2010 (6) TMI 902 - AT - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Assessing Officer (AO)
2. Validity of reference to the District Valuation Officer (DVO) u/s 142A
3. Validity of the assessment order based on the DVO's report

Summary:

1. Jurisdiction of the Assessing Officer (AO):
The assessee contended that the jurisdiction lay with the AO in New Delhi and not Kanpur. The transfer of jurisdiction required prior notice and reasons, which were not provided, making the assessment order dated 31st Dec., 2008 null and void. The CIT(A) erred in holding that objections to centralization should have been raised before relevant authorities.

2. Validity of Reference to the DVO u/s 142A:
The assessee argued that there was no justification to invoke Section 142A and refer the matter to the DVO on 27th Sept., 2007, as no assessment proceedings were pending at that time. The DVO's report, obtained from an invalid reference, could not be the basis for any addition. The Tribunal admitted these additional grounds based on the Supreme Court's ruling in National Thermal Power Co. Ltd. v. CIT.

The Tribunal found substance in the assessee's argument, citing the Gujarat High Court's decision in Umiya Co-op. Housing Society Ltd. and the ITAT Lucknow Bench's decision in Vijeta Educational Society, which held that a reference to the DVO can only be made during pending assessment or reassessment proceedings. Since no such proceedings were pending on 27th Sept., 2007, the reference was invalid, and the assessment based on the DVO's report was unsustainable.

3. Validity of the Assessment Order Based on the DVO's Report:
The Tribunal noted that the DVO's report did not specify the period for which the investment was to be estimated. The assessee had maintained regular books of account with no defects found, and thus, no addition could be made based on the DVO's report. Consequently, the assessment order was quashed.

Conclusion:
The Tribunal quashed the assessment order, deeming the reference to the DVO invalid and the subsequent assessment unsustainable. The appeal was allowed, and the remaining grounds were not considered necessary to decide.