valuation report came, the difference in construction cost over what is accounted by the respondent was Rs. 12,02,795. Based on the valuation report, the AO reopened the assessment by issuing notice under s. 148. Even though the assessee objected the reopening, the objections were overruled and assessments were completed under s. 147 of the IT Act. Even though validity of the reassessments are questioned in first appeal, the first appellate authority turned down the same but granted certain quantum relief. The assessee approached the Tribunal with second appeals questioning the validity of reopening of the assessment as well as against additions sustained. The Tribunal accepted the challenge against the validity of assessments and declared that reassessments are invalid against which Department has filed these appeals.