2014 (2) TMI 898

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....clared cost of property in the return at Rs.83.87 lakhs (rounded off). 2.2 On 30.3.2005, the Assessing Officer passed the impugned order requesting the Valuation Officer, Baroda to calculate the correctness of the cost of investment and authorized the said officer under section 142A of the Income Tax Act, 1961 ("the Act" for short) to inspect the property and make such investigation as considered necessary. The order of reference reads as under:- Date:30/3/2005 "To: The Valuation Officer Valuation Cell, Income tax Department, Baroda. Sir, Sub:-Valuing the cost of investment in the property belonging to M/s. Me & Mummy Hospital, 3rd floor, Jalnidhi, Opp.Bhumali Besides Navdi Ovara, Nanpura, Surat 395 ------------------------------------ M/s. Me & Mummy Hospital has invested in the construction/renovation of the property as per the details indicated below:- DETAILS: 1 Description of the Assets/ property giving exact location with complete address building/ Clinic at 3rd floor, Jalnidhi, Opp. Bahumali Besides Navdi Ovara, Nanpura, Surat 395 001 2 Name & complete address of the Assessee with Telephone No., if any M/s. Me & Mummy Hospit....

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....uation Officer ("DVO" for short) dated 15.4.2005 calling for details about the said investment, the petitioner filed this petition and challenged the very order of reference. 5. Learned counsel Mr.J.P.Shah for the petitioner inviting our attention to the reference order raised following contentions: (1) That as per the Assessing Officer the assessment was already finalized when the order of reference was passed. Therefore, since neither the assessment nor reassessment was pending on such date, the Assessing Officer had no authority to call for DVO's report under section 142A of the Act. (2) That such report cannot be in anticipation of reopening the assessment as was done in the present case. (3) The Assessing Officer had no reason to call for the valuation. The Valuer's report is called for only by way of fishing inquiry, which is not permissible. (4) Before making a reference calling for the report of the Valuer, the Assessing Officer must be satisfied that valuation for the purpose of sections 69,69A and 69B is required to be made. In the present case, no such eventuality existed when the reference was made. (5) He lastly contended that the Assessing Officer ca....

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....ourt in the case of Commissioner of Income-tax vs. Rajendra Aggarwal (supra), it can be safely taken that Assessing Officer, if other parameters of section 142A were satisfied, did have jurisdiction to call for the report from the Valuer. Uttarakhand High Court in the said decision, considered pendency of appeal against order of assessment as continuation of the assessment, and therefore, held that during the pendency of such appellate proceedings also power under section 142A can be exercised by the Assessing Officer. The decisions of Delhi, Allahabad and Karnataka High Courts taking contrary view were not followed. In the present petition, we are not concerned with this controversy and would, therefore, refrain from giving any expression of our opinion on the same. Suffice to conclude that assessment proceedings were pending before the Assessing Officer when the reference order was passed. 9. Despite such conclusion the crucial question is whether the requirements of exercising such powers under section 142A calling for DVO's report are satisfied. In this context, we may peruse the provisions of section 142A more minutely. Section 142A pertains to estimate by Valuation Officer....

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....(1) permits the Assessing Officer to call for the Valuer's report where an estimate of the value of such investment or value of billion or jewellery of valuable article is required to be made, for the purposes of invoking powers under sub-section (1) of section 142A, therefore, there must be a case where an estimate of the value of such investment or value of billion or jewellery or valuable article is required to be made. 12. Section 69 of the Act pertains to unexplained investment and starts with the expression " Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income and the assessee offers no explanation about the nature and source of investments...." 13. Section 69A pertains to unexplained money etc. and starts with the expression "Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income and the assessee offers no e....

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....y etc., call for the report of the Valuer. Initial starting point for triggering a reference to the Valuer, therefore, has to be invocation of sections 69,69A or 69B of the Act. It is only when any of these provisions come into play that the Assessing Officer can resort to section 142A for estimating the value of such investment or expenditure. Sequence cannot be put in the reverse. In other words, the Assessing Officer would have no authority to call for the report of the Valuer under section 142A to judge whether there has been any unexplained investment or expenditure as referred to in sections 69, 69A and 69B of the Act. It would only amount to fishing inquiry and not investigation under section 142A of the Act. In our opinion, the scheme of the provisions when read harmoniously would lead to a situation where in case the Assessing Officer, during the pendency of assessment or reassessment, is of the opinion that sections 69, 69A and 69B of the Act can be invoked; in order to estimate such unexplained investment or expenditure in acquisition of bullion, jewellery or valuable article, he can resort to valuation by the Valuation Officer in terms of sub-section (1) of section 142A....