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TMI Blog2016 (11) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of Section 69 of the Act and therefore, in the absence of it, the reference could not have been made under Section 142A of the Act. Simply because prior to 2 days the reference order came to be made, it cannot be said that the action of making reference during the period of assessment is justified. In fact, no purpose would be served to make such reference especially when the contingencies reflected hereinabove are not satisfied on the background of present facts. Therefore, considering this set of circumstance, we are of the opinion that the action of making reference is not tenable. - SPECIAL CIVIL APPLICATION NO. 6203 of 2011 - - - Dated:- 20-10-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MR JP SHAH, ADVOCATE WITH MR MANISH J SHAH, ADVOCATE FOR THE RESPONDENT : MR SUDHIR M MEHTA, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE A.J. SHASTRI) 1. The petitioner, by way of present petition, has challenged the legality and validity of the impugned action of respondent authority in making a reference to the Valuation Officer and consequently, he has also challenged the communications dated 10.3.2011 and 26.4.2011 respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Valuation Officer for a reasonable time to tender the particulars and therefore, time had been granted by the Valuation Officer on 10.5.2011. It is in the background of these facts, since the reference has been made by the Assessing Officer for estimating the cost of the property, according to the petitioner said reference being not in consonance with the settled proposition of law, the petitioner has invoked the jurisdiction of this Court by way of present petition for challenging the same. 3. Before dealing with the controversy involved in the petition, the reference which has been made by the Assessing Officer to the Valuation Officer is required to be referred which reads, thus; To The Valuation Officer, Valuation Cell, Income-tax Department, Ahmedabad Sub. : Estimating the cost of investment in the property belonging to Shri Anand Adukiya Reg. Sir, Shri Anand Adukia has invested in the construction / renovation of the property as per details indicated below : DETAILS : 1. Description of the assets / property giving exact location with complete address. (1) B-202, Ashawari Tower, B/h Fun Republic, Sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit for determining the true and correct cost of investment of the said property. You should send your Valuation Report to me in duplicate urgently and preferable at your earliest. Copy of information, documents and details available is enclosed 4. Learned counsel, Shri J.P.Shah appearing for the petitioner has challenged said action of the authority to make a reference by contending that the petitioner is a purchaser and cannot be made or subjected to such proceedings. While contending this, learned counsel for the petitioner has drawn attention to the statutory provisions contained in Section 50C which came to be introduced w.e.f. 1.4.2003 and by referring to the same, learned counsel submitted that this provision is meant to capital gain which will be taxed in the hands of seller on the basis of jantri price and therefore, the reference which has been made by Assessing Officer in case of petitioner, who is purchaser, is not just and proper. It was also contended by learned counsel that where the value of investment under Section 69 is to be estimated by the Assessing Officer for the purpose of assessment, the condition precedent of Section 69 of the Act is required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner and granted date on 10.5.2011, by that time the scrutiny assessment under Section 143(3) of the Act has already been done on 31.12.2010 and therefore, no useful purpose will be achieved by undertaking such exercise. Learned counsel has further submitted that the details have been provided by the petitioner during course of assessment proceedings and for that purpose, learned counsel has drawn attention of the Court by referring to the assessment order which is attached to the petition at Page-25. A specific reference under the head of 'Investment in Immovable Properties' is made with respect to property situated at Satyagrah Chhavani, over which an amount of ₹ 55 lacs is taken by way of loan from ICICI Bank and upon such inquiry, under a communication dated 24.12.2010, the investment to that query has already been explained and for that purpose, even the copy of purchase deed also submitted along with the detailed particulars with respect to payment of tax have been furnished. Learned counsel has therefore submitted that Section 142A of the Act cannot be resorted to just to inquire about the cost of investment before arriving at a satisfaction with respect to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference and resort to Section 142A of the Act and therefore, by contending this, learned counsel submitted that since the undervalue is shown by both purchaser and seller, it is just and proper on the part of Assessing Officer to ascertain the correct market value of the property. 6. Learned counsel for the revenue has further drawn the attention of the Court that even during the passage of time, a valuation report has also come on record which indicates that the higher value as compared to what has been reflected by the petitioner and therefore, the reference was rightly made by the Assessing Officer and in view of that, the action is not required to be entertained as challenged by the petitioner. Learned counsel also submitted that there is an amendment took place under the provision of Section 69 of the Act as Section 69AB with retrospective effect and therefore, the conditions contained in Section 69 of the Act are satisfied, the Assessing Officer was well within power to resort to Section 142A of the Act. Learned counsel submitted that the reliance placed by the petitioner in case of Me and Mummy Hospital (Supra) is not applicable in the present background of the fact. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being used is also inquired from. Whereas in case on hand the constructed property in as it is manner has been purchased by the petitioner which is reflected from the sale deed. (5) It is also emerging further from the record that even the revenue department which has filed an affidavit is also reflecting to have been filed to the tune of stand taken by the Assessing Officer while making reference and nothing much has reflected except bare assertion contained in the affidavit-in-reply and therefore, in the background of aforesaid facts which are emerging from the record, we deem it proper to refer to certain relevant statutory provisions which are required to be considered which is reproduced hereinafter : ' 50C. [Special provision for full value of consideration in certain cases. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed [or assessable] by any authority of a State Government (hereafter in this section referred to as the stamp valuation authority ) for the purpose of payment of stamp duty in respect of such transfer, the valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. 69B. Amount of investments, etc ., not fully disclosed in books of account.- Where in any financial year the assessee has made investments or is found to be the owner of any bullion, jewellery or other valuable article, and the Assessing Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this Court in case of Commissioner of Incometax- IV V/s. Sarjan Realities Ltd. , reported in (2013) 40 Taxmann.com 398 . The relevant extract of the said decision reads as under : 6. As is well known, section 50C of the Act makes special provision for full value of consideration in certain cases. Sub-section (1) thereof provides that where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government for the purpose of stamp duty in respect of such transfer, such value shall for the purpose of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. 7. Clearly thus, section 50C of the Act by a deeming fiction substitutes the consideration received on sale of a capital asset by stamp duty valuation. Such deeming fiction, however, is applicable only in case of a seller for the purpose of section 48 of the Act. 9. From the aforesaid decision, it is quite clear that provision of Section 50C would apply to a seller only and not the purchaser and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s report under section 142A of the Act is for the purpose of estimating value of such investment referred to in section 69 or section 69B or the value of any bullion, jewellery or other valuable article referred to in section 69A or section 69B of the Act. Unless, therefore, there is prima facie application of sections 69, 69A and 69B of the Act, reference to the valuer is simply not permissible. It is only when there is some material before the Assessing Officer to hold that in case of an assessee falls under sections 69, 69A and 69B as the case may be, that he can, to estimate the value of such unexplained investment or expenditure in bullion, jewellery etc., call for the report of the Valuer. Initial starting point for triggering a reference to the Valuer, therefore, has to be invocation of sections 69,69A or 69B of the Act. It is only when any of these provisions come into play that the Assessing Officer can resort to section 142A for estimating the value of such investment or expenditure. Sequence cannot be put in the reverse. In other words, the Assessing Officer would have no authority to call for the report of the Valuer under section 142A to judge whether there has been a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the revenue has heavily relied upon a decision in case of Bharathi Cement Corporation (P) Ltd. (Supra). We have gone through the said decision and found that the case of Bharathi Cement Corporation (P) Ltd. (Supra) was altogether on a different set of circumstance from the present one. In that case, the Assessing Officer was of the view that despite several reminders, the assessee had not produced any material and just dragged on the time so as to see that the final assessment cannot be undertaken and therefore, in the background of that particular case, the issue was dealt with of Section 142A of the Act. Again, in the said decision, there was a civil construction work was also undertaken by the assessee, whereas in the present case the property has been purchased by the petitioner in as it is manner. It is also reflecting from the said decision that well before time, the assessment period is getting over, reference came to be made by issuing notice in the month of November,2011 and therefore, the background of the facts is quite distinct from that of case on hand. Therefore, we are of the opinion that no much reliance is possible to be made on the proposition of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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