SDU Beverages Private Limited V. National Faceless Assessment Centre Income Tax Department, New Delhi and Deputy Commissioner of Income Tax Circle 6(1)(1), Bangalore and National Faceless Appeal Center Delhi

WP/14465/2024

AI Insights

The case involves SDU Beverages Private Limited, which challenged the validity of an assessment order related to capital gains for the assessment year 2020-21. The petitioner argued that the Assessing Officer prematurely concluded the assessment without waiting for the report from the District Valuation Officer, to whom the valuation was referred under Section 142A of the Income-Tax Act. The court found that proceeding with an estimated valuation without the report constituted acting on surmise, which was impermissible. Consequently, the court set aside the assessment order and the subsequent recovery proceedings, remitting the matter for a fresh assessment after obtaining and considering the valuation report.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 799684 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 03-07-2024
• Assessment Year: misc
• Laws Referred To: Income-Tax Act, Companies Act 1956
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M DILIP
• Assessee Lawyers: BORKAR SUBODH
• Keywords: Assessment; Attachment; District Valuation Officer; Fair market value; Income Tax; Recovery; Valuation; Writ petition
• Section: 142A; 226(3)

Judgement Text

" - 1 - NC: 2024:KHC:25060 WP No. 14465 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF JULY, 2024 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 14465 OF 2024 (T-IT) BETWEEN: 1. SDU BEVERAGES PRIVATE LIMITED #9, 12/12, 2ND FLOOR, 12TH CROSS, WILSON GARDEN, BENGALURU, KARNATAKA, INDIA-560 027. REG. COMPANIES ACT 1956 REP. BY ANAND AGARWAL (DIRECTOR) … PETITIONER (BY SRI. BORKAR SHEETAL SUBODH., ADVOCATE) AND: 1. NATIONAL FACELESS ASSESSMENT CENTRE INCOME TAX DEPARTMENT, NEW DELHI NORTH BLOCK-110 001 REP. BY INCOME TAX OFFICER 2. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 6(1)(1), BANGALORE, BANGALORE-560 095. 3. NATIONAL FACELESS APPEAL CENTER DELHI, NORTH BLOCK-110 001 Digitally signed by PRAKASH N Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC:25060 WP No. 14465 of 2024 REP. BY COMMISSIONER OF INCOME TAX (APPEALS) … RESPONDENTS (BY SRI. M. DILIP., JUNIOR STANDING COUNSEL) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO 1. ISSUE A WRIT OF CERTIORARI OR IN THE LIKE NATURE OF QUASHING THE IMPUGNED NOTICE OF RECOVERY/ATTACHMENT U/S 226(3) THE INCOME-TAX ACT FOR THE RELEVANT ASSESSMENT YEAR 2020-21, BEARING DIN NO. ITBA/COM/F/17/2024- 25/1064164116(1), AND ITBA/COM/F/17/2024- 25/1064164582(1) DATED 17.04.2024 PRODUCED AS ANNEXURE-F1 AND F2 PASSED BY THE RESPONDENT NO.2 AUTHORITY AND ETC. THIS PETITION COMING ON FOR ORDERS THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner has called in question the validity of the order in original at Annexure-D dated 28.09.2022. 2. The learned counsel for petitioner submits that the proceedings regarding capital gains though on certain transactions was a subject matter of consideration before the Assessing Officer. It is submitted that during the course of assessment proceedings, not being satisfied by the valuation, in order to have clarity regarding valuation reference was made to the District Valuation Officer under - 3 - NC: 2024:KHC:25060 WP No. 14465 of 2024 Section 142A for ascertaining fair market value of the property. 3. It is submitted that without waiting for the report of the District Valuation Officer, the Assessing Officer has proceeded to conclude the assessment taking note of estimated value of the property which according to the petitioner being based on surmise could not have been resorted to and accordingly it is submitted that on such sole ground the impugned assessment order requires to be set aside. 4. Learned counsel appearing for the Revenue is unable to controvert the assertion of the petitioner as regards the Assessing Officer not having waited for receipt of report of the District Valuation Officer and proceeding to make a valuation while passing the assessment order. 5. It is clearly observed that the Assessing Officer has referred for valuation to the District Valuation Officer under Section 142 for ascertaining fair market value of the - 4 - NC: 2024:KHC:25060 WP No. 14465 of 2024 property. If that were to be so, the question of proceeding by taking the estimated valuation would be impermissible as the same would amount to acting on surmise. The Assessing Officer once having referred for valuation to the District Valuation Officer ought to have waited for such report and thereafter should have concluded the assessment proceedings. 6. Accordingly in light of the above, the assessment order is set aside and the matter is remitted for fresh consideration with the observation that the Assessing Officer is required to await report of the District Valuation Officer and after obtaining it to share the same with the assessee and provide an opportunity to the assessee to take stand with regard to such valuation and proceed further after affording an opportunity to the petitioner. 6. Accordingly, the petition is disposed off. The order at Annexure-B is set aside. Consequently the proceedings for recovery by way of attachment in terms of - 5 - NC: 2024:KHC:25060 WP No. 14465 of 2024 the Annnexure-F1 and F2 are set aside. All contentions are kept open on merits. Sd/- JUDGE Np/- "