COMMISSIONER OF WEALTH-TAX Vs. V.N. SHANKAR

JUDGEMENT

(1.) THE following question of law is referred under the provisions of the Wealth -tax Act, 1957 :

(2.) THE assessee was assessed under the Wealth -tax Act ("the Act" for short) with reference to the valuation date March 31, 1970 and March 31, 1971. We are concerned with the property situated in Kothari Road, Madras. The said property was valued at Rs. 2,04,943. Subsequently, the property was sold by the assessee. The estate of the purchaser was the subject -matter of valuation with reference to August, 1971. The property was valued at Rs. 2,67,000. From this, the assessing authority worked backwards to arrive at the value of the property as on March 31, 1970 and March 31, 1971, respectively, and arrived at the value as Rs. 2,25,630 and Rs. 2,46,370, respectively, for the two dates. This valuation was based on the report of a government valuer obtained by the Department while valuing the property in the hands of the purchaser. This report was treated as information and, consequently, proceedings, were taken against the present assessee under section 17(1)(b) of the Wealth -tax Act. The assessment proceedings were reopened. Against this order, the assessee filed an appeal to the Commissioner of Income Tax (Appeals) who allowed the appeal. The Revenue approached the Appellate Tribunal. The Tribunal found that the assessee's value earlier was based on a valuation report obtained in the year 1969 -70 which was accepted by the Wealth -tax Officer. The Appellate Tribunal, therefore, dismissed the appeals by holding that valuation was not an exact science and the report of the valuer furnished in connection with the assessment proceedings of another assessee cannot be information for the purpose of reopening the assessment of the present assessee under section 17 of the Act. The Appellate Tribunal held that it is a case of a change of opinion and not a case of "information". At the instance of the Revenue, this question has been referred. Before proceeding further, it is also necessary to note that, under section 16A(1)(a) of the Act, it is always open to the assessing authority to call for the report of an authorised valuer, hereafter referred to an the Valuation Officer. Therefore, even while assessing initially, the assessing authority could have called for the opinion of the Valuation Officer; instead he proceeded to accept the valuation furnished by the assessee. The present revaluation of the property is again based on the opinion furnished by the Valuation Officer with reference to a different date altogether from which the Revenue sought to work backwards to estimate the value once again. It is well known that arithmetical accuracy in valuation of property is impractical. More than one view as to the value of a property would be there, always. While one valuer estimates the values at rupees one lakh, another has valued it at Rs. 90,000 or even at Rs. 1,15,000. It is said that value is generally subjective, and the "price" is objective. Therefore, an estimated price is the result of subjective evaluation of objective facts. That is why the law is cautious when it refers to the value as the "fair market value"; the value is to be "fair" to the assessee and the Revenue.

(3.) A sudden spurt in demand for property in a particular locality due to actual developmental activities or because of rumour as to a public development of the locality cannot be ruled out. In another case, the valuation done by one valuer may depend upon his subjective approach to some facts of valuation only.