Prakash Chand v Deputy Commissioner of Income Tax and Anr

Madhya Pradesh High Court

GWALIOR BENCH

1 March 2004

Writ Petn. No. 41 of 2003

The Judgment was delivered by : A. M. SAPRE, J.

A.M. SAPRE, J.- The short question that arises for consideration in this writ is, whether respondent No. 1-Dy. CIT, Circle-5, Indore was justified in issuing the impugned notices under s. 148 of the IT Act to the petitioner for the asst. yrs. 1997-98, 1998-99, 1999-2000 and 2000-2001. Facts of the case are not in dispute. Indeed, in income-tax matters, facts are mostly not in dispute and hence, the Courts are mostly concerned with the applicability of legal questions arising out of the controversy.

2. It is not in dispute that assessment of years in question, referred supra, are complete and orders have also been passed, the last being made on 31st March, 2001 by AO. It appears that on 25th Jan., 2002, the AO, who had made the aforementioned assessment, received the report of valuation officer in respect of valuation of petitioner’s house in question. It is on the strength of this valuation report, the AO found that petitioner had shown less investment in the construction of the house in the assessment year in question whereas the report of the valuation officer received by him show higher investment. The AO accordingly and on the basis of this valuation report issued the impugned reassessment notices under s. 148 of IT Act whereby he sought to re-open the concluded assessments in relation to the aforementioned four assessment years. It is against these impugned notices, the petitioner has felt aggrieved and filed this writ. Notice of the writ was issued to respondents. They are served and represented. In substance, the respondents have defended the impugned notices by placing reliance on the reasons (A-4) supplied to the petitioner in support of the impugned notices.

3. Heard Shri P.K. Saxena, learned senior counsel with Shri Ranwka, learned counsel for petitioner and Shri Pal, learned counsel for respondents.

4. Having heard learned counsel for the parties and having perused record of the case, I am inclined to allow the writ and quash the impugned notices.

5. In my considered opinion, the question raised in this writ remains no longer res Integra and stands decided by the decision of Supreme Court rendered in the case of Amiya Bala Paul vs. CIT 2003 Indlaw SC 491 :2003 5 JT 384. In this case also, the question arose, as to what extent the ITO can exercise his powers under ss. 131(1), 133(6) and 142(2) of the IT Act as also in relation to powers conferred under s. 55A ibid while obtaining the valuation report of the valuation officer-statutory authority appointed under s. 2(2) of the WT Act. Their Lordships after examining the Scheme of IT Act and WT Act inter alia held that :

“17. Besides s. 55A having expressly set out the circumstances under and the purposes for which a reference could be made to a valuation officer, there is no question of the AO invoking the general powers of enquiry to make a reference in different circumstances and for other purposes. (See Padam Sen vs. State of U.P.1960 Indlaw SC 244, para 8; Arjun Singh vs. Mohindra Kumar1963 Indlaw SC 362, para 19). It is noteworthy that s. 55A was introduced in the Act by the Taxation Laws (Amendment) Act, 1972 when ss. 131(1), 133(6) and 142(2) were already on the statute book. Learned counsel for the appellant has correctly submitted that if the power to refer any dispute to a valuation officer were already available in ss. 131(1), 133(6) and 142(2), there was no need to specifically empower the AO to do so in certain circumstances under s. 55A.

21. Apart from the aforesaid, a valuation officer is appointed under the WT Act and can discharge functions within the statutory limits under which he is appointed. It is not open to a valuation officer to act in his capacity as valuation officer otherwise than in discharge of his statutory functions. He cannot be called upon nor would he have the jurisdiction to give a report to the AO under the IT Act except when a reference is made under and in terms of s. 55A or to a competent authority except under s. 269L.

22. We are therefore of the view that the High Court incorrectly answered the question referred to it in the affirmative. The Tribunal had not erred in holding that the AO cannot refer the matter to the valuation officer for estimating the cost of construction of the house property. The appeal is accordingly allowed and the decision of the High Court set aside.”

6. It is, therefore, clear that AO has no jurisdiction to take recourse to the provisions of ss. , 131(1), 133(6) and 142(2) of the Act for obtaining any report of valuation officer except in a case of reference made to valuation officer under s. 55A ibid and that too in respect of the cases enumerated therein for making a reference.

7. Coming to the facts of the case, when the assessment proceedings in respect of assessment year in question had already been completed then in such event, the AO had no jurisdiction to place reliance on the valuation report of valuation officer obtained subsequently and that too not obtained in exercise of powers conferred under s. 55A of the Act. In other words, the AO had no jurisdiction to re-open the concluded assessment under s. 148 of the Act on the prayer of petitioner for staying the recovery in accordance with law. While considering the prayer, petitioner may also draw the attention of the respondent No. 3 in respect of Circular No. 1/6/69-ITCC, dt. 21st Aug., 1969, Annex. P-10.

3. Till 15th March, 2004 it is directed that the petitioner’s shop shall remain attached by the respondents for recovery of amount, but the respondents shall not take any coercive action against the petitioner.

No order as to costs.