2009 (7) TMI 709 - HC - Income Tax

Reassessment- Whether on the facts and in the circumstances of the case, the hon ble Income-tax Appellate Tribunal was justified in upholding the order of the Commissioner of Income-tax (Appeals) deleting the addition made by the Assessing Officer on account of difference between the cost of construction, estimated by the valuation officer and that disclosed by the assessee being unexplained investment under section 69 of the Income-tax Act, by placing reliance on the judgment in the case of Smt. Amiya Bala Paul v. CIT 2008 -TMI - 6124 - SUPREME Court without taking into consideration the amended provisions of section 142A(1) of the Income-tax Act, introduced with retrospective effect ? Held that- the original assessment order was passed on March 21, 2002 and had become final between the parties on the date when section 142A was inserted by Finance Act, 2004. The Tribunal was justified in deleting the addition made by the Assessing Officer on account of difference between the cost of construction estimated by the valuation Officer and that disclosed by the assessee.

Summary

Issues:
1. Interpretation of provisions under section 142A of the Income-tax Act.
2. Validity of reassessment proceedings based on the report of the Departmental Valuation Officer.
3. Application of the proviso of section 142A in the reassessment proceedings.
4. Determination of whether a substantial question of law is involved in the appeal.

Analysis:
1. The main issue in this case revolves around the interpretation of section 142A of the Income-tax Act, specifically focusing on whether the reassessment proceedings were justified in light of this provision. The learned standing counsel for the Department argued that the Tribunal erred in setting aside the reassessment proceedings, contending that the Assessing Officer was within rights to resort to the provisions under section 147/148 of the Act based on the report of the Departmental Valuation Officer.

2. Upon review of the orders passed by the authorities and the proviso of section 142A, the court noted that the reassessment proceedings could be impacted by the proviso. The court highlighted that the original assessment order predating September 30, 2004, became final between the parties before the insertion of section 142A by the Finance (No. 2) Act, 2004. As per the proviso, the reassessment proceedings would be affected by section 142A, thereby indicating that the original assessment was concluded before the relevant date.

3. The court emphasized that the proviso of section 142A, introduced with retrospective effect, played a crucial role in determining the application of the reassessment proceedings in this case. Given that the original assessment had attained finality prior to the insertion of section 142A, the court concluded that the reassessment proceedings were impacted by the proviso, leading to the dismissal of the appeal.

4. In the final analysis, the court found that no substantial question of law was present in the appeal, ultimately resulting in the dismissal of the case. The judgment underscores the significance of statutory provisions and their retrospective application in assessing the validity of reassessment proceedings under the Income-tax Act.