SLIMTILE PRIVATE LIMITED vs. ASSISTANT COMMISSIONER OF INCOME TAX

SCA/13575/2023HC GujaratGJHC24048049202303 September 2026Author: HONOURABLE MR. JUSTICE A.S. SUPEHIA,HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI20 pages
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What were the facts?

The petitioner-company, Slimtile Private Limited, filed its income tax return for Assessment Year 2021-22 on March 14, 2022, declaring a total income of Rs. 8,17,74,420. The return was selected for scrutiny, and notices under Section 143(2) and 142(1) were issued. The petitioner responded to these notices. On June 17 and 20, 2023, show cause notices were issued. The petitioner replied on June 22, 2023, raising objections regarding limitation. The Assessing Officer (AO) responded via email on June 21, 2023, citing the Explanation to Section 153 for time extension. On June 24, 2023, the AO referred the matter to the District Valuation Officer (DVO) under Section 142A for determining the value of fixed assets, alleging they were acquired in individual names and not used for business. The petitioner challenged this reference, which was made just before the assessment proceedings were due to become time-barred on June 25, 2023.

What did the High Court hold?

The High Court held that the reference dated 24.06.2023 made by the Assessing Officer to the District Valuation Officer under Section 142A of the Income Tax Act, 1961, was a colourable exercise of power and was without jurisdiction. The Court found that the Assessing Officer was aware that the assessment proceedings would become time-barred on 25.06.2023. Despite having all the material, the AO showed remissness in completing the assessment within the prescribed time. By creating an artificial cause of action of referring the determination of the valuation of assets and the claim of depreciation, the AO attempted to extend the time by resorting to Explanation-1(v) to Section 153 of the Act. The Court also noted that the revenue failed to provide a satisfactory explanation for the delay from December 28, 2022, to June 17, 2023. The show cause notices issued on June 17 and 20, 2023, were silent on the aspect of assets, indicating that the issue of asset valuation was not a genuine concern until the limitation period was approaching. Therefore, the impugned order dated 24.06.2023, referring the matter to the DVO, was quashed. The writ petition was allowed.

What were the issues?

1. Whether the reference dated 24.06.2023 made by the Assessing Officer to the District Valuation Officer under Section 142A of the Income Tax Act, 1961, for determination of the value of fixed assets, constitutes a colourable exercise of power aimed at artificially extending the period for completion of assessment, thereby being without jurisdiction and liable to be quashed. Assessee's Contention: The reference was made at the fag end of the limitation period (June 24, 2023, with limitation expiring on June 25, 2023) solely to invoke the statutory consequence of time extension under Section 153. The basis for the reference, concerning assets allegedly acquired in individual names and depreciation claims, was misconceived, as it pertained to examining depreciation claims, not asset valuation. The reference was extraneous to the assessment proceedings and served no legitimate purpose. Reliance was placed on Anand Banwarilal Adhukia and Me & Mummy Hospital. Revenue's Contention: The Senior Standing Counsel could not justify the reference concerning depreciation on assets, acknowledging that disallowing depreciation is within the AO's power. However, the revenue argued that the reference to the Valuation Officer regarding unaccounted cash, share purchase, immovable properties, and increase in fixed assets was justified.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 142(1),Section 142A,Section 153

AI-generated summary — verify with the full judgment below

C/SCA/13575/2023(GJHC240480492023) CAV JUDGMENT DATED: 03/09/2026 Reserved On : 25/08/2026 Pronounced On : 03/09/2026 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO.13575 of 2023 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE A.S. SUPEHIA and HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI ========================================================== Approved for Reporting Yes No  ========================================================== SLIMTILE PRIVATE LIMITED Versus ASSISTANT COMMISSIONER OF INCOME TAX & ANR. ========================================================== Appearance: MR B S SOPARKAR(6851) for the Petitioner(s) No. 1 KARAN G SANGHANI(7945) for the Respondent(s) No. 1,2 ========================================================== CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA and HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI CAV JUDGMENT (PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)

1.

At the outset, learned advocate Mr.Soparker appearing for the petitioner-Company has submitted that the petitioner-Company is not pressing the

The order continues below.

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