TMI Blog2015 (4) TMI 940X X X X Extracts X X X X X X X X Extracts X X X X ..... coterminus with that of the Assessing Officer. In fact, the CIT(A) can do what the Assessing Officer can do and has failed to do as held by the Apex Court in Commissioner of Income Tax v/s. Kanpur Coal Syndicate [1964 (4) TMI 18 - SUPREME Court]. Thus, in this case, even according to the Petitioner, the Assessing Officer could make a reference to the DVO but he failed to do so during the assessment proceedings. it is undisputed that during the assessment proceedings before him, the Assessing Officer could have made a reference to the DVO and yet he choose not do or failed to do. This failure or conscious decision of not referring to the DVO could be a subject matter of examination by the CIT(A), in an appeal before him. In this case, the issue of the FMV as on 1st April, 1981 was admittedly raised by the Petitioner in its appeal before the CIT(A). Thus the CIT(A) during the appellate proceedings before him can exercise powers under Section 55A of the Act and can make such enquiry in terms of Section 250(4) of the Act, either himself or direct the Assessing Officer to do so and report in terms of Section 250(4) of the Act. Thus, the CIT(A) can make further enquiries into FMV as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitution of India is to the notice dated 21st December, 2006 and 2nd February, 2007 issued by the District Valuation Officer (DVO) under Section 55A of the Income Tax Act, 1961 (the Act). The substance of the Petitioner's challenge is to the jurisdiction of the Commissioner of Income Tax (Appeals) [CIT(A)] under the Act to make a reference to the District Valuation Officer (DVO) in an Appeal before it for determining the FMV (FMV) of land as on 1st April, 1981. It is this reference by the CIT(A) which led to the issue of the two impugned notices. 2 This Petition was admitted on 24th April, 2007 and the proceedings calling for the report from the DVO was stayed. 3 Shorn of details, the facts are as under:( a) For the Assessment Year 200203, the Petitioner filed its return of income, returning a loss of ₹ 107.63 Crores. During the previous year relevant to Assessment Year 200203, the Petitioner had sold its property at Andheri (land) for a consideration of ₹ 131.15 Crores. For the purposes of computing its long term capital gains on the sale of land, the Petitioner adopted FMV of the land as on 1st April, 1981 at ₹ 46.70 Crores. This was on the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A); and (f) The aforesaid notices dated 26th December, 2006 and 2nd February, 2007 are a subject matters of challenge in the present Petition. 4 Mr. Pardiwalla, Sr. Counsel with Mr. Jain, in support of the Petition, submits as under: (a) The reference to the DVO by the CIT(A) under Section 55A of the Act for determining the FMV of the land as on 1st April, 1981 is without jurisdiction. As in terms of Section 55A of the Act, the jurisdiction to make such a reference is only with the Assessing Officer and not with any other authority; (b) The reference made by the CIT(A) to the DVO under Section 55A of the Act would be contrary to and in defiance of the order of this Court dated 3rd April, 2006 in Writ Petition No.392 of 2006; (c) The Supreme Court in Smt. Amiya Bala Paul v/s. CIT 262 ITR 407 has held that no reference can be made for determining the fair market value of immovable properties in the absence of a specific provision under the Act. The DVO gets jurisdiction to act upon the reference only if the same is made under Section 55A of the Act and not otherwise; (d) The Parliament has not empowered the CIT(A) while entertaining an appeal under Section 250 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act was made by the CIT(A) to the DVO and, therefore, no notice invoking Section 55A of the Act could be issued by the DVO. It was submitted that reference to Section 55A of the Act in the impugned notices by the DVO is a mistake and must be ignored. 7 On the background of the aforesaid submissions, the question which would arise is whether the CIT(A) is entitled to make a reference to the DVO under Section 250A(4) of the Act to determine the FMV of the property. It must be noted that the Respondents have not denied/ disputed that the reference made by the CIT(A) to the DVO is to determine a FMV of the land as on 1st April, 1981 for the purposes of determining the capital gains chargeable to tax. This is evident from the communication dated 21st December, 2006 addressed by the CIT(A) to the DVO which reads as under: To, The District Valuation Officer, Piramal Chambers, Lal Bagh, Parel, Mumbai 400 007. Sub: Appeal No.CIT(A)XXI/1(3)/IT.53/0506 in the case of Rallis India Ltd. A. Y . 200203. Please refer to the above. This is with reference to letter No.DCIT. Cir.10/0405/ Kol/14 dt. 7.4.2005 of Dy. CIT. Circle10, Kolkata regarding valuation of the plo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to reference made by the CIT(A) in exercise of his powers under Section 250(4) of the Act as an appellate authority. Section 250(4) of the Act reads as under: The Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals). Mr. Pinto, learned Counsel appearing for the Revenue submits that this power is very wide. There are no fetters to it. Thus, the CIT(A) can make any enquiry which he deems fit. 11 However, according to us, this power to make further enquiry under Section 250(4) of the Act can only be in respect of issues which arise under the Act and for which specific provision have been made and the Assessing Officer has failed to do what he ought to have done. Thus, this power of enquiry though very wide has to find its source in one of the substantive provisions of the Act. It is in the context of substantive provisions that the CIT(A) has to examine whether Assessing Officer either did no enquiry at all or made insufficient enquiry. This power cannot be exercised dehors the substantive provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Syndicate 43 ITR 225. Thus, in this case, even according to the Petitioner, the Assessing Officer could make a reference to the DVO but he failed to do so during the assessment proceedings. This Court in W. P. No.392 of 2006 by order dated 3rd April, 2006 set aside the reference to the DVO by the Assessing Officer as it was made after he had passed the assessment order and ceased to have jurisdiction. However, it is undisputed that during the assessment proceedings before him, the Assessing Officer could have made a reference to the DVO and yet he choose not do or failed to do. This failure or conscious decision of not referring to the DVO could be a subject matter of examination by the CIT(A), in an appeal before him. In this case, the issue of the FMV as on 1st April, 1981 was admittedly raised by the Petitioner in its appeal before the CIT(A). Thus the CIT(A) during the appellate proceedings before him can exercise powers under Section 55A of the Act and can make such enquiry in terms of Section 250(4) of the Act, either himself or direct the Assessing Officer to do so and report in terms of Section 250(4) of the Act. The order of this Court dated 3rd April, 2006 in W. P. No.392 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he opinion that the value determined by the Registered Valuer as the FMV of the property as on 1st April, 1981 is less than its FMV. Only on having formed the above opinion, the CIT(A) is entitled to call upon the DVO to submit a report with regard to its FMV as on 1st April, 1981. However, as rightly contended by the Revenue, this is an issue which the Petitioner could urge before the CIT(A) and satisfy him that a reference is not called for to DVO under Section 55A of the Act. As this is an issue to be decided by the CIT(A), on his satisfaction, we would not preempt his jurisdiction to decide on the facts as found by him. 18 We find as observed above, the powers under Section 250(4) of the Act of the CIT(A) though very wide, yet it would be circumscribed by the substantive provisions of the Act. The enquiry made by the CIT(A) under Section 250(4) of the Act cannot be outside the scope of the Act. The Revenue in spite of our repeated efforts insists on the fact that the power is being exercised only under Section 250(4) of the Act alone. No other provisions of the Act to determine capital gains under which the enquiry could be directed the CIT(A) in the present facts is applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition is allowed in the above terms. 22 Before closing, we record with pain our dismay in the manner in which the Revenue has assisted us in this Petition. The Petition was first heard on 7th January, 2015 and 8th January, 2015 and thereafter reserved for orders. At that time, all proceeded on the basis that the Counsel for the Revenue is appearing for all the Respondents. However, to seek clarification, we put the matter on board on 22nd January, 2015 under caption 'for directions'. At that time, we asked Counsel for the Revenue the exact stand of the DVO who has issued the impugned notice dated 21st December, 2006 and 2nd February, 2007 in respect of the Sections 55A of the Act invoked by him. At that time, Counsel for the Revenue informed us that he is briefed only to appear for Respondent Nos.1, 3 and 4 and that he does not appear for the DVO - i.e. Respondent No.2 and therefore, is unable to respond to our query. In the above circumstances, we closed the matter 'for orders'. 23 Thereafter, it was brought to our notice that Counsel for the Revenue has filed his Vakalatnama only on 2nd February, 2015 wherein the name of the Respondent was indicated as Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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