Before the Supreme Court in Smt. Amiya Bala Paul vs. Commissioner of Income-tax (130TAX511/262ITR407) it was contended on behalf of the assessee that a reference to the Valuation Officer could only be made strictly in terms of section 55A of the Act and that if the circumstances justifying the reference under that section were not prevailing, the Assessing Officer did not have the jurisdiction to otherwise refer the matter to the Valuation Officer. It was further pointed out that section 55A of the Act only allows for reference to the Valuation Officer for the purposes of computing the market value of property in connection with the computation of capital gains. It was also submitted that reference to the Valuation Officer had been specifically provided for under section 55A and that this implied that a reference to the Valuation Officer could not be made under any of the other provisions, which generally empowered the Assessing Officer to ascertain the income of the assessee. The
justification given was that if the power to refer the determination of
the cost of construction to the Valuation Officer was otherwise available to the Assessing Officer under the other provisions of the Act, it was not necessary to specifically empower the Assessing Officer under section 55A.
The Supreme Court accepted such contention and held that in the course of the assessment proceedings, the Assessing Officer does not have the power under the Income-tax Act, 1961, to refer to the Valuation Officer the question of the cost of construction of house property. More particularly the Apex Court held therein that section 55A having expressly set out the circumstances under and the purposes for which a reference could be made to a Valuation Officer it can have no application to such a matter of assessment.
Even while referring to Amiya case (supra) the Calcutta High Court in Hotel Mount View v. CIT (2005) 148TAX532 held that application of section 55A is not confined for the purpose of computation of capital gains. It held that Capital asset is defined in section 2(14) to include capital asset used in connection with business also for which reason valuation of capital asset may be for the purpose of computing capital gains or for the purpose of computing income from business, both of which are dealt with under Chapter IV. The Court further derived this view on the basis of use of the word 'purposes' meaning thereby that it is not made for one purpose namely for the purpose of computing capital gains but for other purposes contemplated under Chapter IV.
The Calcutta High decision would therefore question the very insertion of new section 142A calling upon the valuation officer to estimate the cost of construction of property. Perhaps in the light of decision of the Calcutta High Court the Supreme Court may have to review their earlier decision in Amiya (supra) case.
The decision of the Calcutta High Court may therefore provide an opportunity to the revenue to reopen even assessments completed before 30th September 2004. In the right course the revenue may go for review of Supreme Court decision in Amiya (supra) case.
In yet another decision the P&H High Court in CIT v. Krishan Lal Dua (2005) 149TAX126 following the Supreme Court decision in Amiya (supra) case denounced action of the assessing officer in making reassessment on the basis of valuation report obtained. The Court held that section 142A specifically exclude cases including assessee's case where assessments have become final on or before 30th September 2004.