- (1.) By means of the present writ petition, the petitioner is challenging the notice dt. 24-3-1992 issued under section 148 of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') for the assessment year 1983-84. The petitioner is a partnership firm and was running a cinema hall in the name of Bhagwati Talkies, Kaimganj, district Farrukhabad. For the assessment year 1983-84, relevant to the accounting period from 1-6-1979 to 30-9-1981, the petitioner has been assessed to tax by the assessment order dt. 5-1-1984. It appears that during the year under consideration, the petitioner made construction in which Rs. 5,61,008 was disclosed towards investment. The proceeding under section 148 of the Act was initiated after recording the reasons on 29-4-1992. The reasons recorded are as follows: During course of assessment proceedings for the assessment year 1988-89, the assessee made construction in the building. Consequently, the matter had been referred to Valuation Cell, Agra. In this case, search & seizure operations took place at the business premises of the assessee firm on 8th & 9-10-1987. During course of search operation, the Authorised Officer, recommended to get the Cinema building valued by the Valuation Officer, regarding cost of construction. On the basis of recommendation, the matter has also been referred to the Valuation Cell, on this score. In the valuation Report of the Departmental Valuation Officer, the cost of construction has been worked out at Rs. 9,70,000 during the period 1-6-1979 to 30-9-1981 as against the cost of construction declared by the assessee at Rs. 5,61,008. The assessees firm accounting period is ended on 30-6-1982. Consequently, the investment falls in the assessment year 1983-84. From the facts and circumstances stated above, I am of the opinion that the income amounting to Rs. 4,08,992 (970000 ' 561008) chargeable to tax has escaped assessment within the meaning of section 149(1)(a)(iii) of the Income Tax Act, 1961.
(2.) Heard Sri. R.S. Agrawal, learned counsel for the petitioner and Sri. Shambhu Chopra, learned Standing Counsel, appearing on behalf of the respondent.
(3.) Learned counsel for the petitioner submitted that the initiation of proceedings on the basis of the Departmental Valuation Officers report is wholly illegal, inasmuch as the assessing authority has no jurisdiction to refer the matter to the Departmental Valuation Officer for the determination of the cost of construction. The assessing authority had only jurisdiction to refer the matter to the Departmental Valuation Officer to determine the value for the purpose of capital gain under section 55A of the Act. He placed reliance on the decision of the Apex Court in the case of Amiya Bala Paul v. CIT, 2003 262 ITR 407. He further submitted that the Proviso to section 142A of the Act, which contemplates the powers of the assessing authority to estimate the value of any investment referred to in section 69 of the Act is not applicable to the present case, in view of proviso to section 142A of the Act, which says that the section shall not apply in respect of the assessment made on or before 30-9-2004.;