CIT v. Darshan Singh

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The Tax Publishers2005 TaxPub(DT) 0466 (P&H-HC) : (2005) 004 (I) ITCL 0068 : (2005) 272 ITR 0650 : (2005) 194 CTR 0242 CIT v. Darshan Singh () INCOME TAX --Reassessment----VALIDITYAssessment reopened on valuation report-- Held: Proceedings under section 147, initiated solely on the report of the valuation officer, are not sustainable in law. Hence re-opening of case on the basis of valuation report was not justified. Income Tax Act, 1961 s.147 CIT v. Darshan Singh In the Punjab & Haryana High Court Before Hon'ble Justice Mr. N.K. Sud & Hon'ble Justice Mr. Adarsh Kumar Goel ITA No. 185 of 2002 9 August 2004 Counsel : Dr. N.L. Sharda, for the Appellant Mr. S.K. Mukhi, for the Respondent JUDGMENT(ORAL) NK.Sud, J. This order will dispose of ITA No. 185 and 191 of 2002 raising common question of law and fact. Since arguments have been advances in ITA No. 185 of 2002, the facts are taken from that. Income Tax Appellate Tribunal, Amritsar Bench, Amaritsar (hereinafer referred to as the 'Tribunal') has quashed the proceedings under section 147 of the Income-tax Act, 1961 (hereinafer referred to as the 'Act') initiated on the basis of the report of the Valuation Officer determining the cost of construction at a figure higher than what was disclosed by the assessee. For this purpose, the Tribunal placed reliance on the decision of this court in CIT v. Smt. Usha Mathur, (2001) 252 ITR 179(P&H) and various other decisions of different Benches of the Tribunal taking the same view. We have heard the counsel for the parties and have perused the orders on record. Counsel for the revenue has not been able to controvert the factual position that proceedings under section 147 of the Act have been initiated solely on the report of the Valuation Officer. In this view of the matter, the proceedings under section 147 of the Act are clearly not sustainable in view of the law laid down by this court in Smt. Usha Mathur's case (supra). Since the decision of the Tribunal is in conformity with the view expressed by this court, no substantial question of law arises for consideration by this Court. The matter can be viewed from another angle also. In Smt. Amiya Bala Paul v. CIT, (2003) 262 ITR 407(SC) it has been held that the Departmental Valuation Officer cannot be called upon to give a report to the assessing officer under the Act except when a reference under section 55A or 269L of the Act is made. The assessing officer, therefore, could not have obtained report of the departmental Valuation Officer for the purposes of determining the cost of construction. Thus the report of the departmental Valuation Officer was clearly invalid. If the said report is excluded from consideration, there is no material whatsoever warranting satisfaction on the part of the assessing officer about the escapement of income. Thus, the impugned notices cannot be sustained on this ground as well. Accordingly, we find no merit in these appeals which are dismissed. OPEN SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2005 TaxPub(DT) 0466 (P&H-HC) : (2005) 004 (I) ITCL 0068 : (2005) 272 ITR 0650 : (2005) 194 CTR 0242

CIT v. Darshan Singh ()

INCOME TAX

--Reassessment----VALIDITYAssessment reopened on valuation report-- Held: Proceedings under section 147, initiated solely on the report of the valuation officer, are not sustainable in law. Hence re-opening of case on the basis of valuation report was not justified.

Income Tax Act, 1961 s.147

In the Punjab & Haryana High Court Before Hon'ble Justice Mr. N.K. Sud & Hon'ble Justice Mr. Adarsh Kumar Goel

ITA No. 185 of 2002 9 August 2004

Counsel : Dr. N.L. Sharda, for the Appellant Mr. S.K. Mukhi, for the Respondent

JUDGMENT(ORAL)

NK.Sud, J.

This order will dispose of ITA No. 185 and 191 of 2002 raising common question of law and fact. Since arguments have been advances in ITA No. 185 of 2002, the facts are taken from that.

Income Tax Appellate Tribunal, Amritsar Bench, Amaritsar (hereinafer referred to as the 'Tribunal') has quashed the proceedings under section 147 of the Income-tax Act, 1961 (hereinafer referred to as the 'Act') initiated on the basis of the report of the Valuation Officer determining the cost of construction at a figure higher than what was disclosed by the assessee. For this purpose, the Tribunal placed reliance on the decision of this court in CIT v. Smt. Usha Mathur, (2001) 252 ITR 179(P&H) and various other decisions of different Benches of the Tribunal taking the same view.

We have heard the counsel for the parties and have perused the orders on record.

Counsel for the revenue has not been able to controvert the factual position that proceedings under section 147 of the Act have been initiated solely on the report of the Valuation Officer. In this view of the matter, the proceedings under section 147 of the Act are clearly not sustainable in view of the law laid down by this court in Smt. Usha Mathur's case (supra). Since the decision of the Tribunal is in conformity with the view expressed by this court, no substantial question of law arises for consideration by this Court.

The matter can be viewed from another angle also. In Smt. Amiya Bala Paul v. CIT, (2003) 262 ITR 407(SC) it has been held that the Departmental Valuation Officer cannot be called upon to give a report to the assessing officer under the Act except when a reference under section 55A or 269L of the Act is made. The assessing officer, therefore, could not have obtained report of the departmental Valuation Officer for the purposes of determining the cost of construction. Thus the report of the departmental Valuation Officer was clearly invalid. If the said report is excluded from consideration, there is no material whatsoever warranting satisfaction on the part of the assessing officer about the escapement of income. Thus, the impugned notices cannot be sustained on this ground as well.

Accordingly, we find no merit in these appeals which are dismissed.

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