High Court of Gujarat · Judgments and reasoned final orders
Slimtile Private Limited v. Assistant Commissioner of Income Tax & Anr.
R/Special Civil Application No. 13575 of 2023 ·
Reference made to the District Valuation Officer under section 142A on 24.06.2023 — one day before the assessment for AY 2021-22 became time-barred on 25.06.2023 — quashed as a colourable exercise of power designed solely to invoke Explanation 1(v) to section 153 to artificially extend limitation.
1. FACTS OF THE CASE
Slimtile Private Limited filed its return for AY 2021-22 on 14.03.2022 declaring total income of Rs. 8,17,74,420. Following a search and survey on M/s Ratnakala Exports Pvt. Ltd. in September 2021 and selection of the petitioner's return for scrutiny via notice dated 29.06.2022 under section 143(2), the petitioner submitted a detailed reply on 02.12.2022 to a section 142(1) notice dated 21.11.2022 furnishing full banking details for additions to fixed assets (computers, machinery, factory shed, vehicles, furniture, and office equipment). Thereafter, the Assessing Officer took no action on asset valuation for over six months until issuing show-cause notices on 17.06.2023 and 20.06.2023 (which were silent on fixed-asset valuation). After the petitioner objected on 22.06.2023 that the assessment was time-barred, the AO passed an order on 24.06.2023 — a single day before limitation expired on 25.06.2023 — referring the valuation of fixed assets and depreciation to the District Valuation Officer under section 142A.
2. DISCUSSION BY THE COURT
Relying on coordinate Bench decisions in Anand Banwarilal Adhukia v. DCIT, (2016) 75 taxmann.com 301 (Guj) and Me & Mummy Hospital v. ACIT, (2014) 45 taxmann.com 248 (Guj), the Division Bench noted that Senior Standing Counsel for the Revenue himself conceded that a section 142A valuation reference could not be justified to examine a legal disallowance of depreciation. Scrutinizing the chronology from 02.12.2022 (when full bank payment details for fixed assets were supplied) and 28.12.2022 (when search material was received by DCIT Surat) up to 17.06.2023/20.06.2023 (when the show-cause notices made no mention of asset valuation), the Court held that the AO ingeniously resurrected two artificial issues on 24.06.2023 to make a last-minute reference to the DVO solely to cover up his inaction and trigger the limitation exclusion under Explanation 1(v) to section 153.
3. JUDICIAL DECISION
Holding that the section 142A valuation reference made one day prior to the expiry of limitation was a colourable exercise of power, the Gujarat High Court allowed the writ petition and quashed the impugned reference order dated 24.06.2023.
4. OUTCOME
In favour of the assessee (Slimtile Private Limited); section 142A reference order dated 24.06.2023 quashed.
5. AKHB REVIEW POINT
AKHB analysis: A last-minute reference to the District Valuation Officer under section 142A made on the eve of the section 153 limitation deadline — after months of inaction following the assessee's reply on fixed-asset additions and without any mention in the final show-cause notices — will be struck down as a colourable device to artificially buy limitation under Explanation 1(v) to section 153(1).
Source and verification
Reviewed from the complete 20-page official High Court judgment PDF (20260903_GJHC240480492023.pdf, SHA-256: a821c8bb8e469546d8a377b1ce194453a3762f330923d08534871dcd6cfe7dd1).
Original PDF: 20 pages · SHA-256: a821c8bb8e469546d8a377b1ce194453a3762f330923d08534871dcd6cfe7dd1
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Refers to the Income-tax Act, 1961 and allied statutory rules/circulars as applicable to the relevant assessment years.
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