Reopening based on invalid valuation reference fails where unamended Section 55A conditions were not met.

Reopening under Section 148 was invalid where the Assessing Officer relied on a valuation reference that did not satisfy the unamended Section 55A(a). The assessee had adopted fair market value on 01.04.1981 based on a registered valuer's report, and the value claimed was not less than the fair market value so as to permit a reference under the then-applicable provision. The 2012 amendment to Section 55A(a) was held prospective and not applicable to the relevant year. The reassessment notice was quashed, granting relief to the assessee.

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Issues: Whether reopening of the assessment under Section 148 of the Income-tax Act, 1961 was valid when the assessee had adopted the fair market value of the asset on 01.04.1981 on the basis of a registered valuer's report, and whether the unamended Section 55A(a) governed the reference to the valuation officer.

Analysis: The notice for reassessment was founded on a valuation exercise that reduced the fair market value declared by the assessee from Rs. 81 per sq. mtr. to Rs. 1 per sq. mtr. The governing law at the relevant time permitted a reference to a valuation officer under Section 55A(a) only where the value claimed by the assessee, based on a registered valuer's estimate, was less than the fair market value. The assessee had in fact adopted a higher value than the one later worked out by the Assessing Officer, so the statutory condition for invoking the unamended provision was not satisfied. The amendment brought into Section 55A(a) by the Finance Act, 2012, effective from 01.07.2012, was held to be prospective and not applicable to the year in question.

Conclusion: The reopening was invalid and the notice under Section 148 of the Income-tax Act, 1961 was quashed, resulting in relief to the assessee.

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