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2016 DIGILAW 1054 (CAL)

Jharna Dey v. Income Tax Officer, Ward-I, Bankura

2016-12-21

SUBRATA TALUKDAR

body2016
JUDGMENT : Subrata Talukdar, J. 1. In this writ application under challenge are two notices, both dated 19th March, 2004, issued by the respondent No.1, being the Income Tax Officer, Ward-I, Bankura (for short ITO) to the petitioner under Section 148 of the Income Tax Act (for short the IT Act), 1961. By the said two impugned notices the ITO sought to reopen the assessment for the years 1999-2000 and 2000-2001. 2. The petitioner prays for a writ in the nature of Mandamus to quash and/or set aside the said two notices marked respectively as annexures P-2 and P-7 to the writ petition as well as the order of rejection dated 2nd February, 2005, also issued by the respondent No.1/ITO, marked annexure P-19 to the writ petition. It is relevant to note that by the said rejection order dated 2nd February, 2005 the representation of the petitioner qua the said two notices dated 19th March, 2004 were disposed of without any intervention by the ITO. 3. The point that arises for consideration as argued by Sri R.K. Biswas, Ld. Counsel for the petitioner, is that the said impugned notices of the ITO are contrary to the law then settled by the Hon’ble Apex Court in the matter of Amiya Bala Paul vs. Commissioner of Income Tax reported in 2003 (262) ITR 407 (SC). The said judgment was delivered on 7th July, 2003 and, Sri Biswas submits that the said judgment was brought to the notice of the respondent No.1/ITO by the petitioner vide her letter dated 10th March, 2004. Such position of law was ignored by the ITO and the ITO proceeded with the impugned notices against the petitioner on the ground that the valuation for constructing her residential property remained an unexplained investment in her returns. 4. Sri Biswas submits that the ITO arrived at such conclusion only after referring the matter to the Departmental Valuation Officer who, according to the ITO, is empowered by the Central Board of Direct Taxes (CBDT) for making valuation in respect of any investment. 4. Sri Biswas submits that the ITO arrived at such conclusion only after referring the matter to the Departmental Valuation Officer who, according to the ITO, is empowered by the Central Board of Direct Taxes (CBDT) for making valuation in respect of any investment. Sri Biswas argues that it has been clearly laid down by the Hon’ble Apex Court In Re: Amiya Bala Paul (supra) that the ITO, being the assessing officer, cannot refer to the valuation officer and the valuation officer cannot be called upon nor could he acquire the jurisdiction to submit a report to the ITO under the IT Act except, on a reference made in terms of Section 15A or Section 269L of the IT Act. 5. Sri Biswas points out that at the relevant point of time the enabling section under the IT Act namely, Section 142A did not exist in the statute books and, such new section namely, Section 142A was inserted by the Finance Act, 2004 with retrospective effect from 15th November, 1972. However, Sri Biswas further submits that at the position of time when the ITO referred the matter to the valuation officer and the valuation officer prepared his report on 30th January, 2004 there was no existence of Section 142A in the IT Act and only the judgment In Re: Amiya Bala Paul (supra) held the field. 6. It is also submitted by Ld. Counsel for the petitioner that prior to issuing the impugned notices dated 19th March, 2004, the respondent No.1/ITO issued a show cause notice on 5th March, 2004. By way of reply to the said show cause notice the petitioner referred to the judgment of the Hon’ble Apex Court In Re: Amiya Bala Paul (supra) which had underscored the position that the ITO cannot refer the valuation of any house property to the Departmental Valuation Officer. However, ignoring such statutory position, the ITO added a purported unexplained investment of Rs. 5,48,514/- qua the petitioner for the assessment year 2001-2002. 7. Sri Biswas points out that such arbitrary addition to the assessment qua the petitioner for the assessment year 2001-2002, was challenged by the petitioner in an appeal before the Commissioner of Income Tax (Appeal) (for short the CIT (Appeal). 5,48,514/- qua the petitioner for the assessment year 2001-2002. 7. Sri Biswas points out that such arbitrary addition to the assessment qua the petitioner for the assessment year 2001-2002, was challenged by the petitioner in an appeal before the Commissioner of Income Tax (Appeal) (for short the CIT (Appeal). The CIT (Appeal) by his order dated 30th July, 2004 deleted the additional assessment made by the ITO for the assessment year 2001-2002 against which the Revenue preferred an appeal before the Income Tax Appellate Tribunal (for short ITAT). The ITAT, by its order dated 25th October, 2005, affirmed the order of the CIT (Appeal) as recorded above. 8. Aggrieved again by the decision of the ITAT, the Revenue filed a writ petition before this Hon’ble Court which was dismissed on 5th September, 2008. Therefore, according to Sri Biswas, the application of the principles laid down In Re: Amiya Bala Paul (supra) were clearly upheld at all three adjudicatory levels above the assessing officer/ITO namely, the CIT(A), the ITAT and, thereafter the High Court. Sri Biswas clarifies the position of law to the effect that the opinion given by the District Valuation Officer for reopening an assessment is not per se information and, such proposition of law is supported by another decision of the Hon’ble Apex Court In Re: Assistant Commissioner of Income Tax vs. Dhariya Construction Co. reported in 2010 (328) ITR 515 (SC). 9. Appearing on behalf of the respondents/Revenue, Sri Nizamuddin, Ld. Counsel argues that this writ petition is not maintainable since this Court cannot act as an appellate authority for interfering with the notices impugned under Section 148 of the IT Act. Ld. Counsel points out that no case has been made out by the writ petitioner that the said impugned notices are without or beyond jurisdiction of the CIT (Appeal) and thereafter the ITAT. 10. Drawing the attention of this Court to Section 246(1)(b) of the IT Act, 1961, Sri Nizamuddin points out that the impugned notices are appealable before the CIT (Appeals) and thereafter before the ITAT. Only the order of the ITAT can be carried before this Hon’ble Court by way of a further appeal. Therefore, the writ petition deserves to be dismissed in limine. 11. Only the order of the ITAT can be carried before this Hon’ble Court by way of a further appeal. Therefore, the writ petition deserves to be dismissed in limine. 11. Sri Nizamuddin further argues that it would be evident from the contents of the writ petition itself that the principles of natural justice have been complied with by the Revenue and the petitioner received an adequate opportunity to place her objections. Since, only notices have been issued against the writ petitioner, considering the law laid down in Raymond Woollen Mills Ltd. vs. Income Tax Officers & Ors. reported in 236 ITR 34 (SC), this Court, sitting in writ jurisdiction, should not interfere at the notice stage. Post the stage of notice the assessing officer has the authority to come to a conclusion whether a case of concealment of investment has been made out or not. 12. Meeting the point raised by the writ petitioner relying upon In Re: Amiya Bala Paul (supra) that no case for reassessment is made out upon a report of the valuation officer, Sri Nizamuddin argues that in the facts of the present case since no scrutiny assessment was carried out under Section 143(3) of the IT Act, only a summary assessment under Section 143(1) of the IT Act was carried out. Such summary assessment is not a bar under Section 147 of the IT Act and this point has been underscored in the decision of Assistant Commissioner of Income tax vs. Rajesh Jhaveri Stock Brokers (P) Ltd. reported in (2007) 161 Taxman 316 (SC). 13. Therefore, Sri Nizamuddin concludes that the remedy of a writ petition before this Court is not available at this stage and, only a statutory appeal can be preferred under Section 260A of the IT Act. This Court, according to Ld. Counsel, is required to take notice of the fact that interference is rarely called for at the notice stage since the IT Act is a self-exhaustive code. In the event only the procedure lacks inherent jurisdiction or, a statutory judicial restraint is imposed upon the authority on the ground of limitation or violation of the principles of natural justice, this Court can only then interfere sitting in writ jurisdiction. In this connection, Sri Nizamuddin relies on the decision of Commissioner of Income Tax vs. Chhabil Dass Agarwal reported in 2014 (1) SCC 603 = Laws (SC)-2013-8-23. 14. In this connection, Sri Nizamuddin relies on the decision of Commissioner of Income Tax vs. Chhabil Dass Agarwal reported in 2014 (1) SCC 603 = Laws (SC)-2013-8-23. 14. Having heard the parties and considering the materials placed, this Court finds that on behalf of the Revenue the primary argument placed is that of jurisdiction. The point of jurisdiction, in the opinion of this Court, is answered in favour of the writ petitioner since the writ petitioner has demonstrated that the law prevailing at the material point of time In Re: Amiya Bala Paul (supra) ought to have been applied by the ITO. The relevant note of In Re: Amiya Bala Paul reads as follows:- “In an assessment of the assessee to income-tax, the Assessing Officer cannot refer to the Valuation Officer the question of the cost of construction of a house property built by the assessee : section 55A of the Income-tax Act, 1961, can have no application to such a matter. The power of the Assessing Officer under sections 131(1) and 133(6) is distinct from and does not include the power to refer a matter to the Valuation Officer under section 55A. A report of the Valuation Officer under section 55A may be considered by the Assessing Officer as a piece of evidence if it is relevant. However, the power of inquiry granted to an Assessing Officer under sections 133(6) and 142(2) does not include the power to refer the matter to the Valuation Officer for a enquiry by the latter.” 15. This Court is further persuaded to hold that the writ petitioner has been also able to demonstrate that the legal points addressed in this writ petition were answered in the affirmative in connection with the statutory appeal preferred by the writ petitioner, which has been upheld from the stage of the ITO to the stage of ITAT and, is now pending a reference before this Hon’ble Court under Section 260A of the IT Act. 16. Therefore, this Court finds adequate reasons to accept the submissions of Sri Biswas that at each of the above noted stages from the ITO to the ITAT, the legal position was uniformly ratified that assessment could not be opened on the basis of a reference and subsequent report of the valuation officer. 16. Therefore, this Court finds adequate reasons to accept the submissions of Sri Biswas that at each of the above noted stages from the ITO to the ITAT, the legal position was uniformly ratified that assessment could not be opened on the basis of a reference and subsequent report of the valuation officer. This Court also concurs with the stand taken by the writ petitioner that the procedure for reopening of assessment on the basis of a valuation report by the valuation officer can be applied only in terms of the amendment to Section 142A of the IT Act which was introduced by the Finance Act of 2004, retrospectively. Therefore, at the relevant point of time when the impugned notices under Section 148 were issued against the writ petitioner in respect of the assessment years 1999-2000 and 2000-2001, only the un-amended Section 142A of the IT Act applied. The unamended Section 142A ought to be read in conjunction with the law applicable at the relevant point of time In Re: Amiya Bala Paul (supra). 17. This Court must also concur with the stand taken by the writ petitioner that since the assessment year 1999-2000 and 2000-2001 became final prior to 30th September, 2004, i.e. the introduction of the amended Section 142A, the respondent No.1/ITO could not have reopened the issue in February, 2005 by then applying the amendment under Section 142A retrospectively. 18. Having regard to the demonstrable violation of the legal principles involved in the facts of the present case this Court is persuaded to answer the jurisdictional issue as well as on merits in favour of the petitioner. 19. WP 4575(W) of 2005 accordingly succeeds and stands allowed. 20. The impugned notices dated 19th March, 2004 of the ITO stand set aside. 21. There will be, however, no order as to costs.