1. Heard learned Counsel for the appellant.
2. The following common questions are raised in admission of these appeals:
(a) Whether, on the facts and circumstances of the case and in law, the Appellate Tribunal was correct in quashing the assessment without going into the merits of the case and ignoring the valuation report of the Departmental Valuation Officer ?
(b) Whether, on the facts and circumstances of the case and in law, the Appellate Tribunal was justified in coming to the conclusion that the Assessing Officer had no power to make the reference to the DVO though such powers vested with the Assessing Officer by virtue of the provisions contained in Sections 142A and 131(1) of the Income-tax Act?
(c) Whether, on the facts and in law, the Appellate Tribunal was justified in coming to the conclusion that the making of reassessment does not include the process of issue of notice under Section 148 of the Act?
(d) Whether, on the facts and circumstances of the case and in law, the Appellate Tribunal was correct in quashing the notice under Section 148 even though the notice was issued after the expiry of due date of filing of return and in the light of the fact that the assessee had not filed its return of income under Section 139(1) and 139(4) of the Act?
3. The short controversy involved in these appeals is whether the Assessing Officer can refer any matter for valuation of the property of an assessee though assessment and/or reassessment proceedings are not pending. The Tribunal is of the view that when the assessment proceedings are not pending the Assessing Officer has no jurisdiction and is not empowered to refer any property for valuation to the Valuation Officer. The Tribunal has discussed this issue as under:
8. When the process of reopening of assessment ends and the assessment is validly reopened thereafter, the process of making reassessment starts. Therefore, even after the insertion of Section 142A the Assessing Officer should have reason to believe that any income chargeable to tax has escaped assessment as provided under Section 147 and thereafter only the notice for reassessment can be issued under Section 148. Even after the insertion of Section 142A there is no amendment in the language of Section 147. Therefore, the condition prescribed under Section 147 for reopening of assessment still exists. The hon'ble Gauhati High Court in the case of Bhola Nath Majumdar : [1996] 221 ITR 608 and the Income-tax Appellate Tribunal, Jodhpur Bench, in the case of Vijay Kumar [2001] 73 TTJ (JD) 17 have taken the view that the valuation report is only an opinion of the valuer and an opinion of a third party cannot be a reason to believe of the Income-tax Officer. The hon'ble Bombay High Court in the case of Jamnadas Madhavji and Co. : [1986] 162 ITR 331 have held that the Assessing Officer cannot issue summons under Section 131 for the purpose of making investigation for reopening of the assessment.
9. In view of the above, we are of the opinion that the issue of notices under Section 148 in all the three years under consideration was not in accordance with law. We, therefore, quash the notices issued under Section 148 and consequently the assessments completed in pursuance of notices under Section 148 are also quashed. Since the assessment itself has been quashed, the grounds raised by both the parties with regard to the merits of the additions for undisclosed investments in the house property need no adjudication at this stage because once the assessment is cancelled, the addition does not survive.
4. Mr. Bhatt has mainly emphasised on Section 142A of the Act. He submits that the Assessing Officer at any time can make reference to the Valuation Officer for valuing the property for the purpose of assessment or reassessment, where the value of any investment referred to in Section 69 or Section 69B or Sections 69A and 69B is required to be made. Whether any income can be taxed by deeming the value of investment not disclosed, or not fully disclosed, are issues where such types of questions arise while some proceedings are pending for assessment. In the absence of such proceedings the Assessing Officer cannot refer any property for valuation to the Valuation Officer.
5. In the opening part of Section 142A the words used are 'for the purposes of making an assessment or reassessment under the Act'. The intent of the legislation is that the matter can be referred to the Valuation Officer only when the proceedings of assessment or reassessment are pending before the Assessing Officer. When no such proceedings are pending, the Assessing Officer has no jurisdiction to refer any property for assessment.
6. When the notice under Section 148 has been issued and addition has been made by adopting the value estimated by the Valuation Officer and when we found that the Assessing Officer is not empowered to refer any property for valuation in a case where no assessment proceedings or reassessment proceedings of the assessee is pending before him, we see no justification to make any addition in such cases.
7. Hence, we see no reason to interfere in the impugned order in these appeals. No substantial questions of law arise. The appeals stand dismissed.
8. Registry to place copy of this order in all connected matters.