- (1.) AGGRIEVED by the reference made to the District Valuation Officer ('DVO' for short) under Section 142A of the Income Tax Act, 1961 ('the Act', for short) by the Assessing Officer ('AO' for short), vide letter dated 29.12.2009, the petitioner has approached this Court.
(2.) BRIEFLY, the facts of the case are that the petitioner is a Private Limited Company, registered under the provisions of Companies Act, 1956. Styled and running as Shiv Vilas Resorts Pvt. Ltd, the Company has its registered office at NH-8, Kookas, Jaipur. It is running a hotel in the name of Shiv Vilas Resorts. The petitioner submitted his return of income showing nil income on 31.1.2007 for the financial year 2006-07, relating to the assessment year 2007-08. Subsequently, the case was selected for scrutiny. Notices under Section 143(2) of the Act were issued to it. The AO noticed that the petitioner-assessee has shown an addition of Rs.15,05,86,228/- under the head "building". The AO asked the petitioner to produce the complete details/bills/proofs in respect of these additions. In response, the petitioner informed the AO that the vouchers and other records in respect of the above expenses were destroyed in a fire. Therefore, they are not available with the petitioner. However, the petitioner submitted confirmations from several parties, who had supplied material to the petitioner. In order to prove the cost of construction, the petitioner further relied upon the books of accounts maintained in the regular course. Moreover, he furnished a report of the Registered Valuer, Shri Ravi Vindal, dated 09.08.2002. The petitioner further pointed out that the construction of the hotel had commenced in the financial year 2001-02 and ended in the financial year ending on 31.03.2007. While dealing with the return filed by the petitioner and while dealing with the documents filed therein, the AO noted that the hotel, comprising of 78 rooms, was constructed at the cost of Rs.24,81,03,999/-, including the land cost of Rs.15,00,000/-. Thus, each room cost Rs.31,60,000/-. While the petitioner had claimed that it had invested Rs.330/- per square feet for each room, the AO noted that the Park Hotels of Apeejey Surendra Park Hotel had claimed that each room had cost between Rs.1 crores to Rs.1.5 crores. Moreover, M/s Credit Analyses and Research Ltd. (CARE) had reported that it had cost the Unison Hotel, Rs.84 lacs to Rs.85.50 lacs per room. Thus, the AO concluded that the cost declared by the petitioner was too low. Hence, vide letter dated 29.12.2009, he referred the case to the DVO. The petitioner further claims that while completing the assessment, the AO had accepted the income as declared under Section 143(3) of the Act vide order dated 30.12.2009. However, as the matter has been referred to the DVO, the petitioner has approached this Court. Mr. Mahendra Gargieya, the learned counsel for the petitioner, has raised the following contentions before this Court : firstly, the power under Section 142A of the Act, being a vast power, should be exercised sparingly. The said power can be exercised only when the AO comes to a firm conclusion that part of the investment made, or part of the value declared, is unacceptable. Secondly, once the income as declared by the petitioner was accepted, vide order dated 29.12.2009, the AO was not justified in referring the case for valuation to the DVO. Lastly, since the power has been exercised illegally, the AO has stepped outside his jurisdiction. Hence, the impugned reference is ultra virus. Heard the learned counsel for the petitioner and perused the impugned order. The petition is highly misconceived. Firstly, according to the notice itself, the petitioner could have filed an appeal under Section 246A of the Act before the Income Tax Commissioner (Appeals). Thus, an efficacious alternate remedy does exist. However, despite the existence of the efficacious alternate remedy, the petitioner has chosen to invoke the extraordinary power of this Court under its writ jurisdiction. It is, indeed, a settled principle of law that the extraordinary jurisdiction under Article 226 of the Constitution of India cannot be invoked in case an efficacious alternate remedy exists. Hence, the present petition is liable to be dismissed on this ground along.
(3.) EVEN on merits, this petition cannot be accepted. Section 142A of the Act is as under : 142A. Estimate by Valuation Officer in certain cases : (1) For the purposes of making an assessment or reassessment under this Act, where an estimate of the value of any investment referred to in section 69 or section 69B or the value of any bullion, jewelery or other valuable article referred to in section 69A or section 69B or fair market value of any property referred to in sub-section (2) of section 56 is required to be made, the Assessing Officer may require the Valuation Officer to make an estimate of such value and report the same to him. (2) The Valuation Officer to whom a reference is made under sub-section (1) shall, for the purposes of dealing with such reference, have all the powers that he has under section 38A of the Wealth-tax Act, 1957 (27 of 1957). (3) On receipt of the report from the Valuation Officer, the Assessing Officer may, after giving the assessee an opportunity of being heard, take into account such report in making such assessment or reassessment: Provided that nothing contained in this section shall apply in respect of an assessment made on or before the 30th day of September, 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. Explanation ? In this section, "Valuation Officer" has the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). Section 142A was brought into the statute book in order to empower the AO to seek a valuation report from the DVO. Such a power can be exercised by the AO when in his opinion the valuation of any of the items mentioned in the Section have not been revealed truly or correctly before him. The relationship between the assessee and the revenue authority is that of trust. Thus, the assessee is legally bound to reveal the sources of his income and the level of his investment truly and honestly. If the AO is of the opinion that the assessee has not revealed the true picture with regard to his income, or with regard to the valuation of items mentioned in Section 142A of the Act, then he is empowered to make a reference to the DVO. ;