s.142A — Reference to the Valuation Officer
The power to refer an asset, property or investment to a Valuation Officer, and the effect that reference has on the time available to complete the assessment.
Income-tax Act, 1961
s.142A
Income-tax Act, 2025
s.269
In force from 1 April 2026, but s.536(2)(c) preserves the 1961 Act for tax years beginning before that date.
In short
Section 142A of the Income-tax Act, 1961 permits the Assessing Officer, for the purposes of assessment or reassessment, to refer any asset, property or investment to a Valuation Officer for an estimate of its value, including fair market value. Sub-section (2), substituted with effect from 1 October 2014, allows the reference to be made whether or not he is satisfied about the correctness or completeness of the accounts. The report must be sent within six months from the end of the month of reference, and the assessee is entitled to be heard both before the Valuation Officer and before the report is used against him. The corresponding provision in the Income-tax Act, 2025 is section 269, in substantially the same terms, with wider powers of entry and inspection in sub-section (3) and a new power in sub-section (7) to rectify the report. The reference also stops the limitation clock under section 153, which is dealt with separately.
What the provision does
Authorises a reference for an estimate of value, confers on the Valuation Officer the investigative powers needed to make it, fixes six months for the report, and requires the assessee to be heard at two stages. It says nothing about hearing the assessee before the reference is made.
Threshold questions
- Which power does the reference order actually invoke, section 142A(1) or something else such as section 55A or section 50C
- Is the thing referred an asset, property or investment, as distinct from an item of revenue expenditure
- Was the reference made for the purposes of an assessment or reassessment that was pending
- Is the valuation capable of bearing on any head of charge the Assessing Officer has in contemplation
- Was the report sent within six months from the end of the month of reference
- Was the assessee heard by the Valuation Officer, and again before the report was used
In practice
The recurring disputes.
Whether a precondition survives the 2014 substitution
Until 30 September 2014 the section was keyed to sections 69, 69A, 69B and 56(2). Two propositions grew on that text: that the books must be rejected first, and that a charging provision must be in contemplation. Sub-section (2) answers the first in terms. It says nothing about the second, which is why benches continue to hold that without prima facie application of section 69 a reference is not permissible. The first branch is lost; the second is open.
A reference made to buy time
Because a reference excludes time under section 153 and attracts a sixty-day floor, it is worth more to an Assessing Officer running out of time than the valuation is worth to the assessment. Where a reference is made at the fag end, on material long held, on a question the notices never raised, it is open to challenge as a colourable exercise of power.
Whether the six-month period is mandatory
Sub-section (6) says the report shall be sent within six months. Whether that is a condition of the report's usability, and whether it caps the exclusion under section 153, is unsettled. The Tribunal has held both; the clause excluding time is drafted without a cap.
What is capable of being valued
The section reaches an asset, property or investment. Whether a sum spent on construction is an investment capable of reference, or revenue expenditure that is not, has been decided against the Department at the Tribunal and is worth taking where the figure referred is a cost rather than an asset.