Income tax Appeal No v. Devki Devi

Judgment

1. The Revenue has approached this Court under Section 260- A of the Income tax Act - , 1961 ( in short “ Income tax Appeal No - . 71 2003 2 Act’ ) and has prayed that the following substantial questions law arise in this appeal for the consideration of this Court , from the order of the Income tax Appellate Tribunal Amritsar , - Bench , Amritsar ( “ Tribunal” ) passed on

30.9.2002, in Income tax Appeal No - . 555 ( ASR ) 2001, the assessment year 1992-93: 1- Whether on the facts and in the circumstances the case the Hon’ble ITAT was justified in , law in holding that the reopening of assessment u s / 147 the act based on valuation report was not valid whereas as per valuation report , income to the tune of Rs . 16,91,200/- escaped assessment ” . 2- Whether on the facts and in the circumstances the case the Hon’ble ITAT was justified in holding report the Departmental Valuation Officer “ Information not” initiating proceedings / 147 u s even after Income tax Appeal No - . 71 2003 3 amendment section 147 effect

1.4.1989.”

2. The assessee had filed return of income for the assessment year 1992-93, declaring an income of Rs . 18,650/-. The return was processed under Section 143(1) a ( ) the Act and subsequently proceedings under Sections the Act were initiated . The assessing officer observed that an income of Rs . 16,91,200/- chargeable to tax had escaped assessment as the assessee had incurred Rs . 1,51,000/- construction renovation of / residential house No . 3056, Power House Road Bathinda , against construction of Rs . 18,42,200/- determined by the Departmental Valuation Officer DVO The ). ( Assessing Officer ultimately , vide assessment order dated

18.2.2000 framed assessment an income of Rs . 14,09,928/-. The assessee appeal before the Commissioner of Income tax Appeal ( - ) [( for short CIT A ” ( )] . “ The appeal was remanded back to the assessing officer for decision afresh . The assessing officer re framed the - Income tax Appeal No - . 71 2003 4 assessment ,

27.6.2001 and made an addition of Rs . 5,06,600/-. This gave rise to the assessee to once again prefer appeal before the CIT A ( ). In the appeal , the CIT A ( ) held that the assessing officer was justified in invoking the provisions of Sections 147 read with Section 148 the Act . The consequential assessment framed under Section 143(3) . was thus held to be legal and , ,

3. The assessee preferred appeal before the Tribunal . The assessee only pressed the question of re opening of - assessment under Section 147 the Act . The Tribunal after examining the matter accepted the plea of , the assessee and accordingly allowed the appeal vide order dated ,

30.9.2002.

4. The issue that arises in this appeal is whether the assessing officer could have reopened an assessment on the basis of report of the DVO Learned counsel . for the Revenue , however , could not to any provision except Section A of 55 the Act on the basis of which it could be pleaded , the report of the DVO was valid for estimating the Income tax Appeal No - . 71 2003 5 correct cost of the construction and investment in the house in question He also made efforts to draw support . from the provisions of Section 142 A of the Act introduced by Finance Act No ( .2) 2004 . w e f . . 15.11.1972.

5. We do not find any substance in either of submissions made by the learned counsel for the Revenue .

6. The apex Court Smt Amiya Bala Paul v . . Commissioner of Income Tax - , (2003) 262 ITR 407 ( SC ) had held that in an assessment of the assessee to income , the reference by the assessing officer to the DVO regarding question of cost of construction of a property built by the assessee cannot be made Once that . is so , reliance on the report of the DVO by the assessing officer for reopening the assessment was not justified .

7. Even after insertion of Section 142 A of the Act by Finance No ( . 2) Act , 2004, . w e f . . 15.11.1972, this Court while considering the scope of its applicability to proceedings under the Act , Income tax Reference No - . 48 1994, Income tax Appeal No - . 71 2003 Commissioner of Income Tax Central ( ), 6 Ludhiana v Nabha . Solvex P Ltd ( ) . decided on

7.7.2010, has held as under : “11. The question regarding the applicability of Section 142 A of the Act was subject matter of consideration before this Court in Krishan Lal Dua s ' ( supra wherein the assessment had become ) final on

31.3.1995 and the same was not liable to reassessment under Section 153 A of the Act , was held that Section 142 A of the Act would not be applicable as the proviso was attracted The . Allahabad High Court in Smt Shashi Agarwal s . ' case supra had held that where the Tribunal had ) ( passed the order before the cutoff date prescribed the proviso to Section 142 A of the Act and the appeal under Section 260 A of the Act being maintainable before the High Court only on substantial question of law therefore it could not , , be said to be continuation of the assessment proceedings within the meaning proviso to Income tax Appeal No - . 71 2003 7 Section 142 A of the Act The Assessing Officer , . , had no power to refer the matter to the DVO Similar view has been taken by Delhi and . Calcutta High Courts .

8. In view of the above we hold that Section , 142 A of the Act is not attracted to the facts of the present case and , , no reliance can be placed upon that . Consequently , the initiation of reassessment proceedings on the basis of report of the DVO cannot legally be sustained .

9. Accordingly , substantial questions claimed by the Revenue for determination by this Court are answered against the Revenue The appeal . is dismissed . ( AJAY KUMAR MITTAL ) JUDGE ADARSH KUMAR ( JUDGE GOEL ) 14, 2010 July rkmalik * * Income tax Appeal No - . 71 2003 8