Arijit Pasayat, C.J. 1. At the instance of the Revenue, the following questions have been referred under Section 256(1) of the Income-tax Act, 1961 (in short, "the Act"), by the Income-tax Appellate Tribunal, Cochin Bench (in short, "the Tribunal"), for the opinion of this court :
"(1) Whether, on the facts and in the circumstances of the case, should not the Commissioner of Income-tax (Appeals) have under law given an opportunity of being heard to the Valuation Cell, and the Tribunal is right in law in rejecting such a contention ?
(2) Whether, on the facts and in the circumstances of the case and also in view of the disagreement of the Commissioner of Income-tax (Appeals) with the cost fixed by the Valuation Cell, should not the Commissioner of Income-tax (Appeals) who has a 'duty to act judicially' a duty to accord a hearing to the Valuation Cell before rejecting their report and is not such compliance of natural justice 'implicit in the exercise of such power' as opined by the Supreme Court in State of Orissa v. Dr. Miss Binapani Dei, AIR 1967 SC 1269 ?
(3) Whether, on the facts and in the circumstances of the case and in view of the contents of the sworn statement and the finding of the officer that the assessee is having unaccounted professional income and in the absence of a contrary finding by the Tribunal should not the Tribunal have under law sustained the addition to that extent under the head 'Professional income' ?"
2. Learned counsel for the parties agreed that while the third question needs no change, the first and second questions may be clubbed together and reframed. The questions are consolidated and reframed as follows :
"Whether, on the facts and in the circumstances of the case, principles of natural justice warranted hearing of the Valuation Officer, even if it is held that such a prescription has not been statutorily made ?"
3. The factual position, as set out in the statement of case, is as follows : The assessee is an associate professor of cardiology in Calicut Medical College. He had not maintained accounts for his professional income. A search was conducted in his residential premises under Section 132 of the Act on June 26, 1985, and certain documents were seized. During the search, a statement was recorded from him. Therein he had stated that he was engaged in private practice for 22 days in a month, and consulting fees received by him were Rs. 200 to 250 per day. The Assessing Officer was of the view that considering his professional reputation and also investments made by him and expenditure incurred during the year, his statement that he was receiving consulting fees at the aforesaid rates was not acceptable. During the previous year corresponding to the assessment year in question, i.e., 1984-85, the assessee had completed construction of a residential building. The cost of the construction, according to the assessee, was Rs. 4,35,000. A reference was made to the Valuation Cell, which determined the cost of construction at Rs. 5,40,550. The Assessing Officer determined the "unexplained investment" and expenses at Rs. 1,02,640. Considering the variation between the cost of construction disclosed and determined by the Valuation Cell, the Assessing Officer determined the income from profession at Rs. 1,05,000 as against Rs. 45,000 admitted by the assessee. The matter was carried in appeal before the Commissioner of Income-tax (Appeals), Calicut (in short, "the CIT (A)"), who held that the cost of construction would be Rs. 4,44,673 and since it was marginally higher than the cost of Rs. 4,35,000 declared by the assessee, the addition was deleted. So far as the addition towards drawings is concerned, a sum of Rs. 11,100 was sustained. The Revenue preferred an appeal before the Tribunal. It was contended that the Commissioner of Income-tax (Appeals) should have given an opportunity of the Valuation Officer before accepting the cost of construction as admitted by the assessee. An additional ground was taken to the effect that the Commissioner of Income-tax (Appeals) should have determined the professional income on the basis of the assessee's statement made during search. The Tribunal did not find substance in either of these stands. In regard to the grant of opportunity, it was observed that the reference was not under Section 16A of the Wealth-tax Act, 1957 (in short, "the Wealth-tax Act") and, therefore, there was no requirement to grant opportunity to the Valuation Officer. So far as professional income is concerned, the Tribunal observed that in the absence of any specific addition by the Assessing Officer on the basis of the assessee's statement, though referred to for a minor variation of Rs. 2,500, no interference with the Commissioner of Income-tax (Appeals)'s order was warranted.
4. Learned counsel for the Revenue, with reference to Section 55A of the Act, submitted that the provisions of Section 23(3A) of the Wealth-tax Act, were ipso facto applicable and the Tribunal has not considered it in the proper perspective. Learned counsel for the assessee submitted that reference under Section 55A has no application to the facts of the case. By way of reply to the said contention, it is submitted by learned counsel for the Revenue that even if it is accepted that the provisions of the Section 55A of the Act are not applicable, principles of natural justice mandated grant of such opportunity of hearing.
5. Since much stress has been laid by learned counsel in regard to the applicability of Section 55A, it is necessary to refer to the said provision, which reads as follows :
"55A. With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the Assessing Officer may refer the valuation of capital asset to a Valuation Officer-
(a) in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the Assessing Officer is of opinion that the value so claimed is less than its fair market value ;
(b) in any other case, if the Assessing Officer is of opinion-
(i) that the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such percentage of the value of the asset as so claimed or by more than such amount as may be prescribed in this behalf ; or
(ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do, and where any such reference is made, the provisions of Sub-sections (2), (3), (4), (5) and (6) of Section 16A, Clauses (ha) and (i) of Sub-section (1) and sub-sections (3A) and (4) of Section 23, Sub-section (5) of Section 24, Section 34AA, Section 35 and Section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall with the necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of Section 16A of that Act.
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)."
6. Section 55A appears in Chapter IV of the Act. Section 14 appearing in the said Chapter deals with "heads of income". For the purpose of charge of income-tax and computation of total income, all income has been classified under six heads. But the head "Interest on securities" has been omitted by the Finance Act, 1988. The heads of income have been dealt with in this Chapter under various sections. The head "Salaries" is dealt with in Sections 15 to 17. The head "Income from house property" is dealt with in Sections 22 to 27. The head "Profits and gains of business or profession" is dealt with in Sections 28 to 44D, and the head "Capital gains" is dealt with in Sections 45 to 55A. The head "Income from other sources" is dealt with in Sections 56 to 59. Section 55A is a part of the cluster of sections relating to "capital gains".
7. According to learned counsel for the Revenue, the words used in Section 55A being "for the purposes of this Chapter", it cannot have application only to Part E of Section 14 dealing with "capital gains". On the contrary, learned counsel for the assessee submitted that it is exclusively meant for income from "capital gains". In order to appreciate these rival submis sions, apart from Section 55A, some other provisions of the Act having a bearing need to be noted. Section 2(14) of the Act deals with "capital asset", which has been referred to in Section 55A. The same reads as follows :
"(14) 'capital asset' means property of any kind held by an assessee, whether or not connected with his business or profession, but does nol include-
(i) any stock-in-trade, consumable stores or raw materials held for the purposes of his business or profession ;
(ii) personal effects, that is to say, movable property (including wearing apparel and furniture, but excluding jewellery) held for personal use by the. assessee or any member of his family dependent on him :
Explanation.--For the purposes of this sub-clause, 'jewellery' includes-
(a) ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel ;
(b) precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel ; . . ."
"Fair market value" is dealt with Section 2(22B) in relation to capital asset and is defined as follows :
"(22B) 'fair market value', in relation to a capital asset, means-
(i) the price that the capital asset would ordinarily fetch on sale in the open market on the relevant date ; and
(ii) where the price referred to in sub-clause (i) is not ascertainable, such price as may be determined in accordance with the rules made under this Act."
Part E of Chapter IV of the Act deals with "capital gains" and, as indicated, pertains to Sections 45 to 55A. Section 45 deals with "any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in Sections 54, 54B, 54D, 54E, 54EA, 54EB, 54F, 54G and 54H." It is deemed to be the income in the previous year in which distribution of assets by companies in liquidation. Section 47 categorises transactions not falling within the purview of Section 45. The mode of computation relating to income chargeable under the head "Capital gains" is dealt with in Section 48. Acquisition of capital asset, computing the cost of acquisition in the case of depreciable assets, advance money received, consideration for transfer in cases of understatements, capital gains exempt from tax, profit on sale of property used for residence, etc., are dealt with in Sections 49 to 54. It, therefore, stands to reason and logic that the scope of Section 55A is confined to ascertaining the fair market value of a capital asset, which has been the subject-matter of transfer. Though the expression "under this Chapter" has been referred to in Section 55A, it could not be shown as to how Section 55A has relevance to any transaction other than "capital gains". Therefore, Section 55A has application only to transactions involving capital gains.
8. It is to be noted that the first appellate authority is not required statutorily to give notice under Section 246 and/or Section 250 or 251 of the Act to the Valuation Officer. When an appeal is heard by the Commissioner of Income-tax (Appeals) under Section 23 of the Wealth-tax Act and one of the questions involved relates to valuation of any asset, the appellate authority is required to give notice to the Valuation Officer under sub-section (3A) of Section 23 of the said Act. Similarly, the Tribunal is required to give notice before disposing of an appeal under the proviso to sub-section (5) of Section 24 of the Wealth-tax Act. Section 16A deals with reference to Valuation Officer and his order thereunder. Sub-section (6) thereof provides that the Assessing Officer shall make the valuation in conformity with the estimate of the Valuation Officer. The said provision was introduced by the Taxation Laws (Amendment) Act, 1972, with effect from January 1, 1973. Sub-section (3A) of Section 23 and the proviso to Sub-section (5) of Section 24 dealing with appeals before the first appellate authority and the Tribunal were simultaneously introduced. They specifically provide for opportunity of hearing to the Valuation Officer. There are no corresponding provisions in Sections 250 and 254 of the Act. Mutatis mutandis application of certain provisions of Sections 16A, 23 and 24 of the Wealth-tax Act vis-a-vis Section 55A of the Act shall not change the position, so far as this case is concerned. The above being the position, there was no requirement of giving any notice or opportunity of hearing to the Valuation Officer.
9. Alternatively, it is submitted by counsel for the Revenue that by application of principles of natural justice, such requirement is inbuilt. Where a statutory provision does not exclude principles of natural justice, an opportunity of being heard can be given, particularly when the proceedings are quasi-judicial. Exclusion can either be by a clear provision or by inference from the scheme of the statute ; as also, the nature of power which is being exercised. The principles of natural justice must be read into the unoccupied interstices of the statute, unless there is a clear mandate to the contrary. In the scheme of the statute whenever observance of the principles of natural justice is thought necessary, specific provision has been made. If the plea of learned counsel for the Revenue that even if there is no statutory requirement of observing principles of natural justice, granting of opportunity is to be accepted, then Section 23(3A) and the proviso to sub-section (5) of Section 24 of the Wealth-tax Act were not necessary to be inserted. The same cannot be said to be a meaningless or purposeless prescription. It is a well known principle of statutory interpretation that no provision of a statute can be said to be without any purpose or superfluous. The inevitable conclusion, therefore, is that whenever there is a requirement for observance of the principles of natural justice, the same has been specifically provided for in the statute and in other cases, by necessary implication excluded.
10. It is relevant to note that as per Section 250 of the Act, the right to be heard at the hearing of the appeal has been conferred on the Appellant to appear either in person or by an authorised representative, and on the Assessing Officer to appear either in person or by a representative. It is pertinent to note that the Wealth-tax Act has no provision giving a right of hearing to the Assessing Officer or the Wealth-tax Officer, as the case may be, in the appeal filed by the assessee before the first appellate authority. In that context, it was held that the Assessing Officer/Wealth-tax Officer has no right to be heard and non-grant of opportunity to him would not render the order of the first appellate authority bad in law. No doubt, nothing prevents such officer from appearing at the hearing of the appeal or the first appellate authority calling upon him for hearing (see CWT v. Shrenik Kasturbhai (HUF) [1987] 165 ITR 661 (SC)). There is no fetter on the Assessing Officer/Income-tax Officer appearing, if so required, before the first appellate authority. By the amendment Act of 1972, special provisions have been made in the Wealth-tax Act relating to references to Valuation Officers by the Wealth-tax Officer and appearance by registered valuers. These provisions relate to valuation of assets for the purpose of capital gains. The following provisions of the Wealth-tax Act applicable in relation to a reference made by the Wealth-tax Officer under Section 16A of that Act apply mutatis mutandis to a reference made by the Income-tax Officer under Section 55A :
(i) Sub-sections (2), (3), (4), (5) and (6) of Section 16A relating to a reference to a Valuation Officer.
(ii) Clauses (ha) and (i) of sub-section (1) and sub-sections (3A) and (4) of Section 23 (relating to appeal to the Appellate Assistant Commissioner from orders of Wealth-tax Officer).
(iii) Sub-section (5) of Section 24 (relating to appeal to the Appellate Tribunal from orders of the Appellate Assistant Commissioner).
(iv) Section 34AA (relating to appearance by registered valuers). . (v) Section 35 (relating" to rectification of mistakes) and Section 37 (relating to power to take evidence on oath, etc.).
11. As indicated above, the first appellate authority was not required to grant an opportunity of hearing to the Valuation Officer. A similar view was taken by the Gujarat High Court in I. T. A. No. 49 of 1982 by order dated April 1, 1982. Special leave petition filed before the apex court against this order was rejected in CIT v. Anupam Theatre [1984] 150 ITR (Si.) 79.
12. Under the provisions of Section 254(1A) of the Act, the Tribunal was empowered to refer the question under dispute to arbitration of valuers, one of whom is nominated by the Appellant and the other by the Respondent. The section was omitted by the amending" Act of 1972 with effect from January 1, 1973. The Appellate Tribunal has no power to refer the question for arbitration. A new Section 287A has been introduced in the Act providing for appearance by registered valuers in certain matters and any assessee who is entitled or required to appear before the income-tax authority or the Appellate Tribunal in connection with any proceeding relating to the valuation of any asset (may attend by a registered valuer). It is operative with effect from January 1, 1973.
13. The other question relates to assessment of professional income. The Tribunal found that deletion of the addition towards cost of construction, as done by the Commissioner of Income-tax (Appeals), was in order. It was found that the difference involved was a very petty amount. Learned counsel for the Revenue submitted that the approach of the Commissioner of Income-tax (Appeals) was wrong and an additional ground was permitted to be raised by the Tribunal. The same should have been considered by the Tribunal irrespective of what was considered by the Commissioner of Income-tax (Appeals). The asscssee's own admission was not taken into account. We find that the Tribunal has proceeded on the basis that the Assessing Officer himself did not place reliance on the said statement while determining" the professional income. The Commissioner of Income-tax (Appeals) considered that the difference involved was too small. The Tribunal affirmed the conclusion. We are of the view that the conclusions are essentially factual, giving rise to no question of law.
14. The questions referred as reframed are answered in the negative, in favour of the assessee and against the Revenue.