A subsequent valuation report cannot be a ground for reopening assessment proceedings under Section 147(a) of the Income-tax Act, as the assessee is not obligated to instruct the Income-tax Officer about the inference that may be raised from the disclosed facts.

I.S.Tiwana, J.

1. In these two Civil Writ Petitions Nos. 2279 and 2280 of 1975, the petitioner-assessee impugns two similar but different notices issued to her under Section 148 of the Income-tax Act (for short, "the Act") in order to reopen her I.T. assessments for the assessment years 1965-66 and 1966-67. The learned counsel for the parties are agreed that in view of the identity of facts and the contentions raised, these petitions can be disposed of through a common order and for that purpose, only the facts stated in C.W.P. No. 2279 need be adverted to. Further, the facts are not even in dispute.

2. During the yours noted above, the assessee had constructed a building on Railway Road, Ambala Cantt. The total cost of construction disclosed as per the valuation report was Rs. 1,54,400 though according to her accounts relating to the construction, the actual cost of construction was Rs. 1,43,077. The ITO accepted the valuation report as the actual cost of construction and treating Rs. 11,312 (the difference in the above-noted two amounts) as the undisclosed income of the assessee, distributed that as income of the two assessment years and finalised the assessments for the year 1965-66 on January 28, 1969, and for the year 1966-67 on June 24, 1970. It may be noticed here that since the assessment for the year 1965-66 had already been completed by the time the assessment for the year 1966-67 was finalised on June 24, 1970, the ITO sought to reopen the earlier assessment in order to distribute the above-noted undisclosed income over the two assessment years, Later, as per the stand of the respondent-authorities, when the proceedings for the finalisation of the W.T. assessment of the petitioner for the years 1966-67 to 1973-74 were taken up, the ITO/WTO referred the question of valuation of the building in question to the Valuation Officer on March 26, 1974, for its statutory valuation. As per this report dated July 17, 1974, the Valuation Officer reported the valuation of the construction of the building at Rs. 2,33,940 and its fair market value at Rs. 3,64,560 for the years 1966-67 to 1969-70 (four years). The case of the Department further is that in the light of this modification the ITO formed the opinion that the assessee had not fully and truly disclosed all material facts necessary for the assessment of her income and after obtaining the requisite permission from the Commissioner issued the impugned notices. In a nutshell, the case of the respondents is that this course of action adopted by the ITO is fully covered by the provisions of Section 147(a) of the Act read with Expln. 2 thereunder.

3. Now, the solitary submission of Mr. D.K. Gupta, learned counsel for the petitioner, is that in the given facts and circumstances of this case, which, as already indicated, are not in dispute, the ITO neither had any justification nor jurisdiction to reopen the assessment proceedings on the ground that the petitioner had not fully and truly disclosed the material facts necessary for purposes of the assessment. According to the learned counsel, the ITO was not possessed of any material to show nor has any been disclosed that the facts submitted by the petitioner at the time of the assessment of her income pertaining to the above-noted two years were not in any way true. Admittedly, it is only on the basis of the subsequent valuation report obtained by the ITO from the valuation cell of the Department that he proceeded to initiate these proceedings for reopening the assessments. The learned counsel maintains that this action of the ITO is not warranted by law.

4. It is the conceded case of the respondents that the impugned action has been taken by the ITO under Clause (a) of Section 147 read with Expln. 2 of the Act. After hearing the learned counsel for the parties at some length, I find no merit in the stand taken by the respondents.

5. Thus, the short point that arises for consideration is as to whether the ITO can, on the