TaxTMI 
TaxTMI 
2026 (9) TMI 453
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....mpany, for the Assessment Year (A.Y.) 2021-22, filed its return of income on 14.03.2022, declaring a total income of Rs. 8,17,74,420/-. The return was selected for scrutiny, pursuant to which a notice under Section 143(2) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") came to be issued to the petitioner-Company on 29.06.2022. Thereafter, from time to time, various notices under Section 142(1) of the Act were issued to the petitioner-Company, to which the petitioner-Company duly responded by filing the requisite replies and furnishing the information and documents sought by respondent No. 1. 3. Subsequently, on 17.06.2023 and 20.06.2023, respondent No. 1 issued the show cause notices to the petitioner-Company. The petitioner-Company submitted its detailed reply thereto on 22.06.2023, wherein, apart from dealing with the allegations and issues raised in the show cause notices on merits, the petitioner-Company specifically questioned the very maintainability and validity of the notices and the proceedings initiated pursuant thereto, inter alia, on the ground that the proceedings were barred by limitation. 4. In response to the aforesaid objection regarding li....
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....names of individual owners, while claiming depreciation in respect thereof in its books of account. It was submitted that, even assuming the aforesaid premise of respondent No. 1 to be correct, the same could at the highest furnish a ground for examining the claim for depreciation of the petitioner-Company and, if found impermissible, for disallowing such claim in accordance with law. There was, however, no justification whatsoever for obtaining a valuation of the fixed assets from respondent No. 2, since the valuation of such assets had no bearing upon the alleged defect in the claim for depreciation of the petitioner-Company. 8. It was, therefore, submitted by learned advocate Mr. Mr. Soparkar that the reference to respondent No. 2 for determination of the value of the fixed assets was wholly extraneous to the issue sought to be examined by respondent No. 1 and could serve no legitimate purpose in the assessment proceedings. The timing and manner in which the reference was made, particularly on 24.06.2023, immediately before the assessment was to become time-barred on 25.06.2023, clearly demonstrated that the reference was not made for any genuine or bona fide valuation requir....
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.... requirement to examine the issue as to whether to what extent such cash stood deployed/invested in tangible assets. It is submitted that the financial statements for the year ended on 31.03.2021 disclose significant additions to tangible assets and further incriminating material received from the investigation wing on 28.12.2022 revealed unaccounted cash transactions within the group concerns. 13. It is contended that the determination of true and fair market value of assets vis-a-vis the declared investment was necessitated and hence such exercise squarely falls within the scope of Section 142A of the Act which empowers the Assessing Officer to obtain expert valuation to ascertain the correctness of investment or value of assets in question. 14. It is submitted that thus the proceedings were subsisting as on 24.06.2023 and the reference has been made before expiry of limitation in accordance with Explanation-1(v) to Section 153(1) of the Act which contemplates exclusion of time for obtaining valuation report and hence the timing of the reference was within jurisdiction and in consonance with the statutory framework thus it is urged that the writ petition may not be entertai....
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.... that the extension of time was in compliance of the provision of Section 153 of the Act read with its Explanation and the period of exclusion of handling over seized incrementing materials. (h) Thereafter, by the impugned order dated 24.06.2023, the Assessing Officer referred the matter to Departmental Valuation Officer. 16. We may, at this stage, clarify that while passing the impugned order dated 24.06.2023, the Assessing Officer has specifically recorded that the assessment proceedings are pending in this case and it is getting time barred on 25.06.2023. Thus, one day prior to the expiry of the limitation of the assessment proceedings for A.Y. 2021-22, the Assessing Officer refers the valuation for determining the valuation of fair market value of tangible assets to the District Valuation Officer. Further the Assessing Officer has requested the District Valuation Officer to send the report earliest and preferably by 30.06.2023. 17. The adjustment of limitation period, under which the revenue has taken shelter is found in the provision of Section 153 (Explanation-1)(v) of the Act. Section 153 (Explanation 1)(v) of the Act reads as under - "No order of ass....
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....ogus. 22. In our considered opinion, the Assessing Officer has acted illegally in order to further strengthen his first ground for reference relating to the valuation of assets and attempted to create another ground of claim of bogus depreciation on such assets for extending the limitation, which was getting time barred on 25.06.2023. It cannot be countenanced that the Assessing Officer was ignorant of the provision of the Chapter IV of the Act, which regulates depreciation, investments etc, while making the reference on depreciation of assets by alleging bogus claim, which he could have disallowed. 23. We may now deal with the first reason assigned in the reference order. The same also appears to be intentional, and is raised in order to extend the limitation period of completing the assessment. 24. We may mention that, as per the case of the Revenue the material derived from search and survey action from M/s. Ratnakala group was handed over to the DCIT, Surat on 28.12.2022. For the period of six months the Assessing Officer sat tight on such material and thereafter on 17.06.2023 and 20.06.2023, show cause notices were issued by the respondent of Rs. 1,01,00,113/- and Rs.....
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.... save the assessment proceedings by giving a colorable exercise extended the limitation of the assessment proceedings which was going to be over on 25.06.2023 by passing the impugned order of reference. The Assessing Officer, from the beginning, was very much alive to the limitation period for the assessment proceedings, which would get expired on 25.06.2023, as he himself has referred to in the impugned order. All the material from the search and survey and from the petitioner was already available with the Assessing Officer, however, he showed remissness in completing the assessment before 25.06.2023. Thus, by creating an artificial cause of action of referring determination of valuation of assets and the claim of depreciation on such assets has attempted to extend the time by resorting to Explanation-1(v) to Section 153 of the Act. 26. In addition to the aforesaid aspects, we also find that no satisfactory explanation has been tendered by the Revenue to explain the delay from 28.12.2022 i.e. the date when the material was handed over from the search proceedings to the DCIT, Surat till the issuance of the notice on 17.06.2023. A lame explanation has been tendered to the extent....