2012 (6) TMI 936

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....oner of Income Tax, Circle-2(3), Hyderabad) informing the petitioner that an earlier notice in File No. SE(V)/HYD/2485/ CG/895 dt. 25.11.2011 given by the fourth respondent (District Valuation Officer of the Valuation Cell of the Income Tax Department, Hyderabad) and the earlier connected notices should be read as those issued under Section 142A are ultra vires the provisions of the Act and should be set aside. 4. The fourth respondent had earlier issued a notice dated 25.11.2011 calling upon the petitioner to produce copies of certain documents to arrive at the fair market value of the petitioner's plant at Nallalingayapalli village, Kamalapuram Mandal in Kadapa District. That notice was issued by the fourth respondent pursuant to the third respondent's requisition dt. 21.11.2011. In the notice dated 25.11.2011 it was mentioned that it was issued under Section 50C of the Act. Pursuant to the reply dated 05.12.2011 by the petitioner to the third respondent explaining that Section 50C was inapplicable, the latter issued the impugned notice informing the petitioner that it should be read as one issued under Section 142A of the Act and that Section 50C was mentioned by mistake....

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....edings. It is also pointed out in this connection that noticing the above aspect which was canvassed by the assessee in its reply dt. 05.12.2011, the third respondent sent the impugned letter dt. 07.12.2011 to wriggle out of that situation and therefore the impugned notices are invalid. 9. The petitioner's second plea is that the assessing officer should first reject the books of account of the petitioner or for that matter any assessee to again go into the investment and valuation of an asset and as the third respondent did not reject the books of account regarding the valuation of the petitioner's plant in the assessment proceedings, it was not open to him to go into this aspect. In support of this plea Sri C.P. Ramaswamy the learned counsel for petitioner also relied upon two decisions which we will refer to later. 10. The third plea of the petitioner is that while conducting the assessment and passing the assessment order, the third respondent neither referred to nor expressed any doubt about the valuation of its plant; there was no reference to valuation and in fact he also accepted certain vouchers and other documents filed by it showing investments in the plant. Theref....

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....accepted. 13. Sub-section 1 of Section 142A enacts that for the purposes of making assessment or re-assessment, where an estimate of the value of any investment referred to in the various sections mentioned therein, the assessing officer may require the valuation officer concerned to make an estimate of such value and furnish his report to him. Section 142A (1) of the Act which is relied upon by the respondents clearly authorizes issuance of the impugned letter and the concerned notices; and they are permissible under the aforesaid provision even after an assessment is made. This aspect can as well fall under Section 69 of the Act which may deal with unexplained investment. Thus the first plea of the petitioner is rejected. 14. Coming to the second plea of the petitioner, which is based upon the requirement of rejection of books of account of the petitioner regarding the valuation as a pre-condition for calling a report from the valuation officer, the position is this. Section 142A(1) of the Act which provides for probing into the valuation of investments and the source of money for such investments, has been introduced by Finance Act 2004 (Central Act 23 of 2004), with effec....

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....rred the matters to the departmental valuation officer without rejecting the books of account of the assessee. This judgment is a very short judgment and nothing is placed before us to infer that the matter pertains to a year after the amendment of Section 142A by Finance Act 2004. The relevant facts are not discernable from the judgment and in our opinion this decision cannot therefore come to the rescue of the petitioner. 18. Even otherwise it may be noted here that in the course of previous assessment proceedings, as will be presently seen under the third plea, the third respondent did not accept the valuation shown by the petitioner in its balance sheet and accounts and he was asking for more information to arrive at the fair market value of the petitioner's plant and civil works connected with it. In fact, that can be treated as amounting to rejecting the books of account of the petitioner by implication and no formal order rejecting the books of account is necessary. This is also a negative point for the petitioner and the petitioner's contention under this point is liable to be rejected on the above ground. 19. That takes us to the third plea of the petitioner. The thi....