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M/S Kay Flames (P) Limited Thru' Director Quamaruddin Ansari v. Commissioner Of Income Tax, Varanasi - INCOME TAX APPEAL No. 204 of 2006  RD-AH 17220 (5 October 2006)
Income Tax Appeal No. 204 of 2006
Hon'ble Sushil Harkauli J.
Hon'ble Pankaj Mithal, J.
Connect with Income Tax Appeal No. 203 of 2006.
It appears that under section 55A reference to a valuation officer can be made by the assessing authority only for determining the market value of a capital asset. Market value of a capital asset is different from the input cost in creating the capital asset.
Sri Shambhoo Chopra apppearing for the Income Tax Department has not been able to point out any other provision of the Income Tax Act, which would permit reference to a valuation officer by the assessing authority for computing the input cost in creating or improving the capital asset.
In the present case, the entire assessment is based upon the report of the valuation officer pursuant to the reference by the assessing authority.
In the circumstances, the appeal is admitted on the following questions.
(1)Whether reference to the valuataion officer could have been made by the assessing authority for the purpose of determining the input cost on the suspicion that the input cost declared by the assessee was understated and, if so, under which provision of the Income Tax Act.
(2)If such reference was not permissible, whether the addition to the income of the petitioner could have been based on the report of the valuer.
(3)If reference to a valuer was not permissible, how else could the assessing authority, sitting in his office, determine the input cost in the creation or improvement of the capital asset.
(4)Whether after the amendment with effect from 1.6.2001, the C.I.T. (A) had the power to sent the matter back to the assessing officer.
Till further orders, the operation of the impugned order dated 10.11.2005 passed by the I.T.A.T., Allahabad Bench, will remain stayed.
Dated : October 5, 2006
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