COMMR. OF INCOME TAX,KARNAL vs. RAMESH CHAND HUF

ITA/57/2005HC Punjab & HaryanaPHHC01069407200527 January 2011Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL4 pages
AI SummaryRemanded

What were the facts?

The assessee, Shri Ramesh Chaudhary, constructed a house and declared the investment. The Assessing Officer (AO) referred the matter to the District Valuation Officer (DVO) under section 131(1)(d) of the Income Tax Act, 1961, who opined that the property was undervalued. The AO made an addition based on this valuation. The Income Tax Appellate Tribunal (ITAT) set aside the valuation, following the Supreme Court's decision in Smt. Amiya Bala Paul v. CIT. The ITAT's order, dated 19.5.2004, did not consider the retrospective amendment by Finance Act, 2004, which introduced Section 142A. This section allowed the AO to obtain an estimate of investment value from the Valuation Officer, notwithstanding the Smt. Amiya Bala Paul judgment. However, a proviso to Section 142A excluded its application to assessments made on or before September 30, 2004, if they had become final and conclusive, except in cases requiring reassessment under section 153A.

What did the High Court hold?

The High Court held that the pendency of an appeal in the High Court under section 260A would exclude the applicability of the proviso to Section 142A. The proviso could only apply if the assessment had become final and conclusive before September 30, 2004. If an appeal was pending, it could not be said that the assessment had become final and conclusive. The Court agreed with the view taken by the Madhya Pradesh High Court in CIT v. Omparkash Bagria (HUF) that an appeal under section 260A is a continuation of proceedings. The Court also noted that Section 254(4) specifically provides that the finality of an order of the Tribunal is subject to an appeal under section 260A. The Court respectfully disagreed with the view in CIT v. Smt. Shashi Agarwal. Therefore, the questions were answered in favour of the revenue and against the assessee. Since the Tribunal had not considered the merits of the valuation report, the matters were remitted to the Tribunal for a fresh decision in accordance with law.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the case was covered by the judgment in Smt. Amiya Bala Paul v. CIT, especially when the reference was made under section 131(1)(d) and not section 55A, and considering the newly added Section 142A? 2. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in deleting the addition of Rs. 28,557/- made on account of the difference in the cost of construction shown and that determined by the AO? Assessee's arguments: The assessee contended that the proviso to Section 142A was applicable because the pendency of an appeal in the High Court did not affect the finality of the proceedings, as the appeal was only on a substantial question of law. They relied on CIT v. Smt. Shashi Agarwal, CIT v. Sudhish Kumar, CIT v. Naveen Gera, CIT v. Krishan Lal Dua, CIT (Central) Ludhiana v. Nabha Solvex (P) Limited, and Income Tax Officer and others v. Kajaria Investment and Properties P.Limited. Revenue's arguments: The revenue argued that Section 142A, being retrospective, applied to the assessment year in question. They contended that the AO was justified in acting upon the valuation report and that the ITAT's reliance on Smt. Amiya Bala Paul was superseded by the amendment. The revenue further argued that the proviso was not applicable because the assessment had not become final and conclusive due to the pendency of the appeal in the High Court. They relied on CIT v. Omparkash Bagria (HUF) and the principle that an appeal is a continuation of assessment proceedings, citing Garikapati v. Subbiah Choudhry, Siemens India Limited v. State of Maharashtra, and CIT v. Bengal Card Board Industries and Printers(P) Limited.

Which sections of the Income-tax Act were involved?

Section 131,Section 142A,Section 153A,Section 254,Section 256,Section 260A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

Date of decision: 27.1.2011 The Commissioner of Income Tax, Karnal -----Appellant Vs. Shri Ramesh Chaudhary ----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Yogesh Putney, Sr.Standing Counsel and Mr. Krishan K.Mehta, Advocate for the revenue. Mr. Pankaj Jain, Mr. D.K.Goyal, Mr. Permil K.Goel, Mr. Avneesh Jhingan, Advocate for the respondents in all the cases. Adarsh Kumar Goel,J.

1.

This order will dispose of ITA Nos. 316, 368, 370 of 2004, 57 to 60 of 2005, 38, 95 of 2005, 355 and 482 of 2006 as it has been stated by learned counsel for the parties that all the appeals involve common question of law of applicability of section 142A of the Income Tax Act, 1961 (for short, ‘the Act).

2.

ITA No.57 of 2005 has been filed under section 260A of the Act against order dated 19.5.2004 of the Income Tax Appellate Tribunal, Chandigarh Bench (B), Chandigarh (in short, “the Tribunal”) passed in ITA No.555/Chandi/2003 for the assessment year 1999-2000. 3. The assessee constructed a house building and declared investment made in the cons

The order continues below.

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