Madras High Court
C.T. Laxmandas vs Asst. Commissioner Of Income-Tax And ... on 25 March, 1994
Equivalent citations: [1994]208ITR859(MAD)
JUDGMENT Raju, J.
1. By consent of parties, the main writ petition itself is taken up for disposal.
2. The petitioner has filed the above writ petition under article 226 of the Constitution of India seeking a writ of certiorarified mandamus to call for and quash the proceedings of the first and second respondents in AE(V) CBE/OC 27 of 1992-93 dated January 12, 1993, whereunder the second respondent has called upon the petitioner to produced materials relating to the cost of construction of the property in question to enable him to inspect and submit a valuation report of the property to the first respondent, as requested by the said officer.
3. The petitioner states in the affidavit that during the assessment year 1986-87, having corresponding accounting year ending with March 31, 1986, whereunder the second respondent has called upon the petitioner to produce materials relating to the cost of construction of the property in question to enable him to inspect and submit a valuation report of the property to the first respondent, as requested by the said officer.
4. The petitioner states in the affidavit that during the assessment year 1986-87, having corresponding accounting year ending with March 31, 1986, the petitioner filed a return of income declaring the total income as Rs. 42,430 and the same was accepted by the Income-tax Departmental and assessment was made under section 143(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), and for the assessment year 1987-88, the return of income was filed declaring the total income as Rs. 54,010 which was also accepted by the first respondent and while that be the position, the petitioner is surprised to receive the notice under challenge.
5. The main submission made at the time of hearing is that there is no provision in the Act enabling the Assessing Officer to refer the matter to the Valuation Officer for the purpose of ascertaining the cost of construction of the building after proceedings for the assessment year have been completed and, if at all, there is only an enabling provision under section 55A of the Act to make reference to a Valuation Officer, with a view to ascertain the fair market value of a capital asset for the purpose of bringing to assessment capital gains under Chapter IV of the Act.
6. While admitting the writ petition, this court in M. M. P. No. 2769 of 1993 granted injunction restraining the respondents from proceedings further with the impugned notice. The respondents have filed a counter-affidavit in the said petition with an application for vacating the interim injunction. It is contended there in view of the orders of injunction granted by this court, the first respondent has been disabled from completing the assessment for the year 1986-87 and 1987-88 and the assessment is getting time-barred by March 31, 1994, due to non-availability of the valuation report. It is also contended that the move of the petitioner was very clever in that he has not sought for any interim orders against the completion of assessment and the mere interdiction of securing the valuation report would render the effective exercise of assessment powers virtually perfunctory. Learned counsel appearing on either side reiterated the stand as above.
7. Mr. Janarthana Raja, learned counsel appearing for the petitioner, relied upon a Full Bench decision of the Punjab and Haryana High Court in support of his claim in this writ petition. It is seen from the report of the said judgment in Jindal Strips Ltd. v. ITO [1979] 116 ITR 825 that the learned judges of the Full Bench of the Punjab and Haryana High Court have taken the view that section 55A applies only to capital gains, the assessment of which is provided for in Part E of Chapter IV. At the same time, the learned judges expressed the view that, however, section 133(6) of the Act provides that the Income-tax Officer may require any person to furnish information in relation to such points or matters, or to furnish a statement of accounts and affairs as will be useful for, or relevant to any proceeding under the Act.
8. Mr. N. V. Balasubramanium, learned counsel appearing for the Revenue, per contra, placed reliance upon a Division Bench judgment of the Andhra Pradesh High Court in Daulatram v. ITO [1990] 181 ITR 119, wherein the learned judges of the Division Bench of the Andhra Pradesh High Court held, after careful analysis of the scope and object of section 55A and sections 131, 132, 133 and 142 of the Act, that section 55A as well as 142(2) of the Act would confer ample power on the authorities to have a valuation made on the basis of information to be granted and submit a report to the assessing authority for the purpose of Chapter IV of the Act. The learned judges were also of the view that section 55A of the Act was inserted with the deliberate object of empowering the Income-tax Officer to find out the market value of capital assets for the purpose of Chapter IV, which is titled "computation of total income" and having regard to the language employed, viz., "for the purpose of this Chapter", there was no justification to confine the enabling power available under section 55A of the Act to only a limited purpose pertaining to capital gains.
9. I am in entire agreement with the view taken by the Division Bench of the Andhra Pradesh High Court, referred to supra, and prefer to follow the same in preference to the decision of the Full Bench of the Punjab and Haryana High Court, referred to above. The plea on behalf of the petitioner that except for the purpose of capital gains for no other purpose section 55A could be availed of cannot conform to either the language or the object of the said provision or to reason or logic. Even de hors the question of assessment on capital gains, the valuation of a particular capital asset acquired by the petitioner/assessee in a particular year or more than one year would go a long way to show whether the same was acquired by utilising known means and resources of disclosed income and would help the assessing authorities to effectively prevent generally the evasion of tax due to the State. When that seems to be the main object and purport of the introduction of section 55A of the Act, assigning a restrictive meaning or limiting the operation of the section to assessment only of a particular category of income alone would amount to rewriting the provision and defeat and very object of enacting such a provision. Consequently, I am not satisfied that the grievance of the petitioner in this case can be sustained by this court as having any basis in law. The writ petition, therefore, fails and shall stand dismissed. No costs. The dismissal of this writ petition, or the observations made, if any, in this order for the limited purpose of this writ petition, shall not stand in the way of the petitioner independently challenging at the appropriate stage any orders that may be passed against the petitioner, if the petitioner so desires.