COMMISSIONER OF WEALTH TAX Vs. SHAKUNTLA MEHRA

JUDGEMENT

(1.) As the point of dispute involved in these three reference applications is the same, they are disposed of by this common judgment. Accepting a prayer for reference made by the Revenue under Section 27(1) of the Wealth-tax Act 1957, the Income-tax Appellate Tribunal, Delhi Bench 'B' (in short the Tribunal') has referred the following question for opinion:

(2.) Facts giving rise to these reference applications are as under: Smt. Shakuntla Mehra (mother), Shri Moti Lal Mehra (son) and Shri Prince Mehra (son) (hereinafter referred to as 'assessee' by respective names) had 1/6th share each in the properties bearing Nos. (1) E.40313, Greater Kailash- 1, (2) E-337, Greater Kailash 1, and (3) H.S.-35, Kailash Colony and five plots of land in Greater Kailash II bearing Nos. E-22, E-303, E-324, E-355 and E-576. For the assessment year 1975-76 corresponding to valuation date i.est March 1975, returns under the Act were filed by the assessees. Properties in question were valued by registered valuer, who fixed the valuation of the properties at E-313, Greater Kailash at Rs. 1,09,000.00, E- 207, Greater Kailash at Rs. 1,36,000.00 and of H.S.-35, Kailash Colony at Rs.1,01,000.00. Valuation was done on the basis of average of land and construction method and rental method. Accordingly share of the assessees in each case came to 1/6th of Rs. 3,46,000.00. The five plots in Greater Kailash II were also valued by the registered valuer. He valued Plot No.E-22 at Rs.37,500.00, E-303 at Rs.37,550.00, E-324 at Rs.37,500.00, E-355 at Rs.37,500.00 and E-576 at Rs.71,630.00, the total being Rs.2,21,480.00. On the basis of valuation of the properties and land, 1/6 share of each of the three assessees came to Rs.95,580.00. After assessment, Commissioner of Wealth- tax (hereinafter referred to as the 'Commissioner') called for the records and formed an opinion that Wealth-tax Officer was in error in accepting the value of the three properties at Greater Kailash-ll and Kailash Colony. He was also of the opinion that value of the single room tenements at Lajpat Market owned by Smt. Shakuntla Mehra had been wrongly accepted. Notices were issued to the assessees. requiring them to show cause as to why the orders of the Wealth-tax Officer should not be cancelled on the ground that assessment in each case was erroneous and prejudicial to the interest of Revenue. Assessee in each case submitted show cause reply. It was submitted that assessment in respect of each of the properties had been done by a valuer and merely because a different method could be adopted for fixing the valuation, that did not make the Wealth-tax Officer's order erroneous. In the notice issued to the assessees, it was indicated by the Commissioner that the valuation should have been done only on the rental income basis and not on the basis of average of the two, i.e. cost of construction and rent capitalisation method. After considering the assessees' replies, Commissioner exercised power under Section 25(2) of the Act and set aside all the three assessments and directed Assessing Officer to make fresh assessment after taking into consideration departmental valuation and after giving due opportunity to the assessees. Orders of the Commissioner were challenged before the Tribunal by the Assessees. It was stand of the assessees that order of the Wealth-tax Officer suffered from no infirmity. In any event, it was not erroneous and/or prejudicial to the interest of the Revenue. Merely because a different method Commissioner of Wealth-Tax, Delhi-Ill, New Delhi Vs. Shakuntla Mehra 119 of valuation was available that cannot be a ground to hold that the assessment by adopting one method was erroneous. Tribunal held that the Commissioner had not objected to the land and construction method and the only objection was regarding rental method of valuation wherein multiple of 10 had been applied to the net annual income. Referring to a decision of the Apex Court in Smt. Tribeni Devi and others Vs. The Collector MR 1972 Supreme Court 1417, it was held that in arriving at a reasonable correct market value it may be necessary to take even two or all of those methods which can be adopted. It was, therefore, concluded that the orders passed by the Wealth-tax Officer were, in no way, erroneous. Accordingly the order passed by the Commissioner in each case was set aside. On being moved for reference in each case, reference as aforesaid has been made.

(3.) Learned counsel for the Revenue submitted that Tribunal misconstrued scope of power available to be exercised under Section 25(2) of the Act. It was submitted that the Tribunal proceeded on erroneous presumption that Commissioner had not objected to the land and construction method and only objection related to the multiple to be adopted for rental method. There is no appearance on behalf of the assessees inspite of service of notice, when the matter was called.