2001 (1) TMI 28 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction and authority of the Deputy Director of Income-tax (Investigation) u/s 131(1A) and 131(1)(d).
2. Validity of the valuation report by the District Valuation Officer (DVO).
3. Procedural fairness and opportunity to the petitioner to file objections.

Summary:

1. Jurisdiction and Authority of the Deputy Director of Income-tax (Investigation) u/s 131(1A) and 131(1)(d):
The petitioner challenged the authority of the Deputy Director of Income-tax (Investigation) ("DDI") to issue a commission for property valuation u/s 131(1)(d) read with section 131(1A). The petitioner argued that such power could only be exercised in cases of search and seizure u/s 132. The court, however, interpreted section 131(1A) to empower six specified authorities, including the DDI, to exercise powers u/s 131(1) if they suspect income concealment. The court applied the "rule of last antecedent" and concluded that the words "before he takes action under clauses (i) to (v) of that sub-section" in section 131(1A) qualify only the "authorised officer" and not the other five authorities. Thus, the DDI was within his rights to issue the commission for property valuation.

2. Validity of the Valuation Report by the District Valuation Officer (DVO):
The DDI's letter dated May 31, 1999, directed the DVO to determine the cost of construction of the property "Classic Gold, 23/24, New Palasia, Indore." The DVO's report valued the property at Rs. 1,38,75,000, significantly higher than the petitioner's declared value of Rs. 62,75,000. The petitioner contended that the valuation report should not be accepted. The court found that the DDI's action was justified and within the legal framework of section 131(1A). The court dismissed the petitioner's challenge to the DVO's valuation report, stating that the DDI's reference for valuation was proper and aimed at elucidating the correctness of the cost of construction.

3. Procedural Fairness and Opportunity to the Petitioner to File Objections:
The petitioner argued that the Assessing Officer would rely on the DVO's report, causing prejudice. The court noted that the Assistant Commissioner of Income-tax had given the petitioner an opportunity to file objections to the DVO's report, which the petitioner had done. The court emphasized that these objections were yet to be decided on their merits and that the concerned authority would pass necessary speaking orders before making the assessment. Thus, the court found no procedural unfairness and dismissed the petition as premature.

Conclusion:
The court dismissed the writ petition, upholding the actions of the income-tax authorities as within their legal powers and in conformity with the provisions of the Income-tax Act, 1961. The court emphasized that the petitioner's objections to the DVO's valuation report would be duly considered before finalizing the assessment.