PREM HOTEL Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE aforementioned three writ petitions raise a common question of law and facts, and are, therefore, decided by a common judgment.

(2.) IN OWP No.72 of 1995 it is alleged that the petitioner-firm constructed New choice Resorts building at Greater Kailash By-Pass, Jammu, and started a club therein. The petitioner-firm is a partnership concern, It is submitted that they maintained their accounts in due course of the business, and the account books were got audited by a firm of Chartered Accountants, namely Gupta Sushil Co. They further submit that the income-tax returns were submitted to the IT Department as a required under law. While these were pending for assessment before the assessing authority, i.e., the ITO, respondent No. 1 sent a notice to the petitioners on 5th Dec., stating therein that petitioners have submitted the report of the approved valuer but not the balance sheet. Accordingly, according to the petitioners, a balance sheet was submitted is respondent No. 1. The petitioners submitted that the valuation of the registered under No. 2846 with the Ministry of Finance. In the meanwhile, respondent No. 1 on 21st Sept., 1994 wrote a letter to respondent No. 2, by virtue of which he referred the case to him for determination of the cost of construction of the construction of the building in question. This is letter was purported to have been written in terms of S. 131 (1) (d) of the IT Act, 1961 ('the Act') r/w S. 55A of the Act. The respondent No. 2 after a receipt of the said letter, wrote a letter to respondent No. 3 stating therein that the reference received could not be entertained by him as it was within the powers of a respondents No. 3. Accordingly, he sent the reference received by him to respondent No. 3, and respondent No. 3 entertained the reference and started proceedings against the petitioner. The reference made by respondent No. 1 to respondent No. 2 and thereafter by respondent No. 2 to respondent No. 3 has been challenged by the petitioners in this writ petition.

(3.) THE third case is OWP No. 884 of 1994. The petitioner in this case submits that he constructed first, second and third floors of a building in which a hotel is housed, during the period January 1990 to July, 1992; and the amount spent on the construction of the building was reflected in the petitioner by a chartered Accountant, and the valuation of the property was got done by a valuer approved by the ministry of Finance, Government of India. Return was filed by this petitioner- concern, which was also pending disposal before the ITO. A reference was made by the ITO to respondent No. 2 in terms of S. 131 (1) (d) r/w S. 55A to determine the cost of construction and machinery. The respondents NO.3 in this case also entered into reference, and started investigating into the matter. Hence this writ petition. The notice which was sent by respondent No. 1 to this writ petitioner, reads, as under: