" IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. CWP No. 358 of 1997 Decided on 9th May, 2013. Smt. Uma Kuthiala ….Petitioner Versus The Commissioner of Income Tax …Respondent _________________________________________________________________ Coram The Hon’ble Mr. Justice A.M.Khanwilkar, Chief Justice. The Hon’ble Mr. Justice Mr. R.B. Misra, Judge. For the Petitioner : Mr. M.M. Khanna, Senior Advocate with Ms. Ambika Kotwal, Advocate. For the Respondent : Mr. Vinay Kuthiala, Senior Advocate with Mrs.Vandana Kuthiala, Advocate. ----------------------------------------------------------------------------------------------- A.M Khanwilkar, CJ (Oral) Heard counsel for the parties. This writ petition, under Article 226 of the Constitution of India takes exception to the show cause notice, issued by the Income Tax Officer, in exercise of powers under Section 148 of the Income Tax Act dated 7th March, 1996 for re-opening of assessment for the years 1993-94 in respect of the petitioner-assessee. In the reasons recorded on 23rd February, 1996, the Income Tax Officer has observed thus:- “23.2.1996 REASONS FOR RE-OPENING OF ASSESSMENT U/S 148 READ WITH SEC. 147 OF THE I.T. ACT 1961. The assessment in this case has been completed u/s 143(3) vide order No. Sr/156 dated 14.12.93 at an income of 2 Rs.303420. The scrutiny of the assessment record reveals that the assessee received the compensation of the land acquired by the Govt. during the year, 1992-93 on which assessee declared capital less/gain of Rs.25280/-. The assessed income of Rs. 303420/- includes interest on compensation, interest on FDRS and House Property Income etc. The capital less/gain has been worked out by applying rate of Rs.180.07 per sq. yard as on 1.4.1981 by taking average sale of Rs.118/- per sq. yard on two sale instances 52.5% for stated compensation advantages. This cost reported by the valuation report by the Registered Valuer. During assessment u/s 143(3) the cost worked out by the assessee was accepted. Now, it has come to the light in a similar case of Sh. Sunil Albert, the CIT(A) has held in the increase of 52.5% in cost of land on account of stated compensation advantages as unjustified and cost was at Rs.130/- per sq. yard as on 1.4.1981 as against Rs.180.07 per sq. yard taken by the assessee. Further the registered valuer was not competent to value the land in question, because the same is agricultural land. The valuation of agriculture land can only be made by the Tehsildar of the area. In another case of Smt.Vibha Arihan W/o Sh. Dinesh Arihon, Airport Road, Totu, Shimla who is also co-sharer of the same land. The I.T.O. Ward-4, Shimla had made a reference to the Tehsildar, Shimla for valuation of the land. The Tehsildar, Shimla determined the cost of land at Rs.2,000/- per Biswas i.e. Rs. 44.43 per sq. yard of “Lehandiable Land” and Rs.444/- that is Rs.9.81 per sq. yard of “Ghasin Land”. However, taking into account the another sale instance of the other side of the land as valued by the registered valuer the ITO, ward-4, Shimla adopted by the average rate of Rs.3651/- per biswas i.e. Rs.81.13 per sq. yard. It is thus apparent that the cost adopted by the assessee as on 1.4.1981 in the present case is excessive and has based on the wrong estimation. The capital gain therefore, has to be worked out by applying cost rate of Rs.81.13/- per sq. yard as against Rs.180.07 per sq. yard adopted by the assessee. 3 Therefore, the income of the assessee has been under assessed. I have therefore, reasons to believe that of Rs.321781/- (capital gain) chargeable to tax has escaped assessment within the meaning of section 148 read with sec. 147 and explanation 2(c ) of the Income-tax Act, 1961 for the asstt. Year 1993-94. Sd/- (R.C. Beakta) INCOME TAX OFFICER WARD-1, SHIMLA. (emphasis supplied ) 2. The petitioner, during the pendency of this petition, has produced copy of the order passed by the Commissioner of Income Tax (Appeals), Shimla dated 1st July, 2002 in appeal No. IT/149/97-98-Sml in the case of Vibha Gupta, which is the other sale instance, referred to by the Income Tax Officer in the reasons recorded. The fact that this order relied upon by the petitioner pertains to the same sale instance, referred to in the reasons recorded, is not in dispute. As the decision in the case of Vibha Gupta was the basis to reopen the assessment of the petitioner, as noted in the show cause notice and the reasons recorded and since that basis has become non-existent because of the supervening circumstance of the decision of the appeal-Authority, which has noted in its decision, that the rate of Rs. 130 must be reckoned as the basic price as on 1.4.1981. At best, that may apply even to the case of the petitioner. Suffice it to observe that the assumption of the Income Tax Officer of rate in respect of the said land as Rs. 180.07 per square yard, is a non-existent fact. Thus understood, the 4 impugned show cause notice issued to the petitioner cannot be taken forward and for the same reason, the reasons recorded on 23rd February, 1996 deserves to be quashed and set aside. However, it is clarified that it will be open to the Income Tax Officer, Ward No. 1, Shimla to proceed in the matter on the basis of other material, if available for reopening of the assessment qua the petitioner. That however, will have to be in accordance with law. We make it clear that proposed action, being within limitation or otherwise, can be considered, if and when occasion arises. If the law so permits, as is agreed between the parties in view of Section 153 (3) explaination-1 clause-2, the period spent during the pendency of this petition, may have to be excluded while computing the limitation period for commencement of proposed proceedings. Petition made absolute in the above terms. No order as to costs. (A.M Khanwilkar) Chief Justice. (R.B. Misra), Judge. 9th May, 2013 (sl/krs) "