2011 (4) TMI 1323 - HC - Income Tax

Summary

Issues involved: Question of law regarding the initiation of reassessment proceedings based on the report of the Valuation Officer without first rejecting the books of accounts.

Summary:
The High Court addressed the question of whether the ITAT was legally correct in confirming the findings of CIT (A) that reassessment proceedings cannot be initiated solely based on the report of the DVO, as it does not constitute evidence as per section 147 of the IT Act, 1961. The ITAT had considered the DVO's opinion but held that it does not qualify as evidence under Section 147, leading to the dismissal of the revenue's appeal for reassessment. The Court noted that the ITAT did not address the issue of the Valuation Officer's report under Section 142-A of the Income Tax Act, as mandated by the Supreme Court in Sargam Cinema vs. Commissioner of Income Tax. It was highlighted that the Assessing Officer cannot refer the matter to the DVO without first rejecting the books of accounts, which was not done in this case. Therefore, the appointment of the Valuation Officer and the notice for reassessment were deemed to be without jurisdiction. The appeal was dismissed on these grounds, with the Court emphasizing that the question of law as framed did not even arise in this context.