COMMISSIONER OF WEALTH TAX Vs. ANOKHA SINGH

JUDGEMENT

(1.) ACCEPTING prayer for reference made under S. 27(1) of the WEALTH TAX ACT, 1957 (for short 'the Act'), the Tribunal, Delhi, Bench -C (for short 'the Tribunal'), has referred the following question for opinion of this Court:

(2.) FACTUAL position in a nutshell is as follows : For the asst. year 1976 -77 CWT initiated proceedings under S. 25(2) of the Act and finally directed the WTO to take fair market value of assessee's property at 36, Motia Khan Dump Scheme, Rani Jhansi Road, New Delhi, at Rs. 14,18,000 as against Rs. 7,44,400 for the asst. yr.1976 -77. Basis for taking action under S. 25 of the Act was that the assessment records of the assessee were inspected by the audit party after completion of regular assessment. Objection was raised that the fair market value of the property on the relevant valuation date works out at Rs. 20,26,371 as against Rs. 7,44,400; returned by the assessee and accepted by the AO. On receipt of such audit objections, valuation of the property was referred to the Valuation Officer who determined the fair market value of the property on the relevant date at Rs. 14,18,000. On the basis of the aforesaid material, the CWT initiated proceedings under S. 25(2) of the Act and made the order as aforesaid. Said order was assailed before the Tribunal. It was assessee's stand that any material coming into existence subsequent to the assessment cannot form part of the record for the purpose of invoking power under S. 25(2) of the Act. This plea found acceptance by the Tribunal. On being moved by the Revenue for reference, the aforesaid question has been referred.

(3.) WE find that Tribunal based its conclusions primarily on the basis of a decision of the Calcutta High Court in Ganga Properties vs. ITO (1979) 118 ITR 447 (Cal) : TC 57R.176. The aforesaid decision was by a learned Single Judge. A Division Bench of the same High Court took a contrary view in CWT vs. Ramnarayan Bhojnagarwala (1992) 104 CTR (Cal) 50 : (1992) 194 ITR 489 (Cal) : TC 67R.789. In that case it was observed that where the assessment is completed without any enquiry whatsoever, the order of assessment is erroneous and prejudicial to the interests of Revenue. While exercising powers to revise such assessment, CWT may make further enquiry before cancelling the original order and he can rely on the result of such enquiry. CWT may in a given case can term an order as erroneous on the ground that in the circumstances of the case further enquiry was necessary to be done before accepting the figures indicated by the assessee in the return. The apex Court in Rampyari Devi Sarogi vs. CIT & Ors. (1968) 67 ITR 84 (SC) : TC 57R.202 observed that where the CWT, who exercises jurisdiction, inter alia on the ground that the enquiry as made had revealed that the assessee neither resided nor carried on any business from the address declared in the return, can record the order as erroneous on the ground that further enquiry was contemplated. If AO's order contains some apparent error of reasoning or of law or fact, or where it is a stereo -typed order which simply accepts what the assessee has stated in his return and fails to make enquiries which are called for in the circumstances, CIT may term such an order as erroneous. [See : Tara Devi Agarwalla vs. CIT 1973 CTR (SC) 129 : (1973) 88 ITR 323 (SC) : TC 57R.206. In CWT vs. A. Nageswara Rao (1998) 148 CTR (AP) 45 : (1998) 231 ITR 215 (AP) : TC 67R.794], similar was the view expressed by the Andhra Pradesh High Court. The position has been recently dealt with by the apex Court in Malabar Industrial Co. Ltd. vs. CIT (2000) 159 CTR (SC) 1 : (2000) 243 ITR 83 (SC). It was observed thus :