Brijesh Kumar, C.J.
1. This is a reference under Section 256(2) of the Income-tax Act, 1961, at the instance of the Revenue.
2. The following question has been referred for opinion in view of the order of this court rendered in Civil Rule 8(M) of 1992 : 'Whether, on 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 for estimating the cost of construction of the house property',
3. The request to refer the above question was refused by the Income-tax Appellate Tribunal, Guwahati, by order dated July 9, 1991, relying upon its earlier judgment in the case of one Basana Rani, dated January 7, 1991, in R. A. Nos. 41 and 42 (Gau) of 1990.
4. We have heard Shri Shri G.K. Joshi, learned counsel for the Revenue, and Shri A. K. Saraf, learned counsel appearing for the assessee.
5. The dispute relates to the assessment years 1982-83 and 1983-84, but they have been decided and disposed by a common order. The point involved is short relating to legal competence of the Assessing Officer to refer the matter to the Departmental Valuation Officer/Cell to evaluate the cost of construction, for the purpose of assessment proceedings.
6. The brief facts are that in response to the notice under Section 143(2), a return filed by the assessee disclosed the fact of construction of a house at Calcutta, spending a sum of Rs. 1,75,000 in the year 1982-83 and another sum of Rs. 1,70,000 in the subsequent accounting year totalling to an amount of Rs. 3,45,000. The assessee, it appears, also filed a valuation report by some registered valuer of Calcutta according to which the cost of the construction was Rs. 3,32,000. The Assessing Officer, thereafter, asked the Valuation Officer, Income tax Department to evaluate the cost of construction of the property. According to the report of the Departmental Valuation Officer the estimated cost of the construction comes to Rs. 8,10,000. A break up of the cost of construction, in the two assessment years was made as Rs. 4,54,000 for the assessment year 1982-83 and Rs. 3,47,000 for the subsequent year. In each year out of the two, a sum of Rs. 1,75,000 and Rs. 1,70,000, respectively, as disclosed by the assessee, having been spent, was deducted. Thus, the undisclosed expenditure on construction for the assessment year 1982-83 was calculated to be Rs. 2,79,000 and Rs. 1,77,000 for the subsequent year. On the point in question, namely, whether the matter could be referred to the Departmental Valuation Officer for determining the cost of construction or not, it was ultimately held that, it could not be referred and the assessment should be made, without reference to the report of the Departmental Valuer.
7. We have perused the judgment dated February 27, 1990, by the Income-tax Appellate Tribunal in the appeal Smt. Basana Rani Saha v. CIT, Shillong, which has been relied upon in the present case by the Appellate Tribunal, observing that the same reason was being adopted to hold that the Departmental Valuation Officer cannot be asked to estimate the cost of construction for the purpose of assessment proceedings.
8. The Appellate Tribunal referred to a decision reported in Daulat Ram v. ITO : [1990]181ITR119(AP) decided by the Andhra Pradesh High Court and another decision of the Punjab and Haryana High Court reported in CIT v. Roshan Lal Seth , wherein it was held that valuation report made by the Valuation Officer under Section 16A of the Wealth-tax Act cannot be made use of in the assessment proceedings under the Income-tax Act. The Appellate Tribunal held that Section 55A of the Income-tax Act can be invoked only for the purpose of proceedings under Chapter IV of the Act only and not for any other proceeding.
9. Learned counsel for the Revenue submits that it is always open to the assessing authority to call upon the Valuation Officer to assess the value of a property or the cost of construction for the purpose of assessment proceedings. In this connection, reliance has been placed upon three provisions of the Income-tax Act, namely, Section 55A which falls in Chapter IV of the Act relating to computation of income from capital gains. The relevant part of Section 55A reads as under :
'55A. With a view to ascertaining the fair market value of a capital asset for the purpose of this Chapter, the Income-tax Officer may refer the valuation of the 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 Income-tax Officer is of opinion that the value so claimed is less than its fair market value ;
(b) in any other case, if the Income-tax Officer is of opinion-
(i) that the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such percentage of the value of the asset as so claimed or by more than such amount as may be prescribed in this behalf; or
(ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do.'
Learned counsel has then referred to Section 133(6) of the Income-tax Act which falls in Chapter XIII of the Act which relates to the Income-tax authorities. Sub-section (6) of Section 133 reads as follows :
'133. The Assessing Officer, the Deputy Commissioner (Appeals), the Deputy Commissioner or the Commissioner (Appeals) may, for the purposes of this Act--. . .
(6) require any person, including a banking company or any officer thereof, to furnish information in relation to such points or matters, or to furnish statements of accounts and affairs verified in the manner sped fied by the Assessing Officer . . . giving information in relation to such points or matters as, in the opinion of the Assessing Officer . . . will be useful for, or relevant to, any enquiry or proceeding under this Act.'
10. It is submitted that the power to call for information vested in the assessing authority is to the effect that it may require any person to give information relating to such points or matters which may be useful or relevant for any proceeding under the Act. It is submitted that the expression 'person' used in Sub-section (6) of Section 133 is inclusive in nature and includes a banking company or any officer as well. Hence, the word persons would include a Valuation Officer also. To support the contention reliance has been placed upon a decision reported in CIT v. Tajmahal Hotel : [1971]82ITR44(SC) , so as to stress the point that expression 'includes' enlarges the meaning of the word, viz., the 'person' as in this case so as to include a Valuation Officer.
11. Learned counsel has also placed reliance upon decisions reported in Murarilal Mahabir Prasad v. B.R. Vad : [1976]1SCR689 (at page 110) and Associated Cement Co. Ltd. v. CTO [1981] 48 STC 466 (at page 476) relating to interpretation of machinery provisions. It has been held that whereas the charging provision of a tax statute is rigorously construed the machinery provision is not so strictly construed since it is in the nature of providing machinery for levying, quantifying and collecting taxes. Its purpose is to effectuate the charging provision and to provide workability to the provisions of the Act. Therefore, Section 133(6) of the Act is to be construed as a machinery provision, permitting reference to the Departmental Valuation Officer for the purposes of evaluating cost of construction of a building, Reliance has also been placed upon a case reported in CIT v. National Taj Traders [1980] 121 ITR 535 , on the point that liberal construction should be made where failure to do so would defeat the purpose of the Act.
12. Section 142 of the Income-tax Act has also been referred to. It relates to enquiry before the assessment. Sub-section (2) of Section 142 reads as follows :
'(2) For the purpose of obtaining full information in respect of the income or loss of any person, the Assessing Officer may make such enquiry as he considers necessary.'
13. Learned counsel for the Revenue has submitted that the provisions contained under Sections 55A, 133(6) and 142(2) of the Income-tax Act are all enabling provisions which legally vest power in the assessing authority to call for a valuation report from the Valuation Officer of the Department regarding the cost of construction of a building. It is submitted that these are machinery provisions and are to be interpreted in a manner that they provide workability to the provisions of the Act and effectuate them.
14. Learned counsel for the assessee, however, refutes the contention raised on behalf of the Revenue and submits that the purpose of Section 55A is to ascertain the fair market value of a property, that is to say, for the purpose of evaluating the price it may fetch in the market, which has nothing to do with the cost of construction or value of capital assets. The provision can be put to restricted use only, namely, for the purpose for which it has been provided and not for any other purpose. It falls under Chapter IV of the Act which is for the purpose of computation of income from capital gains. Therefore, it cannot be put to use for ascertaining cost of construction of a building.
15. It is further submitted that there should have been a provision like Section 55A of the Income-tax Act apart from Chapter IV so as to be resorted to for the purpose of Section 142 of the Act, namely, in the Chapter for procedure for assessment. Reliance has been placed upon certain decisions reported in Tarulata Shyam (Smt.) v. CIT : [1977]108ITR345(SC) ; CST v. Parson Tools and Plants : [1975]3SCR743 , as well as in Polestar Electronic (Pvt.) Ltd. v. Addl CST : [1978]3SCR98 , for the proposition that strict interpretation has to be made regarding tax statutes and the consequences which may flow, would not be material. There is no equity about a taxing statute nor is there any consideration for ensuing hardship. In case the language is plain, then a plain interpretation alone should be adhered to.
16. A reference has also been made to Hotel Amar v. CIT : [1993]200ITR785(Orissa) . It has been held that where an assessment has been reopened, there would be no occasion to make reference to the Valuation Officer under Section 55A of the Act since no question of capital gains would be involved. Section 55A would be inapplicable. It has, however, been also held that if a report has been obtained under Section 55A, it can only be used as a piece of evidence which can be rebutted.
17. In so far as Section 133(6) of the Act is concerned, it is submitted that it would not be applicable in the assessment proceedings since the said provision is only for the purpose of seeking information. The contention of learned counsel for the assessee is that neither the provisions contained in Sections 55A , 133(6) nor Section 142 applies in case of inquiry before assessment. Reliance has also been placed by the assessee upon Jindal Strips Ltd. v. ITO at page 830, for the purpose of definition of the word 'person' used under Section 133(6) of the Act. It is a Full Bench decision of the Punjab and Haryana High Court. It has been held that Section 55A of the Act applies to matters relating to capital gains only. It will be necessary to briefly see the facts of the case and the propositions of law as laid down. The expenses incurred in construction of a mill in its premises were not properly valued in the previous year. In the reassessment proceedings the assessing authority called for the report of the Departmental Valuation Officer under Section 55A . On an objection raised against the said report, it has been held that the assessing authority, in the reassessment proceeding could invoke Section 133(6) of the Act for revaluation of the property. Section 133(6) of the Act applies to any proceedings under the Act. Mere mention of a wrong section in the requisition sent to the Valuation Officer, viz., Section 55A , will not vitiate the report. It is held that the valuation report could be called for under Section 133(6) of the Act to evaluate the cost of construction, in reassessment proceedings.
18. We find that Section 131 of the Act falls in Chapter XIII of the Act which relates to powers of the authorities regarding discovery and production of evidence, etc. It reads as under :
'131. (1) The Assessing Officer . . . 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), when trying a suit in respect of the following matters, namely :--
(a) discovery and inspection ;
(b) enforcing the attendance of any person including any officer of a banking company and examining him on oath ;
(c) compelling the production of books of account and other documents ; and
(d) issuing commissions.'
19. From the above provision, it is clear that the Income-tax authorities while exercising various jurisdictions under the Act enjoy the power of a civil court as provided in the Code of Civil Procedure, 1908, for certain purposes including for issue of commission. Section 75 of the Civil Procedure Code, empowers the court trying a suit to issue commission for certain purposes as indicated in Section 75 itself, which reads as under :
'75. Power of court to issue commissions.--Subject to such conditions and limitations as may be prescribed, the court may issue a commission-
(a) to examine any person ;
(b) to make a local investigation ;
(c) to examine or adjust accounts ; or
(d) to make a partition ;
(e) to hold a scientific, technical or expert investigation ;
(f) to conduct sale of property which is subject to speedy and natural decay and which is in the custody of the court pending determination of the suit ;
(g) to perform any ministerial act.'
20. Clause (e) of Section 75 of the Civil Procedure Code, provides that the court can issue commission for holding scientific, technical or expert investigation. The function of the valuer of a property is a technical function requiring expert investigation for the purpose of estimating the cost of any building. A report of a valuer, if sought for estimating the cost of a construction would only be the opinion of an expert on a technical matter. Therefore, in our view, it would always be open to the assessing authority to seek expert opinion about cost of construction of a building which can broadly be termed as issuing commission for the purpose. By virtue of Section 131 of the Income-tax Act, Section 75 of the Civil Procedure Code, comes in aid of the income-tax authorities while carrying on their functions under the provisions of the Act. It will have the same nature as that of machinery provision, namely, to aid and facilitate the levy, quantification of the tax liability under the charging provision of the Act. . In the earlier part of the judgment we have already seen that taxing statutes have two kinds of provisions, one is the charging provision and the other is machinery provision. They are to be construed differently. A charging section has to be strictly interpreted irrespective of the consequences, whereas the machinery provisions are not to be so strictly interpreted, but they are broadly to be utilised to provide a machinery to achieve the purpose of the Act or to effectuate the charging provisions of the Act. There is no doubt about the legal position that Section 55A of the Income-tax Act is meant for the purposes of assessing the capital gains, which is obviously different from valuing cost of construction of a building. It is rightly submitted by learned counsel for the assessee that for the purpose of capital gains the prevailing market value of the property may be relevant and not the cost of construction.
21. In our view, nothing jurisdictional is involved about it and the two decisions relied upon on behalf of the assessee themselves amply clarify the legal position. In the case of Hotel Amar : [1993]200ITR785(Orissa) , it has been held that a reference cannot be made to the Valuation Officer under Section 55A of the Act in reassessment proceedings, but at the same time it was held that a report obtained under Section 55A can be used as a piece of evidence which would be rebuttable. Similarly, in the case of Jindal Strips Ltd. , a Full Bench of the Punjab and Haryana High Court though has held that Section 55A of the Act applied to the matters relating to capital gains only, but in reassessment proceedings the assessing authority is competent to call for report of the Valuation Officer under Section 133(6) of the Act. Hence, merely wrong mention of the provisions of law, namely Section 55A , in the requisition calling for the report of the Valuation Officer would not vitiate the report. From the above two decisions relied upon by the assessee it is clear that the assessing authority has power to call for report about the cost of construction from the Valuation Officer and while doing so, if the provision of law has been wrongly mentioned, it would be wholly immaterial, e.g., while calling for the valuation report about the cost of construction Section 55A is mentioned, it would not make any difference so long as the report is regarding cost of construction, as such power vests under another provision.
22. In view of the decisions referred to in this judgment and in the discussion held above, we are of the view that the assessing authority would be quite competent to call for the report on the valuation of the cost of construction from the Valuation Officer in view of the provisions under Sections 131, 133(6) and 142(2) of the Income-tax Act. These are the enabling machinery provisions which vest ample powers in the assessing authority, any wrong mention of provision on the requisition memo will not be material.
23. Our answer to the question referred is in the affirmative, that is to say, the Tribunal 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.