INCOME TAX
INSTRUCTION NO. 1885/1991
Dated: July 11, 1991
The Public Accounts Committee in para 1.6 of their 3rd Report (1990-91) (9th Lok Sabha) have pointed out that there was a need to overhaul the working of Valuation Cells. A specific reference was made in the said Report to the failure to study the result of the appeal against the valuation by the Valuation Cells and taking suitable remedial steps. At the instance of the PAC, a study was also conducted by the National Institute of Public Finance and Policy(NIPFP). The report of the Institute has made suggestions for improving the working of Valuation Cells and to avoid repetition of the same mistake by the officers of the Valuation Cells.
2. In this regard, attention is drawn to the instructions issued from time to time, prescribing guidelines on the following aspects:-
(i) All liable cases should be referred to the Valuation Cells. A register of references for valuation to the Valuation Cells should be maintained by the concerned officer and this register should be periodically checked and a certificate sent to the concerned Commissioner (F.No. 326/50/78-WT dated 30.6.1979).
(ii) The Valuation Cells should avail of the power conferred by section 37(1) of the Wealth-tax Act, 1957 to enforce compliance of the assessee in submitting the requisite documents and information and also exercise the power conferred by section 37(2) and levy the prescribed fine (F.No. 326/50/78-WT dated 27.4.1979).
(iii) The Valuation Cell should plan their work in such a manner that cases expected to yield higher revenue are handled on top priority basis and the time limits fixed are adhered to (F.No. 326/50/78-WT dated 30.6.1979).
(iv) Copies of the appellate orders wherein findings have been given on the valuation reports should be made available to the Valuation Cell and their comments obtained at the time of preparing the scrutiny reports for section appeal (F.No. 319/72/79-WT dated 5.1.1980 and 29.1.1988).
3. Despite the existing instructions, it has been noticed that valuation reports are not finalised within the prescribed period, appellate orders are not made available to the Valuation Cells and references to Valuation Cells are not made in time. It has been suggested that there is a need to prescribe norms for processing of valuation references at various stages. There is also a need for the officers posted in the Valuation Cells to exercise judiciously and selectively the powers vested in them under section 38A of the Wealth-tax Act. The report of NIPFP also suggests that necessary instructions should be issued to ensure that all eligible cases are referred according to the Board's guidelines.
4. The Board desires that Chief Commissioners/Directors General should issue necessary instructions to the Range Deputy Commissioners and Assessing Officers to ensure that all the references are sent to the Valuation Cell well before the limitation dates of the relevant assessments. It should be ensured that the references are well spread out throughout the year and that bulk of the references are not made in the last quarter of the financial year.
5. The Chief Engineer (Valuation) North/South zones should also ensure that the overall process of sending the valuation report to the Assessing Officers should not take more than 120 days in non-wealth tax cases and 180 days in wealth tax cases from the date of receipt of the references. If the valuation reports are delayed beyond this period, the Chief Engineers shall send the pendency list with reasons for delay alongwith his monthly reports to the concerned Chief Commissioner.
6. The Board also desires that valuation officers should defend their valuation reports and argue the case on behalf of the department before the appellate authorities. For this purpose, Commissioners of Income-tax should ensure their attendance whenever these cases come up for hearing before the CIT(Appeals) or ITAT where the valuation is of subject matter of appeal. A copy of the appellate orders of the CIT(Appeals)/ITAT involving the question of valuation should invariably sent to the valuation cell. Further the Chief Engineer should ensure that comments of the valuation officers on the appellate orders are sent in time to the assessing officer so that they can be incorporated in the Scrutiny report on these cases. Deputy Commissioners and Assessing Officers must ensure that in these cases, no scrutiny reports are sent without obtaining the comments of the concerned valuation officers. The chief Engineer (valuation) should also prepare a brief of common errors committed by valuation officers as notices from the studies of the appellate orders and circulate the same among all valuation officers along with the suggestions to avoid recurrence of such mistakes.
7. The Board reiterates its earlier instructions on the subject issued from time to time for strict adherence to the same.