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1999 (8) TMI 978 - JAMMU AND KASHMIR HIGH COURT

1999 (8) TMI 978 - JAMMU AND KASHMIR HIGH COURT - TMI - W.P. (O) NO. 674 OF 1992 - Dated:- 20-8-1999 - TEJINDER SINGH DOABIA, J. For the Petitioner: R.K. Gupta and A.V. Gupta. For the Respondent: D.S. Thakur ORDER 1. The notices issued by the respondent No. 2 whereby the petitioners were called upon to indicate the cost of construction of property mentioned in the notices is the subject-matter of challenge in these petitions. The basic challenge made is that these notices which are said to have .....

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essment in terms of section 55A does not arise. It is further urged that this section would apply only if the assessee sells his property. The fact that section 55A comes in Chapter 4 and sub (sic) deal with the capital gains, is sought to be projected in this regard. It is stated that as section 55A is part of that set of sections which deals with capital gains, this section can be resorted to only if the question for determination before the authority is vis-a-vis assessment of capital gains. .....

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Before adverting to the submissions made by the learned counsels for the parties, it would be apt to notice section 131(1)(a) to (d). This reads as under : "Power regarding discovery, production of evidence, etc.-(1) The Assessing Officer, Deputy Commissioner (Appeals), Deputy Commissioner, Commis-sioner (Appeals) and Chief Commissioner or Commissioner shall, for the purposes of this Act, have the same powers as are vested in a Court under the Code of Civil Procedure, 1908 (5 of 1908), whe .....

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ses of this Chapter, the Assessing Officer may refer the valuation of capital asset to a Valuation Officer- (a)in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the Assessing Officer is of opinion that the value so claimed is less than its fair market value; (b)in any other case, if the Assessing Officer is of opinion- (i)that the fair market value of the asset exceeds the value of the asset as claimed by the asse .....

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n 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with the necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act." 4. A reading of section 131 of the Act makes it apparent that sufficient power is vested with the officers mentioned therein for discovery and production of evidence. At the same time, this power is not to be exercised with a view to .....

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be exercised after due application of mind. Roving or fishing inquiry.-The various powers of income-tax authorities survey, discovery and inspection, search and seizure, requisitioning books and documents, calling for information, etc., are set out in sections 131 to 135. An overview of these provisions leads to the following conclusions, which are supported by judicial decisions cited under the appropriate sections: (a)Proceedings under the Act are always against an individual or other assessab .....

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ticular case or particular cases, because proceedings can only be in a particular case or particular cases. (d)Some powers are to be exercised, e.g., under section 131(1A), where there is reason to suspect that any income has been concealed or is likely to be concealed by any person or class of persons . In this context, class of persons must mean a class of persons whose coherence as a class is related to the Act. The quoted words do not cover a class between whom and this Act the link is too r .....

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amount to a roving inquiry; nor can he require the bank, which is under a legal duty of secrecy and confidentiality towards its customers, to supply information pertaining to all account holders having a certain credit balance or all purchasers of bank drafts or travellers cheques above a certain monetary limit, because such an inquiry cannot be said to relate to a class of persons ." 5. I am of the opinion that the above conclusions drawn by the learned authors summarise the powers vested .....

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er could not be exercised under section 131 because the income of the assessee stood assessed or that he was not to be subject to any capital gain, is an argument, which cannot be accepted. 6. The argument vis-a-vis section 55A, may also be examined. 7. It can be seen that what is sought to be determined under section 55 is the fair market value of a capital asset. This would be relevant not only for the purpose of determining the tax payable on income but also for other purposes. Merely because .....

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is required to be assessed is the fair market value of capital asset. This determination would be relevant for the purposes of section 2(14). Whether this determination is useful for the purposes of assessing the income or for any other purpose, is a matter regarding which the person seeking information is the best judge. Therefore, to say that the officer who issued the notices under section 131 could not issue the same is not correct. 8. The argument that the Valuation Officer is not a statut .....

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is given by him, then it is a valid notice. A Valuation Officer is supposed to comply with the principles of natural justice. This is because his assessment would affect civil rights. Therefore, if the Valuation Officer had given a notice, he was only complying with the principles of natural justice. If the petitioners do not wish to associate themselves with the notices issued by the Valuation Officer, then the option has to be exercised by them. In this regard, it would be apt to refer to a de .....

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erved that merely because a wrong section has been mentioned in the notice, that would not render the proceedings taken by the Valuation Officer as bad. I am, however, of the opinion that independently of the aforementioned Full Bench judgment, on the basis of the definition of capital asset , the Valuation Officer could issue the notice. It is, therefore, held that the Valuation Officer was competent to deal with the matter. 10. I am, accordingly, of the view : (i)that the authorities mentioned .....

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