TMI Blog2011 (3) TMI 1326X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, on the following substantial questions of law : "1. Whether while referring the property to valuer in pursuance of powers conferred under section 142A of the Income-tax Act, it shall be necessary for the assessing authority to record reason with regard to reliability of books of account or books of account should be rejected with precondition for reference to the valuer ? 2. Whether the word used in sub-section (1) of section 142A of the Income-tax Act, i.e., 'required to be made means satisfaction to be recorded by the Assessing Officer by assigning reason before referring a property to the valuer and in the absence of any recorded satisfaction or reason', the reference to the valuer shall not be sustainable ?" 3. Income-tax Appeal No. 136 of 2007, which relates to the assessment year 2003-04, was admitted by order dated December 3, 2007, on the following substantial question of law : "The Income-tax Appellate Tribunal further erred in law in not correctly appreciating the provisions of section 142A of the Act introduced with retrospective effect from November 15, 1972, correctly as there are no pre-conditions stipulated in this section, e.g., that the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 003-04 in the case of the assessee wherein it is held that without rejecting the books of account which are audited, the Assessing Officer cannot resort to estimation. It is against this order that Income-tax Appeal No. 93 of 2008 has been filed. All the aforesaid facts have been stated in this appeal. Other two appeals have been preferred on similar facts and against similar orders of the Income-tax Appellate Tribunal. 6. On behalf of the appellant-Revenue, it is submitted that it is not necessary for the Assessing Officer to reject the valuation report as submitted by the assessee before resorting to section 142A of the Act. Section 142A of the Act, it is submitted, confers power of the Assessing Officer, if he is (not ?) satisfied with the valuation done in terms of the books of account submitted by the assessee, to direct the valuation of the assets to be done as set out in section 142A of the Act. 7. On the other hand, on behalf of the assessee, it is submitted that the Tribunal was right in holding that without rejecting the books of account, it would not be open to the Assessing Officer to have ordered the Valuation Officer to value the property in terms of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T [2003] 262 ITR 407 (SC). The Supreme Court, after considering the scope and ambit of section 55A of the Act, was pleased to hold that it would not apply to proceedings under section 69B of the Act. Apparently, it appears that section 142A of the Act was introduced to cover this omission. 11. The question before us is whether the Tribunal was right in taking a view that in the absence of rejecting the books of account which are audited, the Assessing Officer cannot resort to estimation. Reference has been made to some authorities, which we shall now refer to. 12. In K. K. Seshaiyer v. CIT [2000] 246 ITR 351 (Mad), the case before the Madras High Court was in respect of the assessment year 1978-79 before section 142A was introduced. The issue referred for consideration was whether the Tribunal was right in ignoring the valuation of the house property submitted by the assessee and instead adopting a sum as the valuation of the property by calling for a report of the District Valuation Officer ? The learned Madras High Court held that in the absence of the Tribunal recording that the books of account maintained by the assessee are not credible, it would not be open to call ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Rajasthan High Court. The High Court thereon proceeded to hold that it would be unfair and against the public policy to proceed on the assumption that the assessee is dishonest and he must have submitted an incorrect account of expenses. The court further held that in case the assessee had not maintained the regular books of account of construction and relied upon the reports of the registered valuer, it would be open for the Assessing Officer to refer to the Departmental Valuation Officer for valuation of the asset. The court then proceeded to hold that a reference to the Departmental Valuation Officer would arise only in a case where the Assessing Officer was not satisfied with the accounts of construction produced by the assessee or where such account was kept and the assessee relied on the valuation report of the registered valuer. 15. Now, we come to a judgment of the Uttarakhand High Court in the case of the CIT v. Bhawani Shankar Vyas [2009] 311 ITR 8 (Uttarakhand). The question before the High Court was whether the Income-tax Appellate Tribunal was justified in holding that without rejecting the books of account, the Assessing Officer was not justified in making ..... X X X X Extracts X X X X X X X X Extracts X X X X
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