9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (3) TMI 1978 - AT - Income TaxReference made to the DVO u/s 142A - Addition u/s 69B - HELD THAT - Admittedly, section 142A of the I.T.Act is a procedural provision and applies to pending assessments. In the instant case, the reference u/s 142A of the I.T.Act to the DVO was made on 06.12.2004 and the assessment was completed only vide order dated 30.03.2005. The assessment so completed vide order dated 30.03.2005 has not become final and conclusive because the appeal was filed by the Revenue and the same is being considered by the Tribunal. Therefore,since the assessment has not attained finality, the amended provisions of section 142A of the I.T.Act (with effect from 01.10.2014) will have application to the facts of the instant case (since the above said provision is a procedural provision and not a substantive provision). The amended provisions, viz., section 142A(2) states that the Assessing Officer may make a reference to the DVO whether or not he is satisfied with the correctness and completeness of the accounts of the assessee. Further the amended provision requires the DVO to give opportunity of being heard to the assessee and send a copy of the report to the assessee. The amended provision of section 142A of the I.T.Act (w.e.f. 01.10.2014), going by the dictum laid down by the Hon ble Apex Court in the case of Sunita Mansingha 2017 (4) TMI 303 - SUPREME COURT has application to the facts of the instant case. Having held that the amended provision of section 142A of the I.T.Act has application to the facts of the case, we have to necessarily hold the rejection of books of account is not a pre-condition for reference to the DVO u/s 142A of the I.T.Act. Also we notice that in the instant case various discrepancies in the valuation report pointed out by the assessee was never addressed to by the DVO nor by the Assessing Officer. On the contrary, the Assessing Officer did not give proper opportunity of hearing to the assessee on account of the assessment becoming time barred and this is clear from para 5 of the assessment order, wherein it is mentioned since the case is getting time barred by limitation on 30.01.2005, the contentions raised by the assessee could not be considered at this stage . It was clear that there was no proper examination either by the DVO nor by the Assessing Officer with regard to the objections raised by the assessee in regard to the valuation report. A.O. had also stated that DVO s report is binding on him. This statement of the A.O. is incorrect. The report of the DVO is only advisory in nature and not binding on A.O. Therefore, we deem it appropriate to restore the issue to the Assessing Officer to consider the objections of the assessee, so that the discrepancies / objections raised by the assessee to the valuation report could be addressed and a clear finding can be given on the discrepancies / objections of the assessee Therefore, the finding of the CIT(A) on this score is set aside.Revenue s appeal is allowed for statistical purposes. AY 2002-03 - When the new Sec.142A was inserted by the Finance (No.2) Act, 2014, the proviso to Sec.142A(3) did not exist as it no longer served any purpose. The legislature was conscious of the fact that the substitution of Sec.142A by the Finance (No.2) Act, 2014 was made only for the purpose of overruling the legal position as interpreted by various High Courts and Supreme Court in the case of Sargam Cinemas 2009 (10) TMI 569 - SC ORDER The legislature did not make the law retrospective in operation nor were pending proceedings saved as was done when Sec.142A was inserted by the Finance (No.2) Act, 2004 w.r.e.f. from 15.11.1972. It cannot also be said that Sec.142A as inserted by the Finance Act, 2014 has retrospective effect. Therefore, the reference to DVO in the present case is invalid because rejection of books of accounts is a pre-condition for making a reference to DVO and there was admittedly no such rejection of books of accounts.We also find that the value as declared by the Assessee in its books of accounts was much higher than the value as was estimated by the Registered Valuer in the report filed by the Assessee and therefore there was no occasion to draw any inference that investment in construction as recorded in the books of accounts was less calling for any addition u/s.69B of the Act.
Issues Involved:
1. Validity of reference to the Departmental Valuation Officer (DVO) under Section 142A of the Income-tax Act. 2. Requirement of rejecting the books of account before making a reference to the DVO. 3. Applicability of the amended Section 142A (effective from 01.10.2014) to pending assessments. Issue-Wise Detailed Analysis: 1. Validity of reference to the DVO under Section 142A: The primary issue was whether the Assessing Officer (AO) was justified in referring the valuation of the hotel building to the DVO under Section 142A without rejecting the books of account. The AO referred the matter to the DVO because the cost of construction reported by the assessee was higher than the valuation by the Approved Valuer. The DVO's report estimated a higher construction cost, leading the AO to add the difference as unexplained investment under Section 69B. 2. Requirement of rejecting the books of account before making a reference to the DVO: The CIT(A) held that the AO was not justified in referring the issue to the DVO without rejecting the books of account. The CIT(A) concluded that the reference to the DVO under Section 142A is invalid unless the books of account are found to be unreliable. This position was supported by various judicial pronouncements, including the Supreme Court's decision in Sargam Cinema v. CIT, which mandated the rejection of books of account before making a reference to the DVO. 3. Applicability of the amended Section 142A (effective from 01.10.2014) to pending assessments: The Tribunal considered whether the amended Section 142A, effective from 01.10.2014, which does not require the rejection of books of account before making a reference to the DVO, applies to the present case. The Judicial Member (JM) opined that the amended provision should apply to pending assessments, citing the Supreme Court's decision in CIT v. Sunita Mansingha, which allowed the application of amended procedural provisions to pending cases. However, the Accountant Member (AM) disagreed, stating that the amended Section 142A is not retrospective and does not apply to assessments before 01.10.2014. Separate Judgments Delivered: Judgment by the Judicial Member: The JM held that the amended Section 142A applies to the present case as it is a procedural provision, and the assessment had not attained finality. Therefore, the rejection of books of account is not a precondition for reference to the DVO. However, the JM noted that the AO failed to address the discrepancies pointed out by the assessee in the DVO's report and remanded the matter back to the AO for fresh consideration. Judgment by the Accountant Member: The AM held that the amended Section 142A does not apply retrospectively to assessments before 01.10.2014. The AM emphasized that the AO must reject the books of account before making a reference to the DVO, as mandated by the Supreme Court in Sargam Cinema. Since the AO did not reject the books of account, the reference to the DVO was invalid, and the additions made based on the DVO's report were unjustified. Third Member's Decision: The Third Member concurred with the AM, stating that the amended Section 142A is not retrospective and does not apply to pending assessments before 01.10.2014. The reference to the DVO without rejecting the books of account was invalid, and the CIT(A)'s decision to delete the additions was upheld. Conclusion: The Tribunal, by majority, held that the reference to the DVO under Section 142A without rejecting the books of account was invalid. The amended Section 142A, effective from 01.10.2014, does not apply retrospectively to pending assessments. The AO's additions based on the DVO's report were deleted.
|
