DAULATRAM Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE petitioners, three in number, seek to issue a writ of prohibition prohibiting the Valuation Officer from proceeding further in the matter pursuant to the notice dt. 4th Aug., 1984, issued by him. Format :

(2.) THE relevant format in brief is : A four storeyed building bearing Municipal No. 5 9 30/1 at Basheerbagh, Hyderabad City, constructed during 1979 82, under the co ownership of Sarvasri Daulat Ram, Ashok Kumar and Smt. Vanita Daulat Ram, the reference of which was made by the ITO to the Valuation Officer for due evaluation to assess the income relevant for the asst. year 1983 84, constitutes the subject of this writ petition. On filing of the IT return by the assessee petitioners for the asst. year 1983 84, the ITO concerned referred the matter of valuation in respect of the aforesaid building to the Valuation Cell of the Department. The Valuation Officer issued a notice dt. 4th Dec., 1982, calling upon the petitioners to produce various materials like the site plan, copy of approved valuer's report, date of commencement of construction and so forth. Though, at the outset, this power of the said ITO was questioned, however, they later submitted the requisite information on 21st Sept., 1983. Thereafter, the Valuation Officer inspected the site on 22nd Sept., 1983 and then a comprehensive valuation report dt. 24th Sept., 1983 determining the cost of construction at Rs. 24.46 lakhs was tendered to the ITO. The further averment in the affidavit is that strangely enough, the District Valuation Officer called upon the petitioners for furnishing the same details that were sought for earlier, for the purpose of revaluation. This second notice was said to have been issued pursuant to the second reference made by the ITO concerned. That reference is dt. 27th Feb., 1984. To this, a protest was registered on 31st March, 1984, stating that the ITO is not empowered to have the cost of construction determined, much less redetermined under S. 142(2) of the IT Act ("the Act" for short), inasmuch as the earlier valuation was already done on a reference by the Valuation Officer and, therefore, there is no necessity to exercise second reference. However, there was no response to this. Thereafter, the impugned notice dt. 4th Aug., 1984 was issued by the Superintending Engineer to the effect that he would be inspecting the property on 17th Aug., 1984, as the matter was referred to him in order to ascertain afresh the cost of construction, asking the petitioners to make it convenient to be present. It is this notice that is challenged in this writ petition solely on the ground that there is no provision enacted anywhere in the Act empowering the ITO to make even any reference, let alone the second reference, to the Valuation Officer for the purpose of ascertaining the cost of construction of a building. Now, the counter averments in the affidavit filed by the Revenue, inter alia, are that the predecessor ITO made a reference to the Valuation Cell in order to ascertain the cost of construction, so also the actual value of the property for wealth tax purposes under S. 133(6) of the Act. That was exclusively for the purpose of obtaining his advice, to determine the cost of construction of the property which becomes apparent from the letter dt. 29th Nov., 1982. The Valuation Officer's report was submitted on 24th Sept., 1983. Subsequently, however, on 29th Oct., 1983, a search and seizure was conducted by the Revenue both on the business premises as well as the residential premises of the assessees and, consequently, the Intelligence Wing of the Department processed the case and reported that large amounts of unaccounted money appeared to have been spent on the construction of the house. Secondly, the valuation was done earlier by the "Valuation Officer" who was incompetent, as the value of the asset was more than Rs. 10 lakhs which has to be valued by the "District Valuation Officer" only, as per the WT Rules. That apart, the Asstt. Director of Inspection also brought to the notice of the ITO certain facts relating to the building, like plinth area, quality of construction, defects in measurement and so forth. Hence, on 20th Dec., 1983, a letter was issued by the ITO to the District Valuation Officer, Superintending Engineer in this case, to take up the necessary valuation work in order to have the advantage of the expertise of the officer. By letter dt. 29th March, 1984, it was informed on clarification sought for by the assessees, that the enquiry is going to be conducted under S. 142(2) of the Act. Points raised :

(3.) NOW , before adjudicating, the relevant statutory provisions enacted in ss. 55A, 131, 132, 133 and 142(2) may be set out.