Commissioner of Income Tax vs Hotel Saklani

Prafulla C. Pant, J.—This appeal, preferred u/s 260A of IT Act, 1961, is directed against the impugned order dt. 22nd Feb., 2005 passed in Misc. Appln. No. 7/Delhi/2005 by Tribunal, Delhi Bench ''C'', New Delhi.

Heard learned Counsel for the parties.

The question of law involved in this appeal is as under:

Whether Tribunal has erred in law in rejecting the application for rectification moved by the Revenue/appellant, of its order dt. 22nd March, 2004 passed in ITA No. 3299-3302/Del/2001, misinterpreting proviso to Section 142A of IT Act, 1961, and by holding that assessment had become final ?

Brief facts of the case are that assessee/respondent-M/s Hotel Saklani, 17, Rajpur Road, Dehradun, was served with the notice u/s 148 of the Income Tax Act, 1961 (hereinafter to be referred as the Act) by the AO in the year 1993. In response to said notice assessee submitted its return showing his income as Nil the matter pertains to the assessment year of 1987-88. During that year assessee had shown an investment of Rs. 9,70,603 for construction of basement and shops in his hotel. Valuation of the property known as "Hotel Saklani" was shown in the return as Rs. 32,74,151. The AO vide his order dt. 28th March, 1995 assessed the investment after hearing the assessee at Rs. 10,70,604. In other words, difference in the valuation was assessed at Rs. 1,00,000 only. The assessee challenged the assessment order before Commissioner of Income Tax (Appeals), Dehradun [hereinafter to be referred as CIT(A)]. Said appeal was registered as appeal No. 92/Ddn/1995-96 and dismissed vide order dt. 10th Jan., 2001 by CIT(A). On further appeal before Income Tax Appellate Tribunal (hereinafter to be referred as Tribunal), filed by the assessee, the appeal was allowed vide order dt. 22nd March, 2004.

After the order was passed by Tribunal on 22nd March, 2004 a new section i.e. Section 142A of the Act, was inserted in the IT Act, 1961 which reads as under:

142A. Estimate by Valuation Officer in certain cases.-(1) For the purposes of making an assessment or reassessment under this Act, where an estimate of the value of any investment referred to in Section 69 or Section 69B or the value of any bullion, jewellery or other valuable article referred to in Section 69A or Section 69B is required to be made, the AO may require the Valuation Officer to make an estimate of such value and report the same to him.

(2) The Valuation Officer to whom a reference is made under Sub-section (1) shall, for the purposes of dealing with such reference, have all the powers that he has u/s 38A of the WT Act, 1957 (27 of 1957).

(3) On the receipt of the report from the Valuation Officer, the AO may, after giving the assessee an opportunity of being heard, take into account such report in making such assessment or reassessment:

Provided that nothing contained in this section shall apply in respect of an assessment made on or before the 30th Sept., 2004, and where such assessment has become final and conclusive on or before that date, except in cases where a reassessment is required to be made in accordance with the provisions of Section 153A.

Explanation-In this section, ''Valuation Officer'' has the same meaning as in the Clause (r) of Section 2 of the WT Act, 1957 (27 of 1957).

Proviso to aforesaid section makes it abundantly clear that the power given u/s 142A of the Act is to be exercised in respect of the assessments, which were not final by 30th of Sept., 2004. In other words, the provision is not to be applied retrospectively, except in the cases where assessment has not become by said date or where reassessment is required to be made in accordance with provisions of Section 153A of the Act. Section 153A of the Act provides for assessment in case of search or requisition. Admittedly, it is not a case either of search or of requisition. That being so in the present case, the estimate by Valuation Officer cannot be sought as the assessment had already got finalized on 22nd March, 2004 (i.e. before 30th Sept., 2004) when Tribunal decided the appeal filed by the assessee.

Learned Counsel for the Revenue/appellant submitted that Tribunal has erred in law in rejecting the application for rectification moved by it before said authority. It is further pointed out that Section 142A of the Act was made applicable w.e.f. 15th Nov., 1972. The object of making Section 142A of the Act applicable w.e.f. 15th Nov., 1972 appears to be to overcome the difficulty faced by the Departmental authorities in view of the Hon''ble apex Court''s judgment in Amiya Bala Paul Vs. Commissioner of Income Tax, Shillong, . But simultaneously, it is to be kept in mind that the proviso contained in Section 142A of the Act excludes those assessments from the purview of the section which were concluded before 30th Sept., 2004. Had the Revenue filed appeal in the High Court against the order passed by Tribunal on 22nd March, 2004, it could have been said that the assessment has yet not finalized. But it is not disputed that the Revenue did not prefer any appeal against the order dt. 22nd March, 2004 passed by Tribunal as such, the same became final.

In such circumstances it cannot be said that Tribunal has committed any error of law in rejecting the application for rectification moved by the Revenue/appellant, particularly when no mistake is shown to have been committed.

For the reasons as discussed above, we are of the view that this appeal is liable to be dismissed. The same is dismissed. Question of law stands answered accordingly.