2009 (8) TMI 635 - HC - Income Tax

Reassessment- On the basis of the report of the valuation officer the Assessing Officer added the difference in the valuation made by the departmental valuation officer and the investment shown by the assessee as income from other sources which order was upheld by Commissioner (Appeals). The Tribunal quashed the reassessment order. Held that- the reassessment proceedings would be hit by the proviso as it also forms part of section 142A of the Act inserted by the Finance Act 2004. the proceedings had become final between the parties on the date when section 142A was inserted by the Act.

Summary

Issues: Reassessment under section 147/148 of the Income-tax Act, 1961 based on Departmental Valuation Officer's report for investment in building construction; Applicability of section 142A inserted by Finance (No. 2) Act, 2004; Validity of reassessment proceedings.

In this judgment by the Allahabad High Court, the main issue revolved around the reassessment under section 147/148 of the Income-tax Act, 1961, initiated based on the report of the Departmental Valuation Officer regarding the investment made by the assessee in building construction. The original assessment order for the assessment year 1990-91 was framed on January 4, 1991. Subsequently, the Assessing Officer added the difference in valuation by the Valuation Officer and the investment shown by the assessee as income from other sources. This decision was upheld by the Commissioner of Income-tax (Appeals), but the Tribunal later quashed the reassessment order in a decision dated November 28, 2003.

The court considered the applicability of section 142A of the Income-tax Act, inserted by the Finance (No. 2) Act, 2004, effective from November 14, 1972. The Revenue argued that the Tribunal erred in setting aside the reassessment proceedings, citing section 142A. However, the court examined the proviso to section 142A, which stated that it would not apply to assessments made on or before September 30, 2004, which had become final and conclusive by that date, except in cases requiring reassessment under section 153A.

Upon reviewing the orders and the proviso to section 142A, the court found that the reassessment proceedings in this case fell under the proviso, as the original assessment order was passed before November 28, 2003. Consequently, the court held that the Tribunal did not err in setting aside the reassessment proceedings. Therefore, the court dismissed the appeal on its merits, concluding that the Tribunal's decision was legally sound and valid.