2010 (7) TMI 306 - HC - Income Tax

Action U/S 148 - on the basis of DVO s report - A.O. referring the property to the D.V.O. for valuation - without rejecting the books of accounts - Held that - Assessing Officer under the powers vested to it under Section 131 (1) (d) read with Section 142 A of the Act had full powers to call for a report of District Valuation Officer without first rejecting the books of account - Appeal is disposed of

Summary

Issues:
1. Whether action under Section 148 can be based on DVO's report?
2. Whether the ITAT erred in dismissing the appeal on technical grounds without considering merits?

Analysis:

Issue 1:
The first substantial question of law in the Income Tax Appeal questioned the validity of taking action under Section 148 based on the District Valuation Officer's (DVO) report. The High Court referred to a judgment in a connected appeal where it was already decided that such action could be justified. The court held that the ratio of a judgment of the Madras High Court did not apply to the facts of the case, thereby upholding the authority to take action under Section 148 based on the DVO's report.

Issue 2:
The second substantial question of law raised whether the ITAT erred in dismissing the appeal on technical grounds without delving into the merits. The High Court noted that this issue was not framed in the connected appeal but had been previously examined in another case. In that case, it was established that the Assessing Officer had the power to call for a report from the DVO without rejecting the books of account first. Therefore, the High Court decided that the ITAT's dismissal on technical grounds was not justified, and the appeal should have been considered on its merits. Consequently, the High Court ruled in favor of the Revenue, emphasizing the Assessing Officer's authority under Section 131(1)(d) read with Section 142A of the Income-tax Act, 1961.

In conclusion, the High Court disposed of the Income Tax Appeal based on the decisions in the connected appeals and the established authority of the Assessing Officer to refer to the DVO's report without rejecting the books of account.