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. Asper 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 basis of a subsequent valuation report, come to the conclusion that the full cost of construction of the building was not disclosed and the assessee was guilty of not disclosing fully and truly all material facts necessary for the assessment of the years in question. Similar question has already been considered and answered at least by three High Courts in Bajranglal Beria v. ITO : 85ITR335(AP) Rasiklal Jivanlal Shah v. ITO : 133ITR476(Cal) and Jawaharlal Daryavbuxmal v. CIT : 137ITR54(MP) . In Bajranglal Beria's case, the Division Bench of the Assam High Court adopted the observations of their Lordships of the Supreme Court in Calcutta Discount Co. Ltd. v. ITO : 41ITR191(SC) to answer this question. The relevant observations are (p. 339 of 85 ITR) :
'The words used are 'omission or failure to disclose fully and truly all material facts necessary for his assessment for that year'. It postulates a duty on every assessee to disclose fully and truly all material facts necessary for his assessment. What facts are material and necessary for assessment will differ from case to case. In every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax clue from an assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his possession, whether on disclosure by the assessee, or discovered by him on the basis of the facts disclosed, or otherwise, the assessing authority has to draw inferences as regards certain other facts ; and ultimately, from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable.
We are of the view that under Section 34(1)(a) if the assessee has disclosed primary facts relevant to the assessment, he is under no obligation to instruct the Income-tax Officer about the inference which the Income-tax Officer may raise from those facts. The terms of the Explanation to Section 34(1) also do not impose a more onerous obligation. Mere production of the books of account or other evidence from which material facts could with due diligence have been discovered does not necessarily amount to disclosure within the meaning of Section 34(1), but where on the evidence and the materials produced the Income-tax Officer could have reached a conclusion other than the one which he has reached, a proceeding under Section 34(1)(a) will not lie merely on the ground that the Income-tax Officer has raised an inference which he may later regard as erroneous.
The assessee had disclosed his books of account and evidence from which material, facts could be discovered : it was under no obligation to inform the Income-tax Officer about the possible inferences which may be raised against him. It was for the Income-tax Officer to raise such an inference and if he did not do so the income which has escaped assessment cannot be brought to tax under Section 34(1)(a).'
6. It is not in dispute before me that Section 34(1)(a) of the Indian I.T. Act, 1922, was equivalent to Section 147(a) of the Act. To the same effect are the observations made in the other two judgments noted above. On behalf of the respondents, Mr. Ashok Bhan, however, contends that certain observations by a Division Bench of this court in CIT v. Smt. Bimla Vati impliedly support the stand of the Department to the effect that if the ITO comes in possession of a valuation report relating to the cost of construction of a particular building, subsequent to the finalisation of the assessment of a particular assessee, that by itself can be enoughinformation to reopen the case of the, assessee under Section 147(a) of the Act. I, however, see no weight in this submission for the short reason that as per this judgment itself, the case of the Department was found to fall within the purview of Clause (b) Section 147 and not under Clause (a) of the same, as is sought to be pleaded by the respondents in the instant case. On the basis of the valuation report, the petitioner cannot possibly be accused of not fully and truly disclosing the facts at the time of the assessment as, to my mind, this report is nothing more than a mere opinion about the cost of construction or the fair market value of the building in question. As has already been indicated, mere change of opinion cannot possibly be any ground for the I.T. authorities to reopen the assessments which have already been finalised.
7. For the reasons recorded-above, the impugned notices obviously have to be quashed as not warranted by law. I order accordingly but with no order as to costs.