M/S Ayu Real Estate Developers Pvt. Ltd v. Income Tax Officer, Nainital And Another

IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Income Tax Appeal No. 30 of 2009 M/s Ayu Real Estate Developers Pvt. Ltd. ……….. Appellant Versus Income Tax Officer, Nainital and another ………..Respondents Present: Mr. P.R. Mullick, Advocate for the appellant Mr. H.M[. Bhatia, Advocate for the respondents. ] Coram: Hon’ble Barin Ghosh, C.J.Hon’ble Servesh Kumar Gupta, J. BARIN GHOSH, C.J. (Oral) In respect of Assessment Year 2001-2002, a nil return was filed by the appellant, whereupon a notice under Section 143(2) of the Income Tax Act, 1961 (hereinafter referred to as the Act) was issued. Subsequent thereto, a notice under Section 143(2) of the Act was issued and, in compliance therewith, assessee attended before the Assessing Officer. In the meantime, a reference was made under Section 131 (1)(d) of the Act to the valuation cell. The Assessing Officer rejected the books of accounts of the assessee by invoking Section 145(3) of the Act. Subsequent thereto, he assessed income of the assessee by taking recourse to Section 69B of the Act. Assessee had shown in its books of accounts that its investments in the constructions/repairs are X. The valuation Officer found that the worth thereof is X + 1. The Assessing Officer assessed tax liability on 1. The Appellate Authority felt that 8 per cent of 1 will be the tax liability. The matter, thereupon, reached the Tribunal. The Tribunal held that the matter is covered under Section 69C of the Act. According to us, the Tribunal erred in doing so. The Assessing Officer, having had not put to the notice of the appellant that the matter is liable to be dealt with under Section 69C at any point of time and there being no such request by the Assessing Officer or the Department even before the Tribunal, it was not within the competence of the Tribunal to do what it did. At the same time, if the amount is covered by Section 69B, then the whole amount is the income and not any percentage thereof and, thereby, the Appellate Commissioner committed a gross error. At the same time, Section 69B of the Act applies when the amount of investment is not fully disclosed in the books of accounts. Having had rejected the books of accounts, it was not within the competence of the Assessing Officer to hold that the amount of investment was not fully disclosed in the books of accounts. In consequence, the whole thing requires re-doing right from the stage of assessment. 2. We, accordingly, remit the matter to the Assessing Officer by setting aside the assessment order and the orders of the Tribunal as well as of the Commissioner of Appeals. Before parting, we make it absolutely clear that the worth of the investment, as was determined by the valuation cell, was not accepted to the full extent by the Commissioner of Appeals. He reduced the quantum thereof. That has further been reduced by the Tribunal. There is no grievance in that regard. Therefore, while proceeding with the matter afresh by the Assessing Officer, he shall proceed on the basis of the valuation as stood reduced by the Tribunal ( Servesh Kumar Gupta, J.) (Barin Ghosh, C.J.) 18.12.2013 18.12.2013 P. Singh