Commissioner of Income Tax, Muzaffarnagar vs Cheetal Grand Hotel (P.) Ltd.

The defect having been removed, office is directed to give regular number. We have heard Shri A.N. Mahajan, learned Standing Counsel for the Revenue and Shri Shakeel Ahmad, learned counsel appearing for respondent-assessee.

In the present appeal filed u/s 260-A of the income tax Act, 1961 (hereinafter referred to as the "Act"), the Commissioner of income tax, Muzzafarnagar has raised the following four questions said to be substantial questions of law:-

(1) Whether the Tribunal is legally justified in law in deleting the addition of Rs. 4,39,125 relying on the decision of the Hon''ble Supreme Court in the case of Amiya Bala Paul Vs. Commissioner of Income Tax, Shillong, , while the facts of that case are not identical to the facts of the present case.

(2) Whether the Tribunal was correct on facts in deleting additions made by the Assessing Officer. On the basis of difference in rates for construction with reference to specific items of building construction, when there was no material before the Tribunal to differ with the rates applied by the Assessing Officer.

(3) Whether the Tribunal was correct in relying on the submissions of the assessee and the order of the CIT(A) which was based upon altogether on different estimation of cost of construction?

(4) Whether on the facts and in the circumstances of the case, the Tribunal is justified in relying upon the rate of law laid down by the Hon''ble Supreme Court in the case of Amiya Bala Paul Vs. Commissioner of Income Tax, Shillong, in view of the insertion of section 142-A in the income tax Act, retrospectively w.e.f. 15-11-1972 by the Finance Act, 2004.

Briefly stated the facts giving rise to the present appeal are as follows:-

The matter relates to the assessment year 1993-94. The regular assessment was completed on 31-3-1995. Subsequently, on the basis of the report of the departmental Valuation Officer for determination of the costs of construction of hotel building proceedings u/s 147 /148 was initiated by issuance of notice dated 11-3-1998 the Assessing Authority in the re-assessment proceedings brought the difference in the costs of construction as determined by the departmental Valuation Officer and as given by the registered Valuer to tax. However, in the appeal preferred by the respondents-assessee before the Commissioner of income tax (Appeals) set aside the revenue appeals before the Tribunal filed.

Relying on the provisions of section 142-A of the Act which was inserted by Finance (No. 2) Act, 2004 with effect from 14-11-1972, the learned Standing Counsel submits that the Tribunal committed an error of law in setting aside the re-assessment proceedings. According to him, the Assessing Officer was fully justified in taking recourse to the provisions of u/s 147 /148 of the Act on the basis of the report on the Departmental Valuation Officer.

We have perused the three orders passed by the authorities filed along with the memo of appeal as also the proviso of section 142-A of the Act which is as under:

Provided that nothing contained in this section shall apply in respect of an assessment made on or before the 30-9-2004 and where such assessment has become final and conclusive on or before that date, except in cases where a reassessment is required to be made in accordance with the provisions of section 153A.

We find that in the present case, the re-assessment proceedings would be hit by the proviso as it also forms part of section 142-A of the Act, inserted by Finance (No. 2) Act, 2004 with effect from 14-11-1972. The proviso has been reproduced above. From the re-assessment order, we find that the original assessment order was passed on 31-3-1995 that is much before 30-9-2004. It had become final between the parties on the date when section 142-A was inserted by Finance (No. 2) Act, 2004 as there is nothing on record to show to the contrary.

We are, therefore, of the considered opinion that the Tribunal had not committed any error of law in setting aside the re-assessment proceedings. The appeals fails and is dismissed on merits.