THE COMMISSIONER OF INCOME TAX V. DEVKI DEVI

ITA/71/2003

AI Insights

The case revolves around an appeal by the Commissioner of Income Tax, Bathinda, challenging the decision of the Income Tax Appellate Tribunal, Amritsar, which had set aside the reopening of an income assessment for the year 1992-93. The original assessment was reopened by the assessing officer based on a valuation report from the Departmental Valuation Officer (DVO), which suggested that income had escaped assessment. The Tribunal found the reopening unjustified, leading to the Revenue's appeal to the High Court. The main legal contention was whether the DVO's report could validly support the reopening of the assessment under Section 147 of the Income Tax Act, particularly after the amendment by Finance Act (2) of 2004.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 719627 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 14-07-2010
• Assessment Year: misc
• Other Referred Cases: Smt Amiya Bala Paul v Commissioner of Income Tax, Commissioner of Income Tax Central Ludhiana v Nabha Solvex P Ltd, Krishan Lal Dua v State, Smt Shashi Agarwal v State
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: SAVITA SAXENA
• Keywords: Departmental Valuation Officer; Income Tax; Legal validity; Reassessment; Valuation report
• Section: 147; 148; 143(3); 143(1); 55A; 142A

Judgement Text

"1 - . 71 2003 Income tax Appeal No of IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ----- - . 71 2003 Income tax Appeal No of : 14, 2010 Date of decision July - Commissioner of Income tax Bathinda --- Appellant Versus Devki Devi widow of late Kasturi Lal --- Respondent --- : . CORAM HON’BLE MR JUSTICE ADARSH KUMAR GOEL . HON’BLE MR JUSTICE AJAY KUMAR MITTAL --- : PRESENT . , Ms Savita Saxena Advocate . for the appellant . None for the respondent --- , . AJAY KUMAR MITTAL J 1. The Revenue has approached this Court under 260- - , 1961 ( “ Section A of the Income tax Act in short the 2 - . 71 2003 Income tax Appeal No of ) Act’ and has prayed that the following substantial questions , of law arise in this appeal for the consideration of this Court - , from the order of the Income tax Appellate Tribunal Amritsar , ( “ ) Bench Amritsar in short the Tribunal” passed on 30.9.2002, - . 555 ( ) 2001, in Income tax Appeal No ASR for 1992-93: the assessment year 1- Whether on the facts and in the circumstances , of the case the Hon’ble ITAT was justified in law in holding that the reopening of assessment / 147 u s of the act based on valuation report , was not valid whereas as per valuation report . 16,91,200/- income to the tune of Rs has . escaped assessment ” 2- Whether on the facts and in the circumstances of the case the Hon’ble ITAT was justified in holding that the report of the Departmental “ Valuation Officer is Information or not” for / 147 initiating proceedings u s even after 3 - . 71 2003 Income tax Appeal No of 147 amendment in section with effect from 1.4.1989.” 2. The assessee had filed return of income for 1992-93, . the assessment year declaring an income of Rs 18,650/-. 143(1) The return was processed under Section ( ) a of the Act and subsequently proceedings under Sections 147/148 . of the Act were initiated The assessing officer . 16,91,200/- observed that an income of Rs chargeable to tax had escaped assessment as the assessee had incurred . 1,51,000/- / Rs as cost of construction renovation of . 3056, , residential house No Power House Road Bathinda . 18,42,200/- against cost of construction of Rs as ( ). determined by the Departmental Valuation Officer DVO The , Assessing Officer ultimately vide assessment order dated 18.2.2000 . framed assessment on an income of Rs 14,09,928/-. The assessee filed 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 4 - . 71 2003 Income tax Appeal No of , 27.6.2001 assessment vide order dated and made an . 5,06,600/-. addition of Rs 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 147 justified in invoking the provisions of Sections read with 148 . Section of the Act The consequential assessment 143(3) , , framed under Section was thus held to be legal and . valid 3. . The assessee preferred appeal before the Tribunal - The assessee only pressed the question of re opening of the 147 . assessment under Section of the Act The Tribunal after , examining the matter accepted the plea of the assessee and , 30.9.2002. accordingly allowed the appeal vide order dated 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 refer to any provision except Section 55 , A of the Act on the basis of which it could be pleaded that the report of the DVO was valid for estimating the 5 - . 71 2003 Income tax Appeal No of correct cost of the construction and investment in the house . in question He also made efforts to draw support from the 142 provisions of Section A of the Act introduced by Finance ( .2) 2004 . . . 15.11.1972. Act No of w e f 5. We do not find any substance in either of the . submissions made by the learned counsel for the Revenue 6. The apex Court in . . Smt Amiya Bala Paul v - , Commissioner of Income Tax (2003) 262 407 ( ) ITR SC had held that in an assessment of the assessee to income , tax 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 the reliance on the report of the DVO by the assessing officer for . reopening the assessment was not justified 7. 142 Even after insertion of Section A of the Act by ( . 2) , 2004, . . . 15.11.1972, Finance No Act w e f this Court while considering the scope of its applicability to proceedings under , - . 48 1994, the Act in Income tax Reference No of 6 - . 71 2003 Income tax Appeal No of ( ), . Commissioner of Income Tax Central Ludhiana v Nabha ( ) . Solvex P Ltd 7.7.2010, : decided on has held as under “11. The question regarding the applicability of 142 Section A of the Act was subject matter of ' consideration before this Court in Krishan Lal Dua s ( ) case supra wherein the assessment had become 31.3.1995 final on and the same was not liable to 153 , reassessment under Section A of the Act it 142 was held that Section 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 142 under the proviso to Section A of the Act and 260 the appeal under Section 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 of proviso to 7 - . 71 2003 Income tax Appeal No of 142 . , Section A of the Act The Assessing Officer , thus 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 thus 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 the substantial questions of law claimed by the Revenue for determination by this Court are . . answered against the Revenue The appeal is dismissed ( ) AJAY KUMAR MITTAL JUDGE ( ADARSH KUMAR ) GOEL 14, 2010 July JUDGE * * rkmalik 8 - . 71 2003 Income tax Appeal No of "