TaxTMI 
TaxTMI 
2013 (12) TMI 60
X X X X Extracts X X X X
X X X X Extracts X X X X
....2,933/- (sold during the year for Rs.20.10 lacs) and a gain of Rs.5,17,102/- in respect of another property at Ghodbunder Village. As the Assessing Officer (A.O.) was of the prima facie view that the fair market value of the said property as on 01.04.1981; the said asset/s having been acquired by the assessee prior to the said date, so that the said value would at the assessee's option substitute for its cost, was taken by the assessee on a higher side, he made a reference u/s.55A of the Act to the Valuation Officer (VO) to determine the same, as well as the fair market value (FMV) on the date of their transfer (sale), during the course of the assessment proceedings vide his letter dated 22.08.2006. However, as no report from the Valuation Officer stood received by the AO, he being constrained for want of time to complete the assessment, framed the assessment accepting the assessee's returned figures, while mentioning the fact of the reference u/s.55A for the FMV of the said property as on 01.04.1981 and 30.09.2003 by way of an office note (forming part of the assessment order), clearly stating that the effect of the same would be considered and assessment amended accordingly on it....
X X X X Extracts X X X X
X X X X Extracts X X X X
....both the assessee and the VO in deciding the matter, with the assesse being further entitled to be represent through a registered valuer. Again, the provision of section 35 (i.e., the rectification of mistakes) and section 37 (i.e., power to take evidence on oath), etc. of the Wealth Tax Act, which are para materia with sections 154 and 131 of the Act, are applicable to the VO to whom reference u/s.55A has been made. The assessee has already been allowed opportunity to state its case on merits before the VO, who is competent person under the Act to decide the issue under reference, i.e., of valuation. Under the circumstances, therefore, in our view, there has been substantial compliance of the procedure for grant of opportunity to the assessee to state his objections, as contemplated by section 154(3), notwithstanding the non-issue of notice there-under. As such, it cannot be said that the non-issue of notice u/s.154(3) has resulted in a breach of principle of natural justice, so that the assessment as amended is a nullity, but can only be said to be vitiated on that score. Toward this, we may, besides the foregoing clear provision of law and the admitted facts, also draw suppor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ional notice, and is therefore curable; it being again trite that where a defect or irregularity informs an assessment, the same is to be restored back to the stage where the said irregularity had occurred (ref: Guduthur Brothers v. ITO [1960] 40 ITR 298 (SC)). The assessing authority has an inherent jurisdiction, subject of course to the time limitation provided by law in its respect, to rectify mistakes inasmuch as no court or authority can by its action or non-action cause prejudice to any party before it (also refer: Honda Siel Power Products Ltd. v. CIT [2007] 295 ITR 466 (SC)). The apex court in Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 (SC) has laid down a four-way test toward an order being erroneous. Succinctly put, these are: incorrect assumption of facts; incorrect application of law; without applying the principles of natural justice; and without application of mind. It is the third category, which arises in the instant case, and with which we are therefore concerned with. To the extent, therefore, the assessee has been denied opportunity to present its case on account of non-issue of notice u/s. 154(3), the rectification order could be erroneous, but not ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt of the firm, being allowable only with reference thereto; change in the share of the partners consequent to a change in the assessment of the firm (for years prior to A.Y. 1992-93); non-satisfaction of a condition/s of sections 32A, 33, 33A, etc. prescribing conditions extending to years subsequent to the assessment year under reference, et. al. We are unable to see as to how the absence of completion of procedure, a part of the verification process, available to the A.O. in making the assessment, could conceivably be regarded as a subsequent development to be included u/s.155, empowering or enabling the A.O. to pass an amended order. We are, as such, not impressed with the argument made with reference to section 155 of the Act. 3.4 Continuing further, however, the argument qua sec. 155, on being extended, itself provides the basis for ousting the AO's action. The AO had called for the valuer's report as a part of the verification procedure. How could thus there be any scope for inferring mistake in the assessment, which cannot predicate on the report? Further, the said report may bind the assessing authority but not bind the assessee, who may well dispute the same. The matte....