CAV JUDGMENT

(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)

1. At the outset, learned advocate Mr.Soparker appearing for the petitioner-Company has submitted that the petitioner-Company is not pressing the prayer seeking quashing and setting aside of the show cause notices dated 17.06.2023 and 20.06.2023, issued by respondent No.1- Assistant Commissioner of Income Tax, Central Circle-2, but is confining the challenge to reference dated 24.06.2023 made by respondent No.1 and respondent No.2-District Valuation Officer for determination of the value of the fixed assets of the petitioner-Company.

BRIEF FACTS OF THE CASE

2. The petitioner-Company is a Limited Company, for the Assessment Year (A.Y.) 2021-22, filed its return of income on 14.03.2022, declaring a total income of Rs.8,17,74,420/-. The return was selected for scrutiny, pursuant to which a notice under Section 143(2) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) came to be issued to the petitioner-Company on 29.06.2022. Thereafter, from time to time, various notices under Section 142(1) of the Act were issued to the petitioner-Company, to which the petitioner- Company duly responded by filing the requisite replies and furnishing the information and documents sought by respondent No.1.

3. Subsequently, on 17.06.2023 and 20.06.2023, respondent No.1 issued the show cause notices to the petitioner-Company. The petitioner-Company submitted its detailed reply thereto on 22.06.2023, wherein, apart from dealing with the allegations and issues raised in the show cause notices on merits, the petitioner-Company specifically questioned the very maintainability and validity of the notices and the proceedings initiated pursuant thereto, inter alia, on the ground that the proceedings were barred by limitation.

4. In response to the aforesaid objection regarding limitation, respondent No.1, by an e- mail dated 21.06.2023 addressed to the petitioner-Company, which communication, significantly, is not reflected on the Income Tax Business Application (ITBA) portal, sought to contend that the time available for completion of the assessment stood extended by virtue of the Explanation to Section 153 of the Act. Thereafter, on 24.06.2023, respondent No.1 made a reference to respondent No.2-District Valuation Officer under Section 142A of the Act, seeking determination of the value of the fixed assets allegedly acquired by the petitioner-Company, on the premise that the said assets had been acquired in the names of individual owners and were allegedly not being used for the purposes of the business of the petitioner-Company.

SUBMISSIONS ON BEHALF OF THE PETITIONER-COMPANY

5. Learned advocate Mr.Soparker appearing for the petitioner-Company has submitted that the reference dated 24.06.2023 made by respondent No.1 to respondent No.2 for determination of the value of the fixed assets constitutes is nothing but a colourable exercise of power, having been resorted to with the object and effect of artificially extending the period available for completion of the assessment.

6. It is submitted that, significantly, in the very reference made under Section 142A of the Act, respondent No.1 sought the opinion of respondent No.2 for determining the Fair Market Value of the tangible assets as on 24.06.2023, while acknowledging that the assessment proceedings would become time-barred on 25.06.2023. It was, therefore, contended that the reference could not have been made as a legitimate step in the assessment proceedings, but was consciously resorted to at the fag end of the prescribed period, with the sole object of invoking the statutory consequence of such reference and thereby seeking to extend the period available for completion of the assessment. On such premise, the reference itself was assailed as being a colourable and impermissible exercise of power and, consequently, as being without jurisdiction and liable to be quashed and set aside.