1978 (8) TMI 16 - HC - Income Tax

Business Expenditure, Expenditure Incurred, Jurisdiction Of Court, Jurisdiction Of High Court, Jurisdiction To Reassess, Notice Of Reassessment, Reason To Believe, Writ Jurisdiction

Summary

Issues Involved:
1. Failure to provide an opportunity of being heard to the valuation officer.
2. Interpretation of the role and rights of the valuation officer under section 269L(3) of the Income-tax Act, 1961.
3. Waiver of the right to be heard by the valuation officer.
4. Appropriate course of action for the Tribunal upon remand.

Issue-wise Detailed Analysis:

1. Failure to Provide an Opportunity of Being Heard to the Valuation Officer:

The primary issue in this appeal was whether the Tribunal failed to give an opportunity of being heard to the valuation officer nominated by the competent authority under section 269L(3) of the Income-tax Act, 1961. The Tribunal did not provide such an opportunity to the valuation officer, Shri U. S. Shah, despite a request made by the competent authority in a letter dated 9th October 1974. The court found that the Tribunal was mandated by the language of section 269L(3) to give an opportunity of being heard to the valuation officer. The failure to do so justified the grievance of the Commissioner.

2. Interpretation of the Role and Rights of the Valuation Officer:

The judgment clarified the role of the valuation officer under section 269L(3). The valuation officer is considered an expert assisting the Tribunal on the technical aspects of determining the fair market value of immovable property. The court emphasized that the valuation officer's role is to make submissions based on the materials on record and not to introduce new evidence. The valuation officer should offer written submissions or oral comments, which must be confined to the materials already on record.

3. Waiver of the Right to Be Heard by the Valuation Officer:

The respondents argued that the competent authority waived the right to be heard through the valuation officer by not taking further steps after the letter dated 9th October 1974. The court rejected this argument, stating that the provisions of section 269L(3) are mandatory, and there must be an express waiver, not an implied one. The court concluded that the competent authority's request made it incumbent upon the Tribunal to afford an opportunity of being heard to the valuation officer.

4. Appropriate Course of Action for the Tribunal Upon Remand:

The court considered two courses of action: sending the matter back to the Tribunal for the limited purpose of hearing the valuation officer or remanding the entire matter for a fresh decision. Given that this was the first time the Tribunal was considering the matter and considering the novelty of the practice and procedure under Chapter XX-A, the court decided to set aside the Tribunal's order and send the entire matter back for a fresh decision. The Tribunal was requested to dispose of the matter expeditiously, ideally within four weeks from receiving the record and proceedings.

Conclusion:

The appeal was allowed on the narrow ground of the Tribunal's failure to give an opportunity of being heard to the valuation officer. The entire matter was remanded back to the Tribunal for a fresh decision in light of the correct legal position as explained in the judgment. The Tribunal was urged to dispose of the matter as expeditiously as possible. There was no order as to costs of the appeal.