TMI Blog1988 (7) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... n Cell of the Department. The Valuation Officer issued a notice dated December 4, 1982, calling upon the petitioners to produce various materials like the site plan, copy of approved valuer's report, date of commencement of construction and so forth. Though, at the outset, this power of the said Income-tax Officer was questioned, however, they later submitted the requisite information on September 21, 1983. Thereafter, the Valuation Officer inspected the site on September 22, 1983 and then a comprehensive valuation report dated September 24, 1983 determining the cost of construction at Rs. 24.46 lakhs was tendered to the Income-tax Officer. The further averment in the affidavit is that strangely enough, the District Valuation Officer called upon the petitioners for furnishing the same details that were sought for earlier, for the purpose of revaluation. This second notice was said to have been issued pursuant to the second reference made by the Income-tax Officer concerned. That reference is dated February 27, 1984. To this, a protest was registered on March 31, 1984, stating that the Income-tax Officer is not empowered to have the cost of construction determined, much less rede ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aluation Officer, Superintending Engineer in this case, to take up the necessary valuation work in order to have the advantage of the expertise of the officer. By letter dated March 29, 1984, it was informed on clarification sought for by the assessees that the enquiry is going to be conducted under section 142(2) of the Act. Points raised : The twin points that are sought to be canvassed by learned counsel for the petitioners are : (1) There is no provision in the Act enabling the Income-tax Officer to refer the matter to a Valuation Officer for the purpose of ascertaining the cost of construction of a building. It is only, if at all any, that section 55A of the Act that alone postulates a situation where a reference could be made to the Valuation Officer in respect of a capital asset, and that too in relation to capital gains alone. (2) If the Income-tax Officer has no power to refer the matter to the Valuation Officer even initially, then a second reference which is sought to be done in this case is wholly without any jurisdiction. Relevant statutory provisions: Now, before adjudicating, the relevant statutory provisions enacted in sections 55A, 131, 132, 133 and 142(2) ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction, then, for the purposes of making any inquiry or investigation relating thereto, it shall be competent for him to exercise the powers conferred under sub-section (1) on the income-tax authorities referred to in that sub-section, notwithstanding that no proceedings with respect to such person or class of persons are pending before him or any other income-tax authority. (2) Without prejudice to the provisions of any other law for the time being in force, where a person to whom a summons is issued either to attend to give evidence or produce books of account or other documents at a certain place and time, intentionally omits to attend or produce the books of account or documents at the place or time, the income-tax authority may impose upon him such fine not exceeding five hundred rupees as it thinks fit, and the fine so levied may be recovered in the manner provided in Chapter XVII-D. (3) Subject to any rules made in this behalf, any authority referred to in sub-section (1) or sub-section (1A) may impound and retain in its custody for such period as it thinks fit any books of account or other documents produced before it in any proceeding under this Act: Provided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the authorised officer) to (i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept ; (ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available; (iia) search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing"; (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search ; (iv) place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom; (v) make a note or an inventory Of any such money, bullion, jewellery or other valuable article or thing; Provided that where any build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. (4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person ; (ii) that the contents of such books of account and other documents are true ; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been, signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. (5) Where any m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, with the previous approval of the Commissioner, release the assets or such part thereof as he may deem fit in the circumstances of the case. (6) The assets retained under sub-section (5) may be dealt with in accordance with the provisions of section 132B. (7) If the Income-tax Officer is satisfied that the seized assets or any part thereof were held by such person, for or on behalf of any other person, the Income-tax Officer may proceed under sub-section (5) against such other person and all the provisions of this section shall apply accordingly. (8) The books of account or other documents seized under subsection (1) or sub-section (1A) shall not be retained by the authorised officer for a period exceeding one hundred and eighty days from the date of the seizure unless the reasons for retaining the same are recorded by him in writing and the approval of the Commissioner for such retention is obtained : Provided that the Commissioner shall not authorise the retention of the books of account and other documents for a period exceeding thirty days after all the proceedings under the Indian Income-tax Act, 1922 (11 of 1922), or this Act in respect of the years for which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocedure, 1973 (2 of 1974), relating to searches and seizure shall apply, so far as may be, to searches and seizure under sub-section (1) or sub-section (1A). (14) The Board may make rules in relation to any search or seizure under this section ; in particular, and without prejudice to the generality of the foregoing power, such rules may provide for the procedure to be followed by the authorised officer (i) for obtaining ingress into any building, place, vessel, vehicle or aircraft to be searched where free ingress thereto is not available (ii) for ensuring safe custody of any books of account or other documents or assets seized. Explanation 1. -In computing the period of one hundred and twenty days for the purposes of sub-section (5), any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. Explanation 2.-In this section, the word 'proceeding' means any proceeding in respect of any year, whether under, the Indian Income-tax Act, 1922 (11 of 1922), or this Act, which may be pending on the date on which a search is authorised under this section or which may have been completed on or before such date an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny person, the Income-tax Officer may make such inquiry as he considers necessary." Income-tax Officer-whether empowered under section 55A to ascertain the market value of a capital asset by referring to a Valuation Officer. Point No. 1. -It is quite manifest from section 55A of the Act that it enables the Income-tax Officer to have the fair market value of a capital asset ascertained through the agency of a Valuation Officer. The crucial provision is that this section is provided by the Taxation Laws (Amendment) Act, 1972, to be effective from January 1, 1973, with deliberate object of empowering the Income-tax Officer to find out the market value of a capital asset for the purpose of Chapter IV which is titled "Computation of total income". It comprises sections 14 to 59. The said Chapter is divided into six sub-chapters. They are A. Salaries. B. Interest on securities. C. Income from house property. D. Profits and gains- of business or profession. E. Capital gains. F. Income from other sources. Bearing the frame of the Chapter in mind, wherein resides section 55A which, though falls within the sub-chapter "Capital gains", if we make careful analysis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counter, the stand taken by the Revenue is that it is not section 55A but section 136 that governs the situation in this behalf, most part of the argument was devoted by learned standing counsel for the Revenue stating that the relevant provision is section 55A, section 136 being only incidental to the main. Be that as it may, a mere wrong reference to a particular provision in the Act cannot demolish the case of the respondent if it could be traceable to a correct statutory provision which the Revenue, at any rate at the time of argument, has, very rightly, realised that it was indeed traceable to section 55A of the Act. From the foregoing, therefore, it is quite manifest that section 55A is the provision that holds the field in answering the first point framed in this behalf Therefore, the answer is that the reference to the Valuation Officer under section 55A is valid. Second reference to the Valuation Officer whether competent: The second question is whether a second reference, when once the first valuation has been arrived at will be valid and legal. It is not in dispute that, under the first reference, the valuation, after due notice to the assessees concerned, wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e asset is not declared in such return or no such return has been made and the value of the asset, in the opinion of the Wealth-tax Officer, exceeds the aforesaid amount, the functions shall be performed by the District Valuation Officer ; (ii) if the value of the asset as declared in the return made by the assessee under section 14 or section 15 exceeds Rs. 2 lakhs but does not exceed Rs. 10 lakhs or if the asset is not disclosed or the value of the asset is not declared in such return or no such return has been made and the value of the asset, in the opinion of the Wealth-tax Officer, falls within the aforesaid limits, the functions shall be performed by the Valuation Officer and (iii) if the value of the asset as declared in the return made by the assessee under section 14 or section 15 does not exceed Rs. 2 lakhs, or if the asset is not disclosed or the value of the asset is not declared in such return or no such return has been made and the value of the asset, in the opinion of the Wealth-tax Officer, does not exceed the aforesaid amount, the functions shall be performed by the Assistant Valuation Officer It is in the light of the aforesaid fresh material that the sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Valuation Officer, to have it revalued by a legally competent Valuation Officer, thereby undoing the valuation arrived at earlier by a person who was incompetent. This is on the premise that a power to do an act requires to do the same properly, correctly and legally. Besides, there is nothing in the provisions either under section 55A or under the Rules made under the Wealth-tax Act forbidding the Income-tax officer from taking recourse to such a process. Further, the contention of learned counsel for the assessees that the authorities are estopped from embarking upon a fresh valuation has no foundation. It is quite plain that there cannot be any estoppel against the statute. It is not in dispute in this case that the statute placed an embargo on the "Valuation Officer" in determining the value of the capital asset the value of which was more than Rs. 10 lakhs. The first exercise was admittedly contrary to the very express statutory provision and so, had no legal sanction. Consequently, the second reference was legally expedient. Hence, the contention, which is devoid of substance, is rejected. The power of second reference could also be traceable to section 142(2) which, in ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
