M/S. Sudarshan Forge Pvt. Ltd.through Sunil Goyal v. Commissioner Of Income Taxludhiana

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 225 of 2006Date of decision: 1.12.2010 M/s. Sudarshan Forge Pvt. Ltd.through Sunil Goyal --- Appellant Versus Commissioner of Income TaxLudhiana --- Respondent CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present:Mr. S.K. Mukhi, Advocatefor the appellant. Mr. Rajesh Katoch, Standing Counselfor the respondent. --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-Tax Act,1961 (for short “the Act”) has been filed by the assessee against theorder dated 16.12.2005, passed by the Income Tax AppellateTribunal, Chandigarh Bench ‘B’, Chandigarh (in short “the Tribunal”)in ITA No. 31/CHD/04, relating to the assessment year 2000-01. The appeal was admitted for determination of thefollowing substantial questions of law by this Court: A-Whether on the facts and in the circumstances ofthe case the Income Tax Appellate Tribunal was justified on facts and in law in confirming the actionof the A.O. in holding that the jurisdiction underSection 142A has been validly assumed by the A.O.in the present case? B- Whether on the facts and in the circumstances ofthe case the Income Tax Appellate Tribunal wasjustified on facts and in law in confirming the actionof the A.O. in holding that the provisions ofAmendment/ Newly introduced Section 142Athough made effective retrospectively w.e.f.15.11.1972 have been validly assumed by the A.O.in the present case which is made applicable onlyto those cases wherein the assessment has notbeen finalized on or before 30[th] day of September,2004 vide Proviso under Section 142A(1) of IncomeTax Act, 1961? C- Whether on the facts and in the circumstances ofthe case the Income Tax Appellate Tribunal wasjustified on facts and in law in confirming the actionof the A.O. under Section 142 A of the Income TaxAct, 1961 by erroneously holding that pendency ofappeal before ITAT will not lead to finalization ofassessment proceedings? The facts, in brief, necessary for adjudication, as narratedin the appeal are that the return filed by the assessee for theassessment year under reference came under scrutiny and theassessment was finalised by order dated 31.3.2003 by making various additions and disallowances out of which an addition of Rs.9,88,374/- was also made on the basis of difference in valuationreport of the valuer of the assessee and that of the Revenue. As perthe case of the assessee the Revenue wrongly invoked the amendedprovisions of Section 142A of the Act. The Commissioner of IncomeTax (Appeals), [hereinafter referred to as “CIT(A)”] on an appealbeing preferred by the assessee deleted the additions made by theassessing officer and, thus, accepted the appeal vide order dated29.10.2003. The Tribunal, however, accepted the appeal carried bythe Revenue, vide order dated 16.12.2005 whereby it reversed theorder of the CIT(A) and endorsed the decision of the assessingofficer by holding that the appellate proceedings were to beconsidered as continuation of the assessment proceedings as theTribunal only adjudicated upon the appeal against the alreadycompleted assessment orders. We have heard learned counsel for the parties andperused the record. Learned counsel for the assessee submitted that sincethe assessment had been finalised prior to 30.9.2004, the assessingofficer was not justified in making reference to the DVO as held bythe Apex Court in Smt. Amiya Bala Paul Vs. Commissioner ofIncome Tax, (2003) 262 ITR 407. Learned counsel further submittedthat the Tribunal had erred in allowing the appeal of the Revenue byholding that the reference to the DVO was valid. The counsel placedreliance on Commissioner of Income Tax v. Krishan Lal Dua, 149TAXMAN 126 (P&H) = 277 ITR 477 (P&H), and S. Sankappa andothers vs. Income Tax Officer, 68 ITR 760 (SC). On the other hand, We have heard learned counsel for the parties andperused the record. Learned counsel for the assessee submitted that sincethe assessment had been finalised prior to 30.9.2004, the assessingofficer was not justified in making reference to the DVO as held bythe Apex Court in Smt. Amiya Bala Paul Vs. Commissioner ofIncome Tax, (2003) 262 ITR 407. Learned counsel further submittedthat the Tribunal had erred in allowing the appeal of the Revenue byholding that the reference to the DVO was valid. The counsel placedreliance on Commissioner of Income Tax v. Krishan Lal Dua, 149TAXMAN 126 (P&H) = 277 ITR 477 (P&H), and S. Sankappa andothers vs. Income Tax Officer, 68 ITR 760 (SC). On the other hand, learned counsel for the Revenue submitted that since the appeal waspending before the Tribunal, the assessment proceedings had notbecome final and conclusive in terms of proviso to Section 142A ofthe Act. We have given our thoughtful consideration to thesubmissions made by the learned counsel for the parties and haveperused the record. The issue in this case is regarding validity of proceedingsfor valuation of the property which was referred to the DepartmentalValuation Officer (DVO) by the assessing officer. The Tribunal while rejecting the contention of theassessee in para 6 of its order recorded as under: “We are unable to accept the submission of the learnedcounsel for the assessee as the assessment order isunder appeal before the Income-Tax Appellate Tribunaland it has not reached its final stage. We are of the viewthat the case of the assessee is not covered by thedecision of the Chandigarh Bench in the case of ITO vs.Shri N.S. Bakshi (supra) as in the said case, theassessment was reopened and the reopening wasquashed on the basis that the assessment had alreadybecome final before 30.9.2004. In the instant case, noreopening is involved as the assessment has beencompleted u/s 143(3), which is subject matter of theappeal before us, and has not reached its final stage.Therefore, keeping in view the provisions of section 142Aof the Income Tax Act, we set aside the order passed by the Commissioner of Income Tax (Appeals) and restore the matter to his file with the direction that he will decidethe issue on merits after providing adequate opportunitiesof being heard to the assessee and the AssessingOfficer.” It is not disputed that the appeal was pending before the Tribunal on 30.9.2004, therefore, the assessment proceedingscannot be said to have attained finality and become conclusive. Oncethat is so, the reference made by the assessing officer to the DVOcannot be held to be bad. The issue as to whether a reference by the assessing officer to the Departmental Valuation Officer could be justified by therevenue, after insertion of provisions of Section 142A of the Actwhere an appeal was pending before the Tribunal on 30.9.2004, wasnot under discussion in the judgments cited by the learned counselfor the assessee. Therefore, the same do not come to the rescue ofthe assessee in view of the facts of the present case, noticed above. No fault could be pointed out by the counsel for theappellant in the order passed by the Tribunal which may warrantinterference by this Court. Accordingly, the appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) JUDGE