Commissioner of Income Tax vs Achamma Chacko

C.N. Ramachandran Nair, J.—This is an appeal filed by the revenue u/s 260A of the Income Tax Act challenging the order of the Tribunal upholding Commissioner (Appeals)''s order cancelling reassessment made against the respondent assessee for the assessment year 1986-87. The assessee who had not filed return was called upon to file return on account of investment in the construction of a building. The assessee filed return and along with it a valuation report of construction. The assessing officer made assessment making certain additions. In the appeal filed against the same, the Commissioner (Appeals) remanded the matter for the limited purpose of examining genuineness of certain cash credits added in the original assessment. When the matter went back to the assessing officer for passing revised orders in terms of the directions contained in the Commissioner (Appeals)''s order, the assessing officer referred valuation of the building constructed by the assessee by the department''s valuer. Even after reference for valuation, the assessing officer gave effect to the Commissioner (Appeals)''s order against which also assessee filed another appeal which was allowed by the appellate authority cancelling the addition pertaining to unexplained cash credits. The assessing officer after receipt of valuation report from the department''s valuer who valued the investment at about Rs. 26 lakhs, reopened the assessment and made an assessment of around Rs. 9 lakhs. On appeal filed against the revised order, the appellate authority found that reference for valuation was made by the assessing officer when no proceeding was pending before him and therefore, he cancelled the reassessment made u/s 147 of the Act. The appeal filed by the revenue was dismissed by the Tribunal against which this appeal is filed. We have heard senior counsel, Sri. P.K.R. Menon for the revenue and Sri. Vijayan Nair for the respondent assessee.

Even though counsel for the revenue contended that reference for valuation was made by the assessing officer when the assessment stood remanded under the orders of the Commissioner (Appeals), counsel for the assessee contended that Commissioner (Appeals) remanded the matter only for the limited purpose of considering certain cash credits and assessment as such was not pending before the assessing officer for reconsideration. We do not think we should enter any finding on this matter because we are of the view that introduction of Section 142A with retrospective effect may validate the reference by the assessing officer for valuation, no matter whether the assessment was pending after remand by the Commissioner (Appeals) or not. The Tribunal had no occasion to consider the amendment because the amendment, though introduced with retrospective effect from 15-11-1972, was made only by Finance (No. 2) Act, 2004. Since the new provision Section 142A entitles an assessing officer for referring the question of valuation even after completion of an assessment for the purpose of considering reassessment after receipt of valuation report, the reference by the officer in this case may get validated on account of the retrospectivity given to the amendment. If that is so, then the correctness of the reassessment has to be gone into by the Commissioner (Appeals) on merits. In other words, the assessee should have an opportunity to contest the case on merits. However, since both the appellate authorities have not considered the impact of amendment with retrospective effect, we leave open both the issues to the Commissioner (Appeals) for consideration, i.e., whether reopening is justified on account of retrospective amendment through introduction of Section 142A and if so, to consider assessee''s challenge against the quantum of assessment. We, therefore, set aside the impugned order of the Tribunal and remand the matter to the Commissioner (Appeals) for rehearing the assessee and for disposal of the case afresh. The appeal is disposed of as above.