2017 (10) TMI 388 - HC - Income Tax

Validity of Settlement commission order - undisclosed income spent in renovation of the house property - Settlement Commission order was based on the valuation report as submitted by the registered valuer - whether Settlement Commission ought to have referred the matter to the valuation officer in the department to make an estimate and submition of report valuing the nature of work/property assigned to be valued instead of getting the valuation report from the registered valuer - Held that - If we give emphasis on this term obtained by it as is referred to in Subsection 4 and thereafter look into the proceedings, it would clearly reveal that upon the application for settlement being filed by an assessee, the commission could get the property valued by a registered valuer. Under such circumstances, if the commission has got the property assessed from a registered valuer, in the opinion of this court, that by itself would not vitiate the action of the commission. What is pertinent to mention is the fact that, except for the alleged procedural lapse of not referring to the valuation officer of the Settlement Commission, petitioner has not adduced any sufficient material to hold that the valuation done by the registered valuer is without any basis. It is also not the case of the petitioner that said procedure and practice of the Settlement Commissioner in getting the valuation done by the empaneled registered valuer been adopted only in the case of the petitioner thereby to show discrimination in the procedure and practice while dealing with the case of the petitioner and that such a procedure is not normally initiated by the Settlement Commission. This court is of the opinion that no strong case has been made out by the petitioner for interfering with the finding arrived at by the Settlement Commission. This court further has no hesitation in reaching to the conclusion that, the Settlement Commission, by not making reference to the valuation officer for valuing the nature of work/property assigned to be valued and getting the valuation done by the empaneled registered valuer, has not committed any procedural lapse.

Summary

Issues Involved:
1. Legitimacy of the Settlement Commission's reliance on a registered valuer's report.
2. Applicability of Section 142-A of the Income Tax Act in settlement proceedings.
3. Finality and binding nature of the Settlement Commission's decision under Section 245-I.

Detailed Analysis:

1. Legitimacy of the Settlement Commission's reliance on a registered valuer's report:
The petitioner contested the Settlement Commission's decision, which was based on a valuation report by a registered valuer, arguing that this was contrary to the provisions of the Income Tax Act. The petitioner claimed that the valuation report adversely impacted their rights and was prima facie erroneous. The court noted that the petitioner did not challenge the referral to the registered valuer during the proceedings but only raised the issue after the final order was passed. The court found no procedural lapse in the Settlement Commission's action, as Chapter 19-A of the Income Tax Act does not mandate a referral to the valuation officer. The Settlement Commission is empowered to adopt its own procedures for the disposal of settlement applications, including obtaining evidence as it deems fit. The court concluded that the use of a registered valuer was within the Commission's discretion and did not invalidate the proceedings.

2. Applicability of Section 142-A of the Income Tax Act in settlement proceedings:
The petitioner argued that Section 142-A of the Income Tax Act requires the assessing officer to refer property valuation to the valuation officer, and this procedure should also apply to the Settlement Commission. The court examined Chapter 19-A and determined that it provides a separate mechanism for settlement proceedings, distinct from the normal assessment or re-assessment procedures under the Act. The Settlement Commission operates independently and is not bound by the procedures outlined in Section 142-A. The court emphasized that the Settlement Commission's authority to obtain evidence, including valuation reports, is explicitly provided under Section 245-D(4) of the Act.

3. Finality and binding nature of the Settlement Commission's decision under Section 245-I:
The court reiterated that the Settlement Commission's decisions are final and conclusive as per Section 245-I of the Income Tax Act. This section stipulates that orders passed by the Settlement Commission cannot be reopened in any proceeding under the Act or any other law. The court found that the petitioner's challenge to the Commission's decision lacked merit, as the petitioner had not provided sufficient evidence to demonstrate that the valuation by the registered valuer was baseless or discriminatory. The court upheld the finality of the Settlement Commission's decision, rejecting the petitioner's claims.

Conclusion:
The court dismissed the writ petition, affirming that the Settlement Commission acted within its authority and procedural framework. The use of a registered valuer for property valuation did not constitute a procedural lapse, and the finality of the Settlement Commission's decision under Section 245-I was upheld. The petitioner's arguments were found insufficient to warrant interference with the Commission's findings.