SHATRUGHAN MAHTO V. THE INCOME TAX OFFICER

WPC/4328/2022

AI Insights

The case involves Shatrughan Mahto, the petitioner, who challenged the reassessment order passed by the Income Tax Officer, Ward 2(1), Dhanbad, and the Assistant Valuation Officer, Valuation Cell, Income Tax Department, Ranchi. The petitioner argued that the reassessment was conducted without providing him the valuation report, which is essential for filing an effective reply or objection, thus violating Section 142A(6) of the Income Tax Act, 1961. The reassessment led to an addition of Rs. 55,16,537 to the petitioner's income, based on a higher valuation of his property, which he contested due to the lack of access to the valuation report.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 748224 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 11-01-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: RATNESH SAHAY
• Assessee Lawyers: NITIN PASARI; SIDHI JALAN; SHUBHAM CHOUDHARY; GAURAV KAUSHALESH
• Keywords: Demand notice; Non compliance; Penalty notice; Quashing of order; Reassessment proceedings; Valuation report
• Section: 147; 148; 143(3); 274; 270A; 156; 142A(6); 153(6)(i)

Judgement Text

" IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P.(T) No. 4328 of 2022 Shatrughan Mahto --- --- Petitioner Versus 1. The Income Tax Officer, Ward 2(1), Dhanbad. 2. The Assistant Valuation Officer, Valuation Cell, Income Tax Department, Ranchi. --- --- Respondents --- CORAM: Hon’ble the Acting Chief Justice Hon’ble Mr. Justice Deepak Roshan --- For the Petitioner : M/s. Nitin Kr. Pasari, Sidhi Jalan, Shubham Choudhary & Gaurav Kaushalesh, Advocates For the Respondents :Mr. Ratnesh Nandan Sahay, Sr. Standing Counsel 05/11.01.2023 Petitioner has prayed for the following reliefs :- (A) For issuance of an appropriate writ, order or direction, for quashing and setting aside the order dated 16.08.2022 passed by the respondent no.1 (Annexure-21) whereby and whereunder, without fulfilling the modality prescribed under the Act in terms of Section 142(A)(6) of the Income Tax Act, 1961, the assessment proceeding has been completed which otherwise renders the entire proceeding ab-initio void and non-est in the eye of law. (B) For issuance of an appropriate writ, order or direction, directing upon the Respondent to provide the copy of the valuation report carried out by the Valuation Officer, in the absence of which no proceeding much less any effective reply / objection to the same could be filed by the petitioner. (C) Consequently, the notice of demand under Section 156 and the notice of penalty under Section 274 read with Section 270A of the Act, all dated 16.08.2022 (Annexure-21), be quashed and set aside. (D) For issuance of any other appropriate writ(s)/ order(s)/ direction(s) as Your Lordships may deem just and proper in the facts and circumstances of the case for imparting substantial justice to the petitioner. 2. Pursuant to the notice under Sections 147 and 148 of the Income Tax Act, 1961 dated 30th March 2021 based on information available with the Department, reassessment proceedings were initiated against the petitioner. Learned counsel for the petitioner has referred to the intimation regarding extension of time by order dated 31st March, 2022 in respect of reassessment proceedings initiated by virtue of notice under Section 148 of Unamended Income Tax Act, 1961 dated 30th March, 2021 (Annexure-1) and then drawn the attention of this Court to the findings of the Assessing Officer in Reassessment Order dated 16th August, 2022 (Annexure-21). It is submitted -2- that though the Assessing Officer acknowledged that valuation report was not served upon the assessee and he could not submit his explanation, but because of the limitation involved, he was not in a position to provide valuation report and accordingly proceeded to pass the assessment order. It is submitted that the same is in teeth of the provisions of Section 142A(6) of the Income Tax Act, 1961. Not only demand has been raised but notice for initiation of penalty proceedings under Section 274 and 270A has also been issued. 3. The assessment order (Annexure-21) dated 16th August 2022 at paragraphs-6 and 7 reads as under :- “6. On going through the reply of the assessee it was found that the assessee has nowhere stated about the difference amount of valuation report rather he has repeatedly focused on not receiving the valuation report from the Valuation Cell. Further, he has asked for valuation report from the undersigned. Since, it is a limitation matter and the undersigned has no much time left to provide valuation report and assessee’s explanation thereon. In fact, the undersigned was under the impression that the valuation report has already been provided to the assessee by the valuation cell. It came to the notice only when the assessee replied. Under the facts and circumstances, the Assessing Officer is bound to complete the proceedings within due time. 7. During the course of assessment proceedings before NeFAC, the assessee had submitted the loan details taken for construction which were ‘after examination’ found explained for an amount of Rs.14,04,623/- on the basis of which the case was re-opened. But so far as the difference amount of Rs.55,16,537 (72,66,537-17,50,000) is remained unexplained by the assessee since, the assessee has not mentioned about it in his reply. The Assessing Officer has no option but to add back the difference amount of Rs.55,16,537/- in his total income of the assessee. In view of the above facts, income of the assessee is computed as below:- Particular Amount Total income as per return 5,93,170/- Add:- As discussed 55,16,537/- Total Assessed Income 61,09,707/- Assessed u/s 147 rws 143(3) of the I.T. Act, 1961 to the tune of Rs.61,09,707/- for the AY 2017-18. Charged interest as per provisions of section 234A, 234B, 234C and 234D of the I.T. Act, 1961 if any. Issue demand notice and challan accordingly. Issued penalty notice u/s 270A of the Income Tax Act 1961 for Under reporting of income in consequence of misreporting.” 4. Learned counsel for the petitioner has submitted that the assessment order has been passed only on account of assessment proceedings -3- going to become time barred, though the assessing officer has accepted that it has no much time left to provide valuation report and seek his explanation thereon in terms of Section 142A(6) of the Income Tax Act, 1961. 5. The respondents have filed a counter affidavit. Learned counsel for the respondents submits that there is no provision as per the Income Tax Act, 1961 to provide valuation report to the assessee by the Assessing Officer, rather it is to be supplied by the Valuation Officer both to the Assessing Officer and to the assessee. If the valuation report was not supplied to the assessee, he could have intimated it well before the compliance date. Since the time was running out for completion of the assessment as per the provisions of the Act, the assessing officer was bound to complete the assessment within the stipulated period. 6. The reassessment has been made only for the reason that valuation of the three storied building of the assessee on the vacant land furnished by him was Rs.17,50,000/- whereas the Department was in receipt of information that it was of a much higher value. The valuation report also shows that the building was valued at Rs.72,66,537/-. The purpose of serving the valuation report to the assessee before an assessment order is passed, is to allow him to make an objection to the valuation report. The purpose got defeated, if the valuation report was not supplied to him. 7. As such, the impugned assessment order dated 16th August 2022 is set aside. The matter is remanded to the assessing officer to pass fresh order in accordance with law within the time frame prescribed under Section 153(6)(i) of the Income Tax Act. Let it be made clear that the assessee should be provided with the valuation report and opportunity be granted to him to make his objection thereupon before passing assessment order. In case the petitioner does not cooperate, it would be open for the assessing officer to pass ex-parte order. (Aparesh Kumar Singh, A.C.J.) (Deepak Roshan, J.) Shamim/ "