N.meenakshi v. The Assistant Commissioner Of Income Tax, Business Circle Iii

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 11.9.2009 CORAM: THE HONOURABLE MR.JUSTICE P.JYOTHIMANI W.P.No.851 of 2009 N.Meenakshi..Petitioner Vs. The Assistant Commissioner of Income Tax, Business Circle III121, Mahatma Gandhi RoadChennai – 600 034... Respondent PRAYER: Petition under Article 226 of the Constitution of Indiafor issue of a writ of Certiorari calling for the records in No.PAN/GIR/AHAPM 2232M dated 31.12.2008 relating to the AssessmentYear 2006-07 on the file of the respondent, quashing the same. For Petitioner :Mr.V.Ramachandran, Sr.Counselfor Dr.Anita Sumanth For Respondent :Mr.Patti B.JaganathanSCGSCORDER The writ petition is directed against the assessment order ofthe respondent dated 31.12.2008 by which the respondent, havingreferred the matter to the Valuation Cell on 17.12.2008 as perSection 50C(2) of the Income Tax Act, 1961 (for brevity, "theAct"), completed the assessment by invoking Section 50C of the Actby taking the value of land as determined for stamp duty purposeas the sale value, as no valuation report was received from theValuation Cell till the said date. 2.1. The petitioner was the owner of a plot of land comprisedin R.S.No.3123/2, Block No.51, Old No.258 (New No.849),Poonamallee High Road, Purasawalkam, Chennai. She leased out thesaid portion of land to the Indian Oil Corporation for more than40 years in which the Corporation was operating a petrol bunk.The petitioner, having decided to sell the property to the IndianOil Corporation, after negotiation, fixed the sale considerationat Rs.99 Lakhs. Pursuant to the agreement, a sale deed wasexecuted in favour of the Indian Oil Corporation. Since there wasa capital gain on the sale, the petitioner offered the capital https://hcservices.ecourts.gov.in/hcservices/ gains for assessment based on the actual consideration received byher, namely Rs.99 Lakhs and paid capital gains tax. However, theRegistering Authority adopted the guideline value of the propertywhich comes to Rs.3,92,68,800/- and levied stamp duty and theIndian Oil Corporation which is the purchaser has also paid stampduty on the said amount. 2.2. According to the petitioner, in these circumstances, theAssessing Authority proposed to assess the capital gains on thebasis of the value adopted by the Stamp Authorities which was inexcess of actual consideration received by the petitioner and thepetitioner filed a writ petition challenging the vires of Section50C of the Act, which was dismissed. The matter was alsoultimately decided by the Supreme Court by rejecting the SLP anddirecting the petitioner to approach the authorities by keepingopen the question of vires of the provision. 2.3. Thereafter, the Assessing Authority proposed to assessthe capital gain on the value fixed by the Stamp Authorities. Thepetitioner made a request to the Assessing Authority to refer thematter to the Valuation Officer for determining the market valueof the property and the reference was made to the ValuationOfficer in the course of the assessment proceedings. However,even before the Valuation Officer filed a report, the AssessingAuthority passed the assessment order taking the value of the landas determined by the Registering Authority, which according to thepetitioner is against Section 50C(2) of the Act. 2.4. The assessment is challenged on the grounds that it isopposed to Section 50C of the Act; that it is opposed toprinciples of natural justice; that, admittedly, the ValuationOfficer's report has not been received before 31.12.2008 and theAssessing Authority has passed the assessment order urgently; andthat even though there is a right of appeal available against theassessment order inasmuch as the order is said to be withoutjurisdiction the present writ petition is maintainable. 2.4. The assessment is challenged on the grounds that it isopposed to Section 50C of the Act; that it is opposed toprinciples of natural justice; that, admittedly, the ValuationOfficer's report has not been received before 31.12.2008 and theAssessing Authority has passed the assessment order urgently; andthat even though there is a right of appeal available against theassessment order inasmuch as the order is said to be withoutjurisdiction the present writ petition is maintainable. 3.1. Mr.V.Ramachandran, learned Senior Counsel appearing forthe petitioner would submit that the Supreme Court while upholdingSection 50C(2) of the Act has kept open the issue relating to itsvalidity. He would rely upon an order of this Court dated22.4.2009 made in W.P.No.2092 of 2009 in an identical situation.It is his contention that there was no opportunity given beforepassing such order and the order itself is without jurisdictionsince at the request of the petitioner the matter has beenreferred for the purpose of valuation and the assessment has beenpassed without the valuation report. 3.2. It is his submission that Section 55A of the Act cannotbe invoked as that provision empowers the Assessing Authority to refer for valuation, while Section 50C(2) of the Act is the rightof the assessee. 3.3. It is his submission that the valuation for the purposeof stamp duty and the dispute therein under Section 47A of theIndian Stamp Act is by the purchaser in the present case. Eventhough either of the parties, namely the vendor or the purchasercan raise such objection, in the present case, the petitionerbeing the vendor can raise his objection under Section 50C(2) ofthe Act. 3.4. He would also refer to Section 153(1) and 153(3) of theAct, especially with reference to the term "any time" and contendthat any time which may be given by the Court will come within themeaning of the same saving the period of limitation, as it washeld in the the order dated 22.4.2009 made in W.P.No.2092 of 2009. 4.1. On the other hand, it is the contention of Mr.PattiB.Jaganathan, learned counsel appearing for the respondent thatwhen the assessment was made as per the value determined underSection 47A of the Indian Stamp Act, the petitioner has not raisedany objection and therefore, there is no bar on the part of theDepartment from passing the impugned assessment order. 4.2. It is his submission that the Assessing Authority has topass orders within one year and that time cannot be extended byany one and therefore, the order passed without waiting for thereport from the Valuation Officer is perfectly valid. 4.3. He would distinguish between Section 50C and Section 55Aof the Act by referring to the judgment of the Bombay High Courtin Rallis India Ltd. v. Deputy Commissioner of Income Tax andothers, [2006] 284 ITR 159 (Bom). He would also rely upon thejudgments in Bombay Metropolitan Regional Development Authority,Bombay v. Gokak Patel Volkart Ltd. and others, [1995] 1 SCC 642and Auto & Metal Engineers v. Union of India, [1998] 229 ITR 399(SC). 4.4. That apart, he would submit that an effectivealternative remedy of appeal is available under Section 246A ofthe Act and rely upon the judgment in M/s.Nivaram Pharma PrivateLimited v. The Customs, Excise and Gold (Control) AppellateTribunal, South Regional Bench, Madras and others, [2005] 2 MLJ246. He would submit that the writ petition is not maintainable. 5. I have heard the learned Senior Counsel for the petitionerand the learned counsel for the respondent and given my anxiousthought to the issue involved in this case. 4.4. That apart, he would submit that an effectivealternative remedy of appeal is available under Section 246A ofthe Act and rely upon the judgment in M/s.Nivaram Pharma PrivateLimited v. The Customs, Excise and Gold (Control) AppellateTribunal, South Regional Bench, Madras and others, [2005] 2 MLJ246. He would submit that the writ petition is not maintainable. 5. I have heard the learned Senior Counsel for the petitionerand the learned counsel for the respondent and given my anxiousthought to the issue involved in this case. 6. The fact that petitioner has sold the property in favourof the Indian Oil Corporation for Rs.99 Lakhs is not in disputeand the same is borne out by records. The further fact that forthe purpose of assessment of stamp duty under the Indian StampAct, the Registering Authority has assessed the actual value ofthe property at Rs.3,92,68,800/- is also not in dispute. But,the fact is that the purchaser – Indian Oil Corporation, which isa Government concern, having paid Rs.99 Lakhs as saleconsideration to the petitioner has accepted the stamp duty on thevaluation of Rs.3,92,68,800/- and paid the stamp dutyaccordingly. It is also true that the purchaser having paid thestamp duty, has not raised any dispute or filed any appeal andthe matter has come to an end at that stage. Thus, when theAssessing Authority is well within his right to assess the capitalgain on the basis of the registration value of the property, itwas objected to by the petitioner by her letter dated 17.12.2008requesting the matter to be referred to the valuation cell as perSection 50C(2) of the Act. It is also true that the ValuationOfficer has not submitted his valuation report and in thosecircumstances, taking note of the fact that the assessment has tobe completed within a period of one year as per Section 143(3) ofthe Act, the impugned assessment order came to be passed withoutwaiting for the valuation report. 7. Section 153 of the Act which prescribes time limit forcompletion of assessments and reassessments which may be eitherunder Sections 143 or 144 of the Act, no doubt contemplates thatthe assessment order should be passed within a period of two yearsfrom the end of the assessment year in which the income was firstassessable; or one year from the end of the financial year inwhich a return or a revised return relating to the assessment yearcommencing on the 1[st] day of April, 1988, or any earlier assessmentyear, is filed under sub-section (4) or sub-section (5) of Section139, whichever is later and the periods of limitation are variedby insertion through Finance Act, 2006 with effect from 1.6.2006and Finance Act, 2007 with effect from 1.6.2007. However, Section153(3) of the Act exempts the said period of limitation in certaincases where the assessment, reassessment or recomputation is madeas per the direction "in an order of any court in a proceedingotherwise than by way of appeal or reference under this Act."That apart, there are many other instances like the period of stayor injunction granted by this Court which are exempted. Further,where, after the exclusion of the said period prescribed underSection 153(3)(ii) of the Act, the period of limitation availableto the Assessing Officer to make an order of assessment is lessthan sixty days, such period can be extended by another sixtydays. Section 153(3) of the Act is as follows:"Section:153. Time limit for completion ofassessments and reassessments. (1) & (2) ***** (3) The provisions of sub-sections (1), (1A), (1B)and (2) shall not apply to the following classes ofassessments, reassessments and recomputations whichmay, subject to the provisions of sub-section (2A),be completed at any time – (1) & (2) ***** (3) The provisions of sub-sections (1), (1A), (1B)and (2) shall not apply to the following classes ofassessments, reassessments and recomputations whichmay, subject to the provisions of sub-section (2A),be completed at any time – (i) [***] (ii) where the assessment, reassessment orrecomputation is made on the assessee or any personin consequence of or to give effect to any finding ordirection contained in an order under section 250,254, 260, 262, 263 or 264 or in an order of any courtin a proceeding otherwise than by way of appeal orreference under this Act ; (iii) where, in the case of a firm, an assessment ismade on a partner of the firm in consequence of anassessment made on the firm under section 147. Explanation 1.In computing the period of limitationfor the purposes of this section - (i) the time taken in reopening the whole or anypart of the proceeding or in giving an opportunity tothe assessee to be re-heard under the proviso tosection 129, or (ii) the period during which the assessmentproceeding is stayed by an order or injunction of anycourt, or (iia) the period commencing from the date on whichthe Assessing Officer intimates the CentralGovernment or the prescribed authority, thecontravention of the provisions of clause (21) orclause (22B) or clause (23A) or clause (23B) or sub-clause (iv) or sub-clause (v) or sub-clause (vi) orsub-clause (via) of clause (23C) of section 10, underclause (i) of the proviso to sub-section (3) ofsection 143 and ending with the date on which thecopy of the order withdrawing the approval orrescinding the notification, as the case may be,under those clauses is received by the AssessingOfficer;(iii) the period commencing from the date on whichthe Assessing Officer directs the assessee to get hisaccounts audited under sub-section (2A) of section142 and ending with the last date on which theassessee is required to furnish a report of suchaudit under that sub-section, or (iv) * * * (iva) the period (not exceeding sixty days)commencing from the date on which the AssessingOfficer received the declaration under sub-section(1) of section 158A and ending with the date on whichthe order under sub-section (3) of that section ismade by him, or (v) in a case where an application made before theIncome-tax Settlement Commission under section 245Cis rejected by it or is not allowed to be proceededwith by it, the period commencing from the date onwhich such application is made and ending with thedate on which the order under sub-section (1) ofsection 245D is received by the Commissioner undersub-section (2) of that section, or(vi)the period commencing from the date on which anapplication is made before the Authority for AdvanceRulings under sub-section (1) of section 245Q andending with the date on which the order rejecting theapplication is received by the Commissioner undersub-section (3) of section 245R, or (vii) the period commencing from the date on whichan application is made before the Authority forAdvance Rulings under sub-section (1) of section 245Qand ending with the date on which the advance rulingpronounced by it is received by the Commissionerunder sub-section (7) of section 245R,shall be excluded :Provided that where immediately after the exclusionof the aforesaid time or period, the period oflimitation referred to in sub-sections (1), (1A),(1B),[(2), (2A) and (4) available to the AssessingOfficer for making an order of assessment,reassessment or recomputation, as the case may be, isless than sixty days, such remaining period shall beextended to sixty days and the aforesaid period oflimitation shall be deemed to be extendedaccordingly." (vii) the period commencing from the date on whichan application is made before the Authority forAdvance Rulings under sub-section (1) of section 245Qand ending with the date on which the advance rulingpronounced by it is received by the Commissionerunder sub-section (7) of section 245R,shall be excluded :Provided that where immediately after the exclusionof the aforesaid time or period, the period oflimitation referred to in sub-sections (1), (1A),(1B),[(2), (2A) and (4) available to the AssessingOfficer for making an order of assessment,reassessment or recomputation, as the case may be, isless than sixty days, such remaining period shall beextended to sixty days and the aforesaid period oflimitation shall be deemed to be extendedaccordingly." 8. Therefore, as per the reading of Section 153(3) of theAct, it is clear that even though the assessment has to be made bythe Assessing Authority within the period stipulated under theAct, such period of stipulation would not apply in cases where theassessment is made on a direction as per an order of an AppellateAuthority or the Appellate Tribunal as per Section 250 or Section254 of the Act, or the Supreme Court and the National Tax Tribunalas per Section 260 or Section 262 of the Act, or by the RevisionalAuthority in respect of orders prejudicial to the revenue underSection 263 of the Act, or other revision orders under Section 264 of the Act, apart from an order of any court in a proceeding otherthan the appeal or reference which saves the time limit – whichmay be either given by any court which includes High Courtexercising writ jurisdiction under Article 226 of the Constitutionof India or otherwise. 9. The order dated 22.4.2009 made in W.P.No.2092 of 2009 byS.Nagamuthu,J. is under similar circumstances as that of thepresent facts of the case, wherein irrespective of the ValuationOfficer's report assessment has been made. The learned Judgewhile setting aside the assessment has directed the AssessingAuthority to pass fresh order of assessment after obtainingvaluation certificate and by such direction, the period ofassessment certainly stands extended by virtue of Section 153(3)(ii) of the Act. 10. As far as reference for estimation by Valuation Officeris concerned, under the Act there are three circumstances: (i) In cases of amounts of investments, etc., not fullydisclosed in the books of accounts or unexplained expenditure asit is seen under Sections 69B and 69C of the Act, which are asfollows: "Section:69B. Amount of investments, etc., not fullydisclosed in books of account.- Where in any financial year the assessee has madeinvestments or is found to be the owner of anybullion, jewellery or other valuable article, and theAssessing Officer finds that the amount expended onmaking such investments or in acquiring such bullion,jewellery or other valuable article exceeds theamount recorded in this behalf in the books ofaccount maintained by the assessee for any source ofincome, and the assessee offers no explanation aboutsuch excess amount or the explanation offered by himis not, in the opinion of the Assessing Officer,satisfactory, the excess amount may be deemed to bethe income of the assessee for such financial year. Section:69C.Unexplained expenditure, etc.-Where in any financial year an assessee has incurredany expenditure and he offers no explanation aboutthe source of such expenditure or part thereof, orthe explanation, if any, offered by him is not, inthe opinion of the Assessing Officer, satisfactory,the amount covered by such expenditure or partthereof, as the case may be, may be deemed to be theincome of the assessee for such financial year : Provided that, notwithstanding anything contained inany other provision of this Act, such unexplainedexpenditure which is deemed to be the income of theassessee shall not be allowed as a deduction underany head of income.", Section:69C.Unexplained expenditure, etc.-Where in any financial year an assessee has incurredany expenditure and he offers no explanation aboutthe source of such expenditure or part thereof, orthe explanation, if any, offered by him is not, inthe opinion of the Assessing Officer, satisfactory,the amount covered by such expenditure or partthereof, as the case may be, may be deemed to be theincome of the assessee for such financial year : Provided that, notwithstanding anything contained inany other provision of this Act, such unexplainedexpenditure which is deemed to be the income of theassessee shall not be allowed as a deduction underany head of income.", the Assessing Officer has a discretion to require the ValuationOfficer to make an estimate of such value and report under Section142A of the Act, which is as follows: "Section:142A. Estimate by Valuation Officer incertain cases. (1) For the purposes of making an assessment orreassessment under this Act, where an estimate of thevalue of any investment referred to in section 69 orsection 69B or the value of any bullion, jewellery orother valuable article referred to in section 69A orsection 69B is required to be made, the AssessingOfficer may require the Valuation Officer to make anestimate of such value and report the same to him. (2) The Valuation Officer to whom a reference is madeunder sub-section (1) shall, for the purposes ofdealing with such reference, have all the powers thathe has under section 38A of the Wealth-tax Act, 1957(27 of 1957). (3) On receipt of the report from the ValuationOfficer, the Assessing Officer may, after giving theassessee an opportunity of being heard, take intoaccount such report in making such assessment orreassessment: Provided that nothing contained in this section shallapply in respect of an assessment made on or beforethe 30th day of September, 2004, and where suchassessment has become final and conclusive on orbefore that date, except in cases where areassessment is required to be made in accordancewith the provisions of section 153A. Explanation.In this section, Valuation Officer hasthe same meaning as in clause (r) of section 2 of theWealth-tax Act, 1957 (27 of 1957)." (ii) Cases covered under Section 55A of the Act, where, forthe purpose of ascertaining the fair market value of the capitalasset, the Assessing Officer is empowered to refer the valuation https://hcservices.ecourts.gov.in/hcservices/ of the capital asset to the Valuation Officer. Section 55A of theAct is as follows: "Section:55A. Reference to Valuation Officer.- With a view to ascertaining the fair market value ofa capital asset for the purposes of this Chapter, theAssessing Officer may refer the valuation of capitalasset to a Valuation Officer (a) in a case where the value of the asset asclaimed by the assessee is in accordance with theestimate made by a registered valuer, if theAssessing Officer is of opinion that the value soclaimed is less than its fair market value; (b) in any other case, if the Assessing Officer isof opinion (i) that the fair market value of the assetexceeds the value of the asset as claimed by theassessee by more than such percentage of the value ofthe asset as so claimed or by more than such amountas may be prescribed in this behalf ; or (ii) that having regard to the nature of theasset and other relevant circumstances, it isnecessary so to do, and where any such reference is made, the provisionsof sub-sections (2), (3), (4), (5) and (6) of section16A, clauses (ha) and (i) of sub-section (1) and sub-sections (3A) and (4) of section 23, sub-section (5)of section 24, section 34AA, section 35 and section37 of the Wealth-tax Act, 1957 (27 of 1957), shallwith the necessary modifications, apply in relationto such reference as they apply in relation to areference made by the Assessing Officer under sub-section (1) of section 16A of that Act. (ii) that having regard to the nature of theasset and other relevant circumstances, it isnecessary so to do, and where any such reference is made, the provisionsof sub-sections (2), (3), (4), (5) and (6) of section16A, clauses (ha) and (i) of sub-section (1) and sub-sections (3A) and (4) of section 23, sub-section (5)of section 24, section 34AA, section 35 and section37 of the Wealth-tax Act, 1957 (27 of 1957), shallwith the necessary modifications, apply in relationto such reference as they apply in relation to areference made by the Assessing Officer under sub-section (1) of section 16A of that Act. Explanation.In this section, Valuation Officer hasthe same meaning, as in clause (r) of section 2 ofthe Wealth-tax Act, 1957 (27 of 1957)." Either Section 50C or Section 55A of the Act, they all relate tocapital gains. Section 55A of the Act deals with theascertainment of the fair market value, conferring such power tothe Assessing Officer. While construing the said Section 55A ofthe Act, the Bombay High Court in Rallis India Ltd. v. Deputy Commissioner of Income Tax and others, [2006] 284 ITR 159 (Bom),observing that Section 55A of the Act does not prohibitascertainment of the fair market value after the assessment orderis passed by the Assessing Officer, held that the very purpose ofascertainment of the fair market value of the capital asset underSection 55A of the Act is for the purpose of computing totalincome of the assessee which would enable him to pass assessmentorder and therefore, after the assessment order is passed there isno jurisdiction on the part of the Assessing Officer to refer tothe Valuation Officer. The relevant portion of the said judgmentis as follows: "Mr.D.S.Chopra, counsel for the Revenue submittedthat section 55A did not prohibit the ascertainmentof the fair market value of the capital asset of theassessee for the purposes of capital gains after theassessment order has been passed by the AssessingOfficer. He is right that section 55A does notspecifically prohibit so but it was not required tobe prohibited specifically in section 55A as the verypurpose of ascertaining the fair market value of thecapital assets of an assessee for capital gains bythe Assessing Officer is for the purposes ofcomputing the total income of the assessee which mayenable him to pass the assessment order. If counselfor the Revenue wants to suggest that even after theassessment order has been passed by the AssessingOfficer, by way of an academic exercise or to satisfyhimself that he correctly determined the value of theproperty while computing the total income, hereferred the matter for valuation, we are afraid, heis wrong. The entire exercise of reference to theValuation Officer for ascertaining the fair marketvalue of the capital assets of an assessee is for thepurposes of computation of income from capital gainsand for completion of the assessment order and oncethat has been done, the Assessing Officer has nocompetence to refer to the Valuation Officer." The fact remains that the said power of the Assessing Officerunder Section 55A of the Act is with reference to the capitalgain. (iii) The other aspect is covered under Section 50C of theAct which is a special provision relating to the value ofconsideration inserted by the Finance Act, 2002 with effect from1.4.2003. Section 50C of the Act is as follows:"Section:50C. Special provision for full value ofconsideration in certain cases. (1) Where the consideration received or accruing as aresult of the transfer by an assessee of a capital The fact remains that the said power of the Assessing Officerunder Section 55A of the Act is with reference to the capitalgain. (iii) The other aspect is covered under Section 50C of theAct which is a special provision relating to the value ofconsideration inserted by the Finance Act, 2002 with effect from1.4.2003. Section 50C of the Act is as follows:"Section:50C. Special provision for full value ofconsideration in certain cases. (1) Where the consideration received or accruing as aresult of the transfer by an assessee of a capital asset, being land or building or both, is less thanthe value adopted or assessed by any authority of aState Government (hereafter in this section referredto as the "stamp valuation authority") for thepurpose of payment of stamp duty in respect of suchtransfer, the value so adopted or assessed shall, forthe purposes of section 48, be deemed to be the fullvalue of the consideration received or accruing as aresult of such transfer. (2) Without prejudice to the provisions of sub-section (1), where- (a) the assessee claims before any Assessing Officerthat the value adopted or assessed by the stampvaluation authority under sub-section (1) exceeds thefair market value of the property as on the date oftransfer; (b) the value so adopted or assessed by the stampvaluation authority under sub-section (1) has notbeen disputed in any appeal or revision or noreference has been made before any other authority,court or the High Court,the Assessing Officer may refer the valuation of thecapital asset to a Valuation Officer and where anysuch reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A,clause (i) of sub-section (1) and sub-sections (6)and (7) of section 23A, sub-section (5) of section24, section 34AA, section 35 and section 37 of theWealth-tax Act, 1957 (27 of 1957), shall, withnecessary modifications, apply in relation to suchreference as they apply in relation to a referencemade by the Assessing Officer under sub-section (1)of section 16A of that Act. Explanation 1.For the purposes of this section,"Valuation Officer" shall have the same meaning as inclause (r) of section 2 of the Wealth-tax Act, 1957(27 of 1957). (3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed bythe stamp valuation authority referred to in sub-section (1), the value so adopted or assessed by suchauthority shall be taken as the full value of theconsideration received or accruing as a result of thetransfer." A reading of the said Section makes it abundantly clear that thisis the section which is available to the assessee as a matter ofright. 11. Section 50C of the Act was held valid by a Division Benchof this Court in K.R.Palanisamy v. Union of India, [2008] 306 ITR61 (Madras) holding that the purpose of Section 50C of the Act isto prevent undervaluation of the real value of the property in thesale deeds. K.Raviraja Pandian and P.P.S.Janarthana Raja, JJ.,after analyzing the entire case law on the issue, while decidingabout the constitutional validity of the said provision, have heldas follows: A reading of the said Section makes it abundantly clear that thisis the section which is available to the assessee as a matter ofright. 11. Section 50C of the Act was held valid by a Division Benchof this Court in K.R.Palanisamy v. Union of India, [2008] 306 ITR61 (Madras) holding that the purpose of Section 50C of the Act isto prevent undervaluation of the real value of the property in thesale deeds. K.Raviraja Pandian and P.P.S.Janarthana Raja, JJ.,after analyzing the entire case law on the issue, while decidingabout the constitutional validity of the said provision, have heldas follows: "Sub-sections (2) and (3) of Section 50C providesfurther safeguard to the assessee, in the sense thatif the assessee claims before the assessing officerthat the value adopted by the stamp duty authoritiesexceeds the fair market value and the value soadopted or assessed for the purpose of stamp duty hasnot been disputed in any appeal or revision beforeany authority, the Assessing Officer could refer thevaluation of the capital asset to the DepartmentalValuation Officer. On such reference, if the valuedetermined by the Valuation Officer is more than thevalue adopted or assessed by the stamp dutyauthority, the Assessing Officer shall adopt themarket value as determined by the Stamp dutyauthority. Thus, a complete foolproof safeguard hasbeen given to the assessee to establish before theauthorities concerned the real value. Thus, what isstated in Section 50C as a real value cannot beregarded as a notional or artificial value and suchreal value is determinable only after hearing theassessee as per the statutory provisions statedsupra. There is no indication either in theprovisions of Section 50C of Income-tax Act orSection 47A of the Stamp Act or rules made thereunderabout the adoption of the guideline value. Hence, thecontention that the Section 50C is arbitrary andviolative of Article 14 cannot be accepted." Therefore, the right of an assessee conferred under Section 50C ofthe Act is a valuable statutory right available to protect hisinterest against any arbitrariness which may creep in while fixingthe value of the capital gain and that is the safeguard given tothe assessee. The said right is more effective in cases where theparties to the document have not taken any steps to defend or toinitiate proceedings under Section 47A of the Indian Stamp Act. 12. A combined reading of the entire provisions show that inrespect of the valuation of the registered property, the assesseecan either use the valuation which has been finally decided,including the appeal under section 47A of the Indian Stamp Act orthe valuation which has been ascertained by the DepartmentalValuer as per Section 50C of the Act. On the facts andcircumstances of the present case, inasmuch as the purchaser,which is a Government concern, has not taken any steps under theIndian Stamp Act as per Section 47A, it is really the valuableright of the petitioner, who is stated to have sold the propertyfor a sum of Rs.99 Lakhs while the stamp duty paid by thepurchaser under the sale deed was on the valuation ofRs.3,92,68,800/-, which is involved. It was at the request of thepetitioner, the matter has been referred for valuation.Therefore, the only available remedy to the petitioner in respectof her capital gain is under Section 50C of the Act, which cannotbe dispensed with merely due to the reason that the ValuationOfficer has not chosen to pass orders regarding the valuation intime. 13. In such circumstances, the impugned order of assessmentpassed without waiting for the valuation report from the authorityconcerned and deciding the amount of capital gain on the basis ofthe stamp duty paid by the purchaser under the document on thevaluation of Rs.3,92,68,800/- without making any reference underSection 47A of the Indian Stamp Act is opposed to the veryguarantee granted to the assessee under Section 50C of the Act.That being the only safeguard available to the assessee in respectof the capital gain under the provisions of the Act, I am of theconsidered view that the impugned order of assessment is to be setaside. At the same time, since the Assessing Authority himselfhas no right to have extension of the period of assessment, byvirtue of the powers under Section 153(3)(ii) of the Act, asexplained above, which relates to "in an order of any court in aproceeding otherwise thank by way of appeal or reference underthis Act", the Assessing Authority should be directed to proceedwith the assessment of capital gain immediately after thevaluation report is filed by the authority to whom the matter wasreferred by the respondent at the instance of the petitioner. 14. The contention raised by Mr.Patti B.Jaganathan, learnedcounsel appearing for the respondent about the availability ofalternative remedy also deserves to be considered. 15. In M/s.Nivaram Pharma Private Limited v. The Customs,Excise and Gold (Control) Appellate Tribunal, South RegionalBench, Madras and others, [2005] 2 MLJ 246, it was held by theDivision Bench of this Court that in tax matters there should notbe a short circuiting of statutory remedies as follows: "15. There are well settled principles of writjurisdiction and Judges also must exercise self-discipline. It has been repeatedly held by theSupreme Court that in tax matters there should be noshort circuiting the statutory remedies of appeal,revision, etc. We are therefore surprised that inthis case the learned single Judge did not observethis well settled principle of self-discipline andentertained the writ petition despite existence ofstatutory remedies." 16. It is true and also not in dispute that as against theimpugned order of assessment, an appeal lies under Section 246A ofthe Act. But, on the undisputed facts and circumstances of thecase on hand that while the matter is pending before the ValuationOfficer, which has been referred by the respondent at the instanceof the petitioner, the impugned order of assessment came to bepassed, it is a question of the valuable right of the petitioneras conferred under Section 50C of the Act, in the sense that it isa statutory protection. 16. It is true and also not in dispute that as against theimpugned order of assessment, an appeal lies under Section 246A ofthe Act. But, on the undisputed facts and circumstances of thecase on hand that while the matter is pending before the ValuationOfficer, which has been referred by the respondent at the instanceof the petitioner, the impugned order of assessment came to bepassed, it is a question of the valuable right of the petitioneras conferred under Section 50C of the Act, in the sense that it isa statutory protection. 17. In respect of a similar situation under the Central SalesTax Act, when a question about the appellate remedy was raised tocontend that when alternative remedy is available Article 226 ofthe Constitution of India cannot be pressed into service, theSupreme Court in State of Himachal Pradesh v. Gujarat AmbujaCement Ltd. and another, JT 2005 (6) SC 298 held as follows:"10. We shall first deal with the plea regardingalternative remedy as raised by the appellant-State.Except for a period when Article 226 was amended bythe Constitution (42nd Amendment) Act, 1976, thepower relating to alternative remedy has beenconsidered to be a rule of self imposed limitation.It is essentially a rule of policy, convenience anddiscretion and never a rule of law. Despite theexistence of an alternative remedy it is within thejurisdiction of discretion of the High Court to grantrelief under Article 226 of the Constitution. At thesame time, it cannot be lost sight of that though thematter relating to an alternative remedy has nothingto do with the jurisdiction of the case, normally theHigh Court should not interfere if there is anadequate efficacious alternative remedy. If somebodyapproaches the High Court without availing thealternative remedy provided the High Court shouldensure that he has made out a strong case or thatthere exist good grounds to invoke the extraordinaryjurisdiction. *** *** 15. If, as was noted in Ram and Shyam Co. v. State ofHaryana and Ors. AIR 1985 SC 1147 the appeal is from"Caeser to Caeser's wife" the existence ofalternative remedy would be a mirage and an exercisein futility. In the instant case the writ petitionershad indicated the reasons as to why they thought thatthe alternative remedy would not be efficacious.Though the High Court did not go into that plearelating to bias in detail, yet it felt thatalternative remedy would not be a bar to entertainthe writ petition. Since the High Court haselaborately dealt with the question as to why thestatutory remedy available was not efficacious, itwould not be proper for this Court to consider thequestion again. When the High Court had entertained awrit petition notwithstanding existence of analternative remedy this Court while dealing with thematter in an appeal should not permit the question tobe raised unless the High Court's reasoning forentertaining the writ petition is found to bepalpably unsound and irrational. Similar view wasexpressed by this Court in First Income-Tax Officer,Salem v. M/s. Short Brothers (P) Ltd., [1966] 3 SCR84 and State of U.P. and Ors. v. M/s. Indian HumePipe Co. Ltd., [1977] 2 SCC 724. That being theposition, we do not consider the High Court'sjudgment to be vulnerable on the ground thatalternative remedy was not availed. There are twowell recognized exceptions to the doctrine ofexhaustion of statutory remedies. First is when theproceedings are taken before the forum under aprovision of law which is ultra vires, it is open toa party aggrieved thereby to move the High Court forquashing the proceedings on the ground that they areincompetent without a party being obliged to waituntil those proceedings run their full course.Secondly, the doctrine has no application when theimpugned order has been made in violation of theprinciples of natural justice. We may add that wherethe proceedings itself are an abuse of process of lawthe High Court in an appropriate case can entertain awrit petition.", thereby holding that alternative remedy cannot be a bar forexercise of extraordinary jurisdiction under Article 226 of theConstitution of India in cases where fundamental right is breachedor there is violation of the statutory provisions. 18. The Supreme Court in Rajasthan State Electricity Board v.Union of India and others, [2008] 5 SCC 632 held that in admittedfacts and circumstances of the case alternative remedy need not bea bar for exercising jurisdiction under Article 226 of theConstitution of India. The Supreme held as follows: "5. We are clearly of the view that as the respondentUnion of India has clearly admitted the liability,the High Court ought not to have relegated theappellant to his alternative remedy and should nothave dismissed the writ petition on that count. Thereis no disputed question of fact in this case. Asalready noted, in the present case the respondent hadadmitted its liability and, therefore, the questionraised before the High Court being an admitted factthe High Court ought not to have directed theappellant to resort to its alternative remedy underthe Act." 19. Considering the facts that the petitioner is 96 years oldand the matter has been referred by the respondent for valuation,I am of the considered view that the petitioner must be given anopportunity to take advantage of the valuation report that may befiled by the statutory authority and therefore, the contention ofthe learned counsel for the respondent that the appellate remedyis available cannot be countenanced. 19. Considering the facts that the petitioner is 96 years oldand the matter has been referred by the respondent for valuation,I am of the considered view that the petitioner must be given anopportunity to take advantage of the valuation report that may befiled by the statutory authority and therefore, the contention ofthe learned counsel for the respondent that the appellate remedyis available cannot be countenanced. In such view of the matter, this writ petition is allowed andthe impugned assessment order passed by the respondent is setaside and the matter is remitted to the file of the respondent forfresh disposal after obtaining the valuation certificate from theDistrict Valuation Officer. No costs. Consequently, M.P.No.1 of2009 is closed. //True Copy// The Assistant Commissioner of Income Tax, Business Circle III121, Mahatma Gandhi Road, Chennai – 600 034. https://hcservices.ecourts.gov.in/hcservices/