Sudarshan Forge Pvt. Ltd. V. Commissioner of Income Tax Ludhiana

ITA/225/2006

AI Insights

The case involves M/s. Sudarshan Forge Pvt. Ltd., the appellant, contesting the decision of the Income Tax Appellate Tribunal which upheld the Assessing Officer's use of Section 142A for property valuation in the assessment year 2000-01. The primary legal contention was whether the Tribunal was justified in confirming the Assessing Officer's action of assuming jurisdiction under Section 142A, particularly in light of the retrospective amendment effective from 15.11.1972, and whether the assessment, which was under appeal and not finalized by 30.9.2004, could still be subjected to these provisions. The Tribunal and the High Court both found that the ongoing appeal prevented the finalization of the assessment, thus allowing the use of Section 142A.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 678316 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 01-12-2010
• Assessment Year: misc
• Other Referred Cases: Smt. Amiya Bala Paul Vs. Commissioner of Income Tax, Commissioner of Income Tax v. Krishan Lal Dua, S. Sankappa and others vs. Income Tax Officer
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: RAJESH KATOCH
• Assessee Lawyers: S K MUKHI
• Keywords: Amendment; Assessment; Departmental Valuation Officer; Income Tax; Retrospective effect; Valuation
• Section: 143(3); 260A; 142A

Judgement Text

" Income Tax Appeal No. 225 of 2006 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 225 of 2006 Date of decision: 1.12.2010 M/s. Sudarshan Forge Pvt. Ltd. through Sunil Goyal --- Appellant Versus Commissioner of Income Tax Ludhiana --- Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present: Mr. S.K. Mukhi, Advocate for the appellant. Mr. Rajesh Katoch, Standing Counsel for the respondent. --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-Tax Act, 1961 (for short “the Act”) has been filed by the assessee against the order dated 16.12.2005, passed by the Income Tax Appellate Tribunal, Chandigarh Bench ‘B’, Chandigarh (in short “the Tribunal”) in ITA No. 31/CHD/04, relating to the assessment year 2000-01. The appeal was admitted for determination of the following substantial questions of law by this Court: A- Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was Income Tax Appeal No. 225 of 2006 2 justified on facts and in law in confirming the action of the A.O. in holding that the jurisdiction under Section 142A has been validly assumed by the A.O. in the present case? B- Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was justified on facts and in law in confirming the action of the A.O. in holding that the provisions of Amendment/ Newly introduced Section 142A though made effective retrospectively w.e.f. 15.11.1972 have been validly assumed by the A.O. in the present case which is made applicable only to those cases wherein the assessment has not been finalized on or before 30th day of September, 2004 vide Proviso under Section 142A(1) of Income Tax Act, 1961? C- Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was justified on facts and in law in confirming the action of the A.O. under Section 142 A of the Income Tax Act, 1961 by erroneously holding that pendency of appeal before ITAT will not lead to finalization of assessment proceedings? The facts, in brief, necessary for adjudication, as narrated in the appeal are that the return filed by the assessee for the assessment year under reference came under scrutiny and the assessment was finalised by order dated 31.3.2003 by making Income Tax Appeal No. 225 of 2006 3 various additions and disallowances out of which an addition of Rs. 9,88,374/- was also made on the basis of difference in valuation report of the valuer of the assessee and that of the Revenue. As per the case of the assessee the Revenue wrongly invoked the amended provisions of Section 142A of the Act. The Commissioner of Income Tax (Appeals), [hereinafter referred to as “CIT(A)”] on an appeal being preferred by the assessee deleted the additions made by the assessing officer and, thus, accepted the appeal vide order dated 29.10.2003. The Tribunal, however, accepted the appeal carried by the Revenue, vide order dated 16.12.2005 whereby it reversed the order of the CIT(A) and endorsed the decision of the assessing officer by holding that the appellate proceedings were to be considered as continuation of the assessment proceedings as the Tribunal only adjudicated upon the appeal against the already completed assessment orders. We have heard learned counsel for the parties and perused the record. Learned counsel for the assessee submitted that since the assessment had been finalised prior to 30.9.2004, the assessing officer was not justified in making reference to the DVO as held by the Apex Court in Smt. Amiya Bala Paul Vs. Commissioner of Income Tax, (2003) 262 ITR 407. Learned counsel further submitted that the Tribunal had erred in allowing the appeal of the Revenue by holding that the reference to the DVO was valid. The counsel placed reliance on Commissioner of Income Tax v. Krishan Lal Dua, 149 TAXMAN 126 (P&H) = 277 ITR 477 (P&H), and S. Sankappa and others vs. Income Tax Officer, 68 ITR 760 (SC). On the other hand, Income Tax Appeal No. 225 of 2006 4 learned counsel for the Revenue submitted that since the appeal was pending before the Tribunal, the assessment proceedings had not become final and conclusive in terms of proviso to Section 142A of the Act. We have given our thoughtful consideration to the submissions made by the learned counsel for the parties and have perused the record. The issue in this case is regarding validity of proceedings for valuation of the property which was referred to the Departmental Valuation Officer (DVO) by the assessing officer. The Tribunal while rejecting the contention of the assessee in para 6 of its order recorded as under: “We are unable to accept the submission of the learned counsel for the assessee as the assessment order is under appeal before the Income-Tax Appellate Tribunal and it has not reached its final stage. We are of the view that the case of the assessee is not covered by the decision of the Chandigarh Bench in the case of ITO vs. Shri N.S. Bakshi (supra) as in the said case, the assessment was reopened and the reopening was quashed on the basis that the assessment had already become final before 30.9.2004. In the instant case, no reopening is involved as the assessment has been completed u/s 143(3), which is subject matter of the appeal before us, and has not reached its final stage. Therefore, keeping in view the provisions of section 142A of the Income Tax Act, we set aside the order passed by Income Tax Appeal No. 225 of 2006 5 the Commissioner of Income Tax (Appeals) and restore the matter to his file with the direction that he will decide the issue on merits after providing adequate opportunities of being heard to the assessee and the Assessing Officer.” It is not disputed that the appeal was pending before the Tribunal on 30.9.2004, therefore, the assessment proceedings cannot be said to have attained finality and become conclusive. Once that is so, the reference made by the assessing officer to the DVO cannot be held to be bad. The issue as to whether a reference by the assessing officer to the Departmental Valuation Officer could be justified by the revenue, after insertion of provisions of Section 142A of the Act where an appeal was pending before the Tribunal on 30.9.2004, was not under discussion in the judgments cited by the learned counsel for the assessee. Therefore, the same do not come to the rescue of the assessee in view of the facts of the present case, noticed above. No fault could be pointed out by the counsel for the appellant in the order passed by the Tribunal which may warrant interference by this Court. Accordingly, the appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) December 1, 2010 JUDGE *rkmalik* Income Tax Appeal No. 225 of 2006 6 "