2008 (4) TMI 514 - HC - Income Tax

Assessee not filed return - called upon to file return on account of investment in the construction of a building - assessee filed a return and along with it a valuation report of construction - Assessing Officer referred the valuation of the building constructed by the assessee to the Department s valuer - valuation was made by the Assessing Officer when the assessment stood remanded under the orders of the Commissioner of Income-tax (Appeals), counsel for the assessee contended that the Commissioner of Income-tax (Appeals) remanded the matter only for the limited purpose of considering certain cash credits and assessment as such was not pending before the Assessing Officer for reconsideration - authorities have not considered the impact of amendment with retrospective effect we leave open both the issues to the Commissioner of Income-tax (Appeals) for consideration, i.e., whether reopening is justified on account of retrospective amendment through introduction of section 142A and if so, to consider the assessee s challenge against the quantum of assessment - set aside the impugned orders of the Tribunal and remand the matter to the Commissioner of Income-tax (Appeals) for rehearing the assessee and for disposal of the case afresh

Summary

Issues involved:
Appeal by Revenue challenging Tribunal's order cancelling reassessment made against assessee for assessment year 1986-87. Validity of reference for valuation by Assessing Officer. Impact of retrospective amendment introducing section 142A on reassessment. Consideration of assessee's challenge against quantum of assessment.

Analysis:
The judgment involves an appeal by the Revenue challenging the Tribunal's decision to cancel the reassessment made against the assessee for the assessment year 1986-87. The assessee was called upon to file a return due to an investment in the construction of a building, which led to certain additions being made by the Assessing Officer during assessment. The Commissioner of Income-tax (Appeals) remanded the matter to examine the genuineness of certain cash credits added in the original assessment. Subsequently, the Assessing Officer referred the valuation of the building to the Department's valuer, leading to a revised assessment. However, the appellate authority canceled the addition pertaining to unexplained cash credits, prompting the Assessing Officer to reopen the assessment under section 147 of the Act.

The main contention revolved around the validity of the reference for valuation by the Assessing Officer. The Revenue argued that the reference was made during the remanded assessment, while the assessee contended that the assessment was not pending for reconsideration. The court refrained from making a finding on this issue, considering the retrospective introduction of section 142A, which allows for valuation references even after the completion of an assessment. The court highlighted that the Tribunal did not consider this amendment, which could potentially validate the reference for valuation.

Due to the lack of consideration of the retrospective amendment by the appellate authorities, the court set aside the Tribunal's orders and remanded the matter to the Commissioner of Income-tax (Appeals) for rehearing the assessee and for fresh disposal of the case. The court emphasized that the assessee should have an opportunity to contest the case on its merits, especially in light of the impact of the retrospective amendment. Therefore, the correctness of the reassessment and the assessee's challenge against the quantum of assessment should be considered by the Commissioner of Income-tax (Appeals) in the rehearing.