OM PRAKASH BAMBA Vs. VALUATION OFFICER

JUDGEMENT

(1.) THE notices issued by the respondent No. 2 whereby the petitioners were called upon to indicate the cost of construction of property mentioned in the notices is the subject-matter of challenge in these petitions. The basic challenge made is that these notices which are said to have been issued in terms of S. 131(1)(d) of the IT Act, 1961 ('the Act') are beyond the authority of the officer issuing the same. It is stated that the said officer has taken resort to the provisions of S. 55A of the Act also. It is stated that this section is not attracted to the facts of this case. It is stated that the income of the assessee has already been assessed. It is urged that the assessees are not transferring the property and, therefore, the question of making the assessment in terms of S. 55A does not arise. It is further urged that this section would apply only if the assessee sells his property. The fact that S. 55A comes in Chapter 4 and deals with the capital gains, is sought to be projected in this regard. It is stated that as S. 55A is part of that set of sections which deals with capital gains, this section can be resorted to only if the question for determination before the authority is vis-a-vis assessment of capital gains.

(2.) THE respondents have filed objections. The stand taken by them is that in terms of S. 131(1)(d), the assessing authority has the power to issue commissions. This power as per the Revenue has been properly exercised. The determination of the value as per the respondents is not only required for the purposes of determining the capital gains but is also relevant for going into the question of income of an assessee. It is, accordingly, submitted that this power has been rightly exercised.

(3.) A reading of S. 131 of the Act makes it apparent that sufficient power is vested with the officers mentioned therein for discovery and production of evidence. At the same time, this power is not to be exercised with a view to have a roving or fishing enquiry. The proceedings which are taken under S. 131 are against an individual or an assessable entity. The individual or entity may not actually be assessed but may be suspected to have assessable income. In this regard, it would be apt to refer to the Law & Practice on Income-tax by Palkhivala, 8th Edn., p. 1069, where the powers which are exercisable in terms of ss. 131 to 135 have been summarised. This paragraph is reproduced below : "Power to be exercised after due application of mind. Roving or fishing inquiry.-The various powers of IT authorities survey, discovery and inspection, search and seizure, requisitioning books and documents, calling for information, etc., are set out in ss. 131 to 135. An overview of these provisions leads to the following conclusions, which are supported by judicial decisions cited under the appropriate sections :