Case Note & Summary
The writ petition was filed by Rallis India Limited challenging a notice dated 19th April, 2005 issued under Section 55A of the Income Tax Act, 1961 by the Deputy Commissioner of Income Tax. The petitioner had been assessed for the assessment year 2002-2003 under Section 143(3) of the Act on 24th March, 2005. After completing the assessment, the Assessing Officer sought to refer the valuation of the petitioner's property to a Valuation Officer under Section 55A. The petitioner contended that once the assessment order had been passed, the Assessing Officer had no jurisdiction to invoke Section 55A. The court examined the language of Section 55A, which states that the Assessing Officer 'may refer the valuation of capital asset to a Valuation Officer' with a view to ascertaining the fair market value for the purposes of that Chapter. The court held that the power under Section 55A is to be exercised during the pendency of the assessment proceedings, not after the assessment is completed. The court noted that the Assessing Officer had already applied a formula to value the property in the assessment order, and the subsequent reference under Section 55A was without jurisdiction. The court allowed the writ petition, quashed the notice dated 19th April, 2005, and directed the respondents not to give effect to the said notice. The rule was made absolute with no order as to costs.
Headnote
A) Income Tax - Section 55A - Reference to Valuation Officer - Timing - The Assessing Officer cannot refer the valuation of a capital asset to a Valuation Officer under Section 55A of the Income Tax Act, 1961 after the assessment order under Section 143(3) has been passed. The power under Section 55A is to be exercised during the pendency of the assessment proceedings to ascertain the fair market value for the purposes of that Chapter. Once the assessment is completed, the Assessing Officer has no jurisdiction to invoke Section 55A. (Paras 1-6)
Issue of Consideration
Whether the Assessing Officer is competent to seek valuation of a property under Section 55A of the Income Tax Act, 1961 after he has already assessed the income of the assessee and passed the assessment order.
Final Decision
The writ petition is allowed. The notice dated 19th April, 2005 issued under Section 55A of the Income Tax Act, 1961 is quashed. The respondents are directed not to give effect to the said notice. Rule is made absolute with no order as to costs.
Law Points
- Section 55A of the Income Tax Act
- 1961
- cannot be invoked after the assessment order is passed
- the power under Section 55A is to be exercised during the pendency of assessment proceedings
- not thereafter.
