Authority: High Court of Gujarat at Ahmedabad

Order Date: 03 September 2026

Case Overview

  • Parties: Petitioner – Slimtile Private Limited; Respondents – Assistant Commissioner of Income Tax (Central Circle‑2) and District Valuation Officer.
  • Nature of Proceeding: Special Civil Application (No. 13575 of 2023) seeking quash of a valuation reference order dated 24 June 2023.
  • Background:
  • Slimtile filed its AY 2021‑22 return on 14 March 2022, declaring total income of Rs 8,17,74,420 (≈ Rs 8.18 crore).
  • The return was selected for scrutiny; a notice under Sec. 143(2) was issued on 29 June 2022.
  • Subsequent notices under Sec. 142(1) were issued on 12 Aug 2022, 21 Nov 2022 and 2 Dec 2022, to which Slimtile responded.
  • Search and seizure under Sec. 132 were conducted at M/s Ratnakala Exports Pvt. Ltd. on 24 Sept 2021; material was handed to DCIT Surat on 28 Dec 2022.
  • On 17 June 2023 and 20 June 2023, the Assistant Commissioner issued show‑cause notices for alleged unaccounted payments of Rs 1,01,00,113 and Rs 90,75,00,000 respectively.
  • Slimtile objected to the notices on 22 June 2023, arguing the assessment was time‑barred (limitation expiry on 25 June 2023) and questioning the validity of the notices.
  • On 21 June 2023, the Assessing Officer claimed an extension of time under Explanation‑1(v) to Sec. 153, citing a pending valuation.
  • On 24 June 2023, the Assessing Officer referred the matter to the District Valuation Officer under Sec. 142A, seeking fair market value of tangible assets, one day before the limitation would expire.
  • Petitioner’s Submissions: The reference was a colourable exercise to artificially extend the limitation period; the valuation was unrelated to the depreciation claim; the timing indicated intent to invoke the statutory extension.
  • Revenue’s Submissions: Valuation was necessary to verify unaccounted cash used for asset acquisition and to examine alleged bogus depreciation claims; the reference was within the scope of Sec. 142A and justified by Explanation‑1(v) to Sec. 153.
  • Court’s Observations & Reasoning:
  • The reference was made on 24 June 2023, explicitly noting the assessment would become time‑barred on 25 June 2023, indicating a motive to extend time.
  • Section 153(Explanation‑1)(v) allows exclusion of time only after a reference is made; however, the Assessing Officer used the provision to create additional cause for extension.
  • The valuation request was unrelated to the depreciation issue, which could have been dealt with by disallowance without valuation.
  • No satisfactory explanation was provided for the six‑month delay (28 Dec 2022 to 17 June 2023) in issuing the show‑cause notices.
  • The Assessing Officer’s actions were deemed an illegal attempt to circumvent the limitation period.

Final Outcome

  • The writ petition is allowed. The impugned order dated 24 June 2023, wherein the Assessing Officer referred the matter to the Departmental Valuation Officer, is quashed.
  • No further assessment proceedings can rely on the invalidated reference.

Topics: Tax Assessment, Limitation Extension, Judicial Review