2003 (9) TMI 20 - HC - Income Tax

Power of Assessing Officer under section 131 Held that the power of Assessing Officer under section 131 is distinct from and does not include the power to refer a matter to the Valuation Officer under section 55A - this writ petition is allowed. A writ of prohibition as prayed for is issued to the Assistant Valuation Officer. - A writ is also issued to the Assessing Officer not to rely on the report of the Valuation Officer/Assistant Valuation Officer.

Summary

Issues:
1. Writ petition for prohibition against Assistant Valuation Officer.
2. Quashing of valuation report and prohibition against Assistant Director of Income-tax.
3. Allegation of improper exercise of power under Income-tax Act.
4. Reference to Valuation Officer without pending assessment proceedings.
5. Reliance on judgments regarding powers of Assessing Officer.

Analysis:
The writ petition was filed seeking a prohibition against the Assistant Valuation Officer and quashing of a valuation report, along with a prohibition against the Assistant Director of Income-tax. The petitioner, an individual and a doctor by profession, alleged making investments in specific assessment years, duly reflected in financial documents. Subsequently, the petitioner received a summons under section 131 of the Income-tax Act from the Assistant Director of Income-tax (Investigation), Moradabad, which was contested on grounds that the assessment was already being processed by the Income-tax Officer in Bijnor. Despite providing necessary information, the Assistant Director directed the Valuation Officer to assess the property, leading to the petitioner challenging the legality of this action.

The petitioner argued that the Assistant Director lacked the authority under the Income-tax Act to refer property valuation to the Valuation Officer, contending that such power is linked to search and seizure provisions. It was emphasized that no pending proceedings existed before the income-tax authorities when the valuation reference was made, asserting that only the Assessing Officer can make such references during ongoing assessment proceedings. Citing precedent from a previous court decision, the petitioner maintained that full disclosure of construction costs had been made, supported by a valuation report, rendering the Assistant Director's actions unlawful.

Legal counsel for the petitioner referenced a Supreme Court decision in Smt. Amiya Bala Paul v. CIT, highlighting that the Assessing Officer's powers under section 131 of the Income-tax Act do not encompass the authority to refer matters to the Valuation Officer under section 55A. The court concurred with this interpretation, noting the applicability of the Supreme Court's ruling in Smt. Amiya Bala Paul's case to the present situation. Additionally, a decision by the Gauhati High Court cited by the Departmental counsel was deemed overturned by the Supreme Court in the aforementioned case.

Consequently, the court allowed the writ petition, issuing a writ of prohibition against the Assistant Valuation Officer and instructing the Assessing Officer not to rely on the report submitted by the Valuation Officer or Assistant Valuation Officer.