2009 (4) TMI 405 - HC - Income Tax

Reassessment- On the basis of the report of valuation officer the Assessing Officer added the difference in the valuation made by the Departmental Valuation Officers added the difference in the valuation made by Departmental valuation Officers and the investment shown by the assessee as income from other source which order was upheld in appeal by the Commissioner of Income Tax (Appeals).The Tribunal quashed the reassessment order. Held that- the proviso lays down that section 142A will not apply to an assessment made before the 30th day of September, 2004. In the instant case, the original assessment order was passed December 4, 1990 that was much before September 30, 2004. It had become final between the parties on the date when section 142A was inserted by Finance Act, 2004. The reassessment proceeding were not valid and liable to be quashed.

Summary

Issues:
Assessment order under section 143(3) of the Income-tax Act, 1961 for the assessment year 1989-90 challenged based on the report of the Departmental Valuation Officer. Validity of reassessment proceedings under section 147/148 of the Act. Interpretation of section 142A inserted by the Finance (No. 2) Act, 2004.

Analysis:
The judgment pertains to the challenge against the assessment order under section 143(3) of the Income-tax Act, 1961 for the assessment year 1989-90. The Assessing Officer initiated proceedings under section 147/148 of the Act based on the report of the Departmental Valuation Officer regarding the investment made in the construction of a building by the respondent-assessee. Subsequently, the Assessing Officer added the difference in valuation as income from other sources, a decision upheld by the Commissioner of Income-tax (Appeals). However, the Tribunal, in its order dated March 31, 2005, quashed the reassessment order, leading to the present appeal.

During the hearing, the learned standing counsel for the Revenue argued that the Tribunal erred in setting aside the reassessment proceedings, citing section 142A of the Act inserted by the Finance (No. 2) Act, 2004. The counsel contended that the Assessing Officer was justified in initiating proceedings under section 147/148 based on the Valuation Officer's report.

The High Court examined the provisions of section 142A of the Act and the relevant proviso which exempts assessments made before September 30, 2004, from its application. The Court noted that the original assessment order in this case was passed on December 4, 1990, much before the specified date. As a result, the reassessment proceedings were deemed to be covered by the proviso of section 142A. The Court concluded that the Tribunal did not err in setting aside the reassessment proceedings based on this interpretation.

In light of the above analysis, the High Court dismissed the appeal on its merits, upholding the Tribunal's decision to quash the reassessment order. The judgment underscores the importance of adhering to statutory provisions and timelines concerning reassessment proceedings under the Income-tax Act, 1961.