9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (7) TMI 567 - AT - Income TaxRevision u/s 263 - revision based on the DVO s report called for under the provisions of section 142A(1) by the Ld. AO, which was received after the culmination of the assessment - valuation report without adhering to prerequisite conditions of prescribed in relevant section HELD THAT - As per subsection (4) of section 142A, it was incumbent upon the valuation officed to The Valuation Officer shall, estimate the value of the asset, property or investment after taking into account such evidence as the assessee may produce and any other evidence in his possession gathered, after giving an opportunity of being heard to the assessee., apparently no such opportunity was provided to the assessee. As per sub section (6) of section 142A The Valuation Officer shall send a copy of the report of the estimate made under sub-section (4) or sub-section (5), as the case may be, to the AO and the assessee, within a period of six months from the end of the month in which a reference is made under sub-section (1) , in present case the report of the DVO was send to department way beyond the stipulated time period which shows complete violation of provisions of section 142A. Under such circumstances the report of DVO barred by limitation should be categorized as non-est, thus, cannot be the basis for revisionary proceedings u/s 263. The interpretations in the order of Shri Zulfi Ravdjee 2019 (11) TMI 76 - ITAT HYDERABAD is based on principle of law laid down in the case of B.K. Khanna Co. vs Union Of India And Others 1984 (9) TMI 31 - DELHI HIGH COURT wherein Hon ble High court has categorically interpreted the seriousness of word Shall placed in the sections and provisions of the Act and the significance and prerequisite of its mandatory compliance. Non adherence to such strict mandatory provision thus entails the proceedings illegal and the outcome as not est. Issue regarding valuation report without adhering to prerequisite conditions of prescribed in relevant section renders the reopening assessment bad has been discussed in the case of Reliance Jute and Industries Ltd. 1984 (3) TMI 43 - CALCUTTA HIGH COURT wherein Hon ble Calcutta High court had held that provisions of law need to be followed strictly, failure of compliance to prerequisite essential conditions tantamount the valuation as incompetent, so as the assessment based on such report. Thus, no hesitation to concur with the contentions raised by the AR that the non- disposal of the objections of the assessee on DVO s report by the Ld PCIT in revisionary proceedings against the principle of natural justice, though set aside to AO for opportunity to assessee, however the report of DVO was prepared, completed and furnished by the DVO to the department beyond the stipulated time provided in section 142A(vi), thus the same is against the mandate of law and literal interpretation of provisions of section 142A, therefore the revisionary proceedings initiated u/s 263 based such report are unjustified as well as against the intent of law. Assessee appeal allowed.
Issues Involved:
1. Legality of the order under section 143(3) dated 30/12/2019. 2. Validity of the order under section 263 dated 25/03/2022. 3. Discrepancies in Work in Progress (WIP) valuation. 4. Reference made under section 142A. 5. Jurisdiction under section 263 based on DVO's report. 6. Compliance with procedural requirements under section 142A. Detailed Analysis: 1. Legality of the Order Under Section 143(3) Dated 30/12/2019: The assessee argued that the order under section 143(3) dated 30/12/2019 was not erroneous and did not prejudice the interests of the revenue. The assessment was completed after considering all relevant materials, and no amount was omitted from assessment. 2. Validity of the Order Under Section 263 Dated 25/03/2022: The Principal Commissioner of Income Tax (PCIT) invoked section 263, claiming the assessment order was erroneous and prejudicial to the interests of the revenue. The PCIT's primary basis was the discrepancy in WIP valuation identified by the Departmental Valuation Officer (DVO). The assessee contended that the PCIT did not establish any error or prejudice, and the DVO's report was not binding on the Assessing Officer (AO). 3. Discrepancies in Work in Progress (WIP) Valuation: During the survey under section 133A, discrepancies were found in the WIP of the assessee. The AO made a reference to the DVO under section 142A(1) for valuation, which revealed a significant difference between the book value and the DVO's estimate. The assessee objected to the DVO's valuation, arguing that the discrepancies were not properly addressed. 4. Reference Made Under Section 142A: The AO referred the matter to the DVO on 29/12/2019, just one day before completing the assessment. The DVO's report was received after the assessment was finalized. The assessee argued that the DVO's report was not binding and that procedural requirements under section 142A were not followed, including the six-month timeline for the DVO to submit the report. 5. Jurisdiction Under Section 263 Based on DVO's Report: The PCIT relied on the DVO's report to invoke section 263. The assessee argued that the DVO's report, received after the assessment, did not form part of the "record" for section 263 purposes. The PCIT failed to address the assessee's objections to the DVO's report, making the invocation of section 263 unjustified. 6. Compliance with Procedural Requirements Under Section 142A: The assessee contended that the DVO's report was not submitted within the six-month period mandated by section 142A(6). The failure to adhere to this timeline rendered the DVO's report invalid. The ITAT agreed, citing precedents that emphasized strict compliance with statutory timelines. Conclusion: The ITAT concluded that the PCIT did not establish any error or prejudice in the assessment order. The DVO's report, received beyond the statutory period, was not binding. The PCIT failed to address the assessee's objections, violating principles of natural justice. Consequently, the revisionary proceedings under section 263 were deemed illegal and unsustainable. The appeals of both assessees were allowed. Separate Judgments: No separate judgments were delivered by the judges. The decision was rendered by the ITAT as a single order applicable to both appeals.
|
