2011 (1) TMI 431 - HC - Income Tax

Applicability of section 142A - The revenue submitted that Section 142A being retrospective from 15.4.1972 applied for the assessment year in question and the Assessing Officer was justified in acting upon a valuation report and the Tribunal has based its decision on judgment in Smt.Amiya Bala Paul which decision has been superseded by the amendment - The proviso was not applicable as the assessment had not become final and conclusive in view of pendency of appeal in this Court - Reliance has been placed on judgment of Madhya Pradesh High Court in CIT v. Omparkash Bagria (HUF), wherein it was held that pendency of appeal under section 260A of the Act before High Court would exclude the applicability of the proviso - Section 254(4) specifically provides that finality of order of the Tribunal is subject to appeal under section 260A of the Act - Hence, answer the questions raised in favour of the revenue and against the assessee.

Summary

Issues Involved:
- Applicability of section 142A of the Income Tax Act, 1961
- Interpretation of the proviso to section 142A
- Effect of pendency of appeal under section 260A on the applicability of the proviso

Analysis:

1. Applicability of section 142A:
The judgment dealt with the applicability of section 142A of the Income Tax Act, 1961, which allows the Assessing Officer to require a Valuation Officer to estimate the value of investment. The amendment to the Act made this provision retrospective from 15.4.1972. The Assessing Officer in the case relied on a valuation report based on this section. However, the Tribunal had based its decision on a previous judgment by the Supreme Court, which was later superseded by the amendment. The key issue was whether the retrospective application of section 142A was valid for the assessment year in question.

2. Interpretation of the proviso to section 142A:
The proviso to section 142A excluded the applicability of the provision to assessments made on or before September 30, 2004, which had become final and conclusive, except in cases where reassessment was required under section 153A. The debate centered around whether the proviso applied to cases where appeals were pending in the High Court under section 260A. The revenue contended that the proviso did not apply due to the pendency of the appeal, while the assessee argued the opposite.

3. Effect of pendency of appeal under section 260A:
The crucial question was whether the proviso to section 142A would apply when an appeal under section 260A was pending in the High Court before September 30, 2004. The Court held that the pendency of an appeal under section 260A would exclude the applicability of the proviso. It was emphasized that if an appeal is pending, the assessment cannot be deemed final and conclusive. The Court also referred to section 254(4), which specifies that the finality of the Tribunal's order is subject to appeal under section 260A.

In conclusion, the Court ruled in favor of the revenue and against the assessee on the questions raised. Since the Tribunal had not considered the merits of the valuation report, the matters were remitted back to the Tribunal for a fresh decision in accordance with the law.