2009 (9) TMI 59 - HC - Income Tax

Court sets aside assessment order under Section 50C, emphasizes statutory safeguards and natural justice

N. Meenakshi Versus The Assistant Commissioner of Income Tax

The court allowed the writ petition, set aside the assessment order invoking Section 50C of the Income Tax Act, and remitted the matter for fresh disposal ... Valuation – value of land determined for stamp duty purpose as the sale value u/s 50C - petitioner offered the capital gains for assessment based on the actual consideration received by her, namely Rs.99 Lakhs and paid capital gains tax. However, the Registering Authority adopted the guideline value of the property which comes to Rs.3,92,68,800/- and levied stamp duty and the Indian Oil Corporation which is the purchaser has also paid stamp duty on the said amount. – AO propose to assess the capital gains on such value assessed by the Registering Authority – held that - Assessing Authority himself has no right to have extension of the period of assessment, by virtue of the powers under Section 153(3)(ii) of the Act - Considering the facts that the petitioner is 96 years old and the matter has been referred by the respondent for valuation …… the petitioner must be given an opportunity to take advantage of the valuation report that may be filed by the statutory authority – assessment order set aside – matter remitted Issues Involved:1. Validity and applicability of Section 50C of the Income Tax Act, 1961.2. Compliance with principles of natural justice.3. Jurisdiction and maintainability of the writ petition.4. Time limits for assessment under Section 153 of the Act.5. Availability and adequacy of alternative remedies.Detailed Analysis:1. Validity and Applicability of Section 50C of the Income Tax Act, 1961:The petitioner challenged the assessment order dated 31.12.2008, which invoked Section 50C of the Income Tax Act, 1961. The Assessing Authority completed the assessment based on the stamp duty value of the property, as the valuation report from the Valuation Cell was not received by the assessment date. The petitioner argued that this was contrary to Section 50C(2) of the Act, which mandates referral to a Valuation Officer if the assessee disputes the stamp duty valuation. The court acknowledged that Section 50C provides a safeguard to the assessee to contest the stamp duty valuation and seek a fair market valuation by a Valuation Officer.2. Compliance with Principles of Natural Justice:The petitioner contended that the assessment order was passed without waiting for the Valuation Officer's report, thereby violating principles of natural justice. The court emphasized that the right to a fair valuation is a statutory protection under Section 50C, and bypassing this process undermines the assessee's rights. The court noted that the Valuation Officer's report was crucial for a fair assessment and that the Assessing Authority should have awaited this report.3. Jurisdiction and Maintainability of the Writ Petition:The respondent argued that the writ petition was not maintainable due to the availability of an alternative remedy of appeal under Section 246A of the Act. The court, however, held that in cases where there is a breach of statutory provisions or principles of natural justice, the High Court can exercise its jurisdiction under Article 226 of the Constitution of India. The court cited precedents where the Supreme Court allowed writ petitions despite the existence of alternative remedies, especially when fundamental rights or statutory protections are at stake.4. Time Limits for Assessment under Section 153 of the Act:The court discussed the time limits for completing assessments under Section 153 of the Act. It noted that while there are statutory time limits, these can be extended in certain circumstances, such as when directed by a court. The court referred to Section 153(3) of the Act, which allows for an extension of the assessment period when directed by an order of any court. The court concluded that the Assessing Authority should have sought an extension to wait for the Valuation Officer's report, rather than rushing to complete the assessment.5. Availability and Adequacy of Alternative Remedies:The court acknowledged the respondent's argument about the availability of an appeal under Section 246A of the Act. However, it emphasized that the writ petition was maintainable given the specific circumstances of the case, including the petitioner's advanced age and the statutory right to a fair valuation under Section 50C. The court cited the Supreme Court's stance that alternative remedies do not bar the exercise of writ jurisdiction in cases of statutory breaches or violations of natural justice.Conclusion:The court allowed the writ petition, set aside the impugned assessment order, and remitted the matter to the Assessing Authority for fresh disposal after obtaining the valuation certificate from the District Valuation Officer. The court emphasized the importance of adhering to statutory safeguards and principles of natural justice in the assessment process.