Case: Amiya Bala Paul Vs. Comnr. Of Income, Tax, Shillong

The assessee built a house in a suburb of Kolkata between the years 1981 to 1983. She filed a return in respect of the assessment year 1982-1983 in which she disclosed that she had invested an amount of Rs. 1,75,000 in the construction of the house. The return was accepted by the Income Tax Officer (Now known as the Assessing Officer). In respect of the subsequent assessment year, namely 1983-84, the assessee disclosed that she had invested a further amount of Rs. 1,70,000 in the construction of the house. This was not accepted by the Assessing Officer, who referred the question of the construction cost of the house to the Valuation Officer under Section 55(A) of the Income Tax Act, 1961 (hereinafter referred to as the Act). The Valuation Officer submitted a report to the Assessing Officer. On the basis of the report, the Assessing Officer re-opened the assessment in respect of the assessment year 1982-83. The Income Tax Officer then made an addition of Rs. 2,79,000 in respect of the assessment year 1982-83 and Rs. 1,77,000 in respect of the assessment year 1983-84 as undisclosed investment in the construction of the house. The assessees appeals from the assessment orders were turned down by the Commissioner of Income Tax (Appeals) Guahati. The Income Tax Appellate Tribunal, however, following an earlier decision allowed the assessees appeal and held that the Assessing Officer could not have referred the question of the cost of construction of the assessees house to the Valuation Officer. In this background the following question was referred to the High Court under Section 256(2) of theon the facts and in the circumstances of the case, the Tribunal erred in law by holding that the Assessing Officer cannot refer the matter to the Valuation Cell (sic) for estimating the cost of construction of the house property".The Division Bench of the High Court held that although the Assessing Officer could not have referred the question of the cost of construction of the assessees house to the Valuation Officer under Section 55A of the Act, he had ample power under Sections 131(1), 133(6) and 142(2) of the Act to ask for a Valuation Report from the Valuation Officer. It was held that each of these sections were "enabling machinery provisions which invested ample powers in the Assessing Authority" and that any wrong mention of the provision on the requisition memo would not be material. Accordingly the question referred was answered in the affirmative and against the assessee.

Reasoning: 19. The Valuation Officer referred to has, according to the Explanation to the Section, the same meaning as in clause (r) of Section 2 of the Wealth Tax Act, 1957. Under sub-section (2) of Section 269L, the Valuation Officer to whom a reference is made under clause (a) or clause (b) of sub-section (1) is given all the powers he has under Section 38 of the Wealth Tax Act, 1957. And if in an appeal under Section 269G against the order for acquisition of any immovable property, the fair market value of such property is in dispute, the Appellate Tribunal shall, on a request being made in this behalf by the competent authority, give an opportunity of being heard to any Valuation Officer nominated for the purpose by the competentis clear that whenever reference to a Valuation Officer appointed under the Wealth Tax Act is permissible under the Income Tax Act, it has been statutorily soValuation Officer is appointed under the Wealth Tax Act and can discharge functions within the statutory limits under which he is appointed. It is not open to a Valuation Officer to act in his capacity as Valuation Officer otherwise than in discharge of his statutory functions. He cannot be called upon nor would he have the jurisdiction to give a report to the Assessing Officer under the Income Tax Act except when a reference is made under and in terms of Section 55A or to a competent authority except under Section 269L.22. We are therefore of the view that the High Court incorrectly answered the question referred to it in the affirmative. The Tribunal had not erred in holding that the Assessing Officer cannot refer the matter to the Valuation Officer for estimating the cost of construction of the house property.