SIVARAMAKRISHNA IYER S Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) AT the instance of the assessee to wealth-tax, the Income-tax Appellate Tribunal has referred the following two questions of law for the decision of this court :

(2.) THE respondent is the Revenue. THE matter arises in connection with wealth-tax proceedings. We are concerned with the assessment years 1957-58, 1958-59 and 1959-60. THE respective valuation dates are March 31, 1957, March 31, 1958, and March 31, 1959. THE net wealth of the assessee included a block of shares of Peninsular Plantations Ltd. In the wealth-tax returns filed, the assessee had shown the value of the said shares at the stock exchange rates prevailing on the relevant valuation dates. THE Revenue got information that the assessee had purchased certain shares of Peninsular Plantations Ltd., at rates higher than those quoted in the stock exchange. THE Wealth-tax Officer took the view that such purchases were made to secure the "controlling interest" in the company. He, therefore, reopened the assessments for the three years to include in the net wealth the value of an asset styled "controlling interest". In the assessments thus reopened, the value of the shares, as returned, was neither accepted nor disturbed. THE only thing that was done was that an asset styled "controlling interest" was also brought to wealth-tax. Against the reopened assessments, the assessee filed appeals before the Appellate Assistant Commissioner of Wealth-tax. He upheld the validity of the reassessments. He further held that there was no asset known as "controlling interest", which could be valued and included in the net wealth. He further held that the value of the shares to be taken should have been the real price which was paid by the assessee and received by the seller. Admittedly, the assessee paid more than what is commonly known as "quoted price". Since there was evidence in the case to show that the assessee paid enhanced values for the shares, that really represented the market value of the shares and the Wealth-tax Officer was directed to adopt that market price (the enhanced value of the shares for which the assessee purchased them) for the entire block of shares held by the assessee. THE appellate order is dated December 31, 1975. It is common ground that the said order, though related to the assessment year 1957-58, it was adopted as applicable to the assessment years 1958-59 and 1959-60 also, since the appeals for those two later years were disposed of on the same day, relying upon the order passed earlier in the day for the year 1957-58. Though the Revenue filed appeals from the aforesaid appellate orders, they were subsequently withdrawn. THE assessee did not file appeals from the appellate orders dated December 31, 1975, passed by the Appellate Assistant Commissioner. As a sequel to the appellate orders dated December 31, 1975, passed by the Appellate Assistant Commissioner, the Wealth-tax Officer passed fresh assessment orders dated July 23, 1980, and in completing the assessments, he deleted the value of the "controlling interest". However, the Wealth-tax Officer determined the value at the purchase price of the shares of the assessee, which was admittedly higher than the rates quoted for the said shares in the stock exchange. Against the fresh assessment orders dated July 23, 1980, passed by the Wealth-tax Officer, the assessee filed appeals before the Appellate Assistant Commissioner of Wealth-tax. THE Appellate Assistant Commissioner held that the valuation of the shares should be made in accordance with the rates quoted in the stock exchange on the relevant valuation dates. Aggrieved by the aforesaid decision of the Appellate Assistant Commissioner, the Revenue carried the matter by way of second appeals before the Appellate Tribunal. While the said appeals were pending, the assessee filed three appeals against the earlier orders of the Appellate Assistant Commissioner dated December 31, 1975, along with petitions to condone the delay in filing the appeals. Finally, the Appellate Tribunal disposed of the three appeals filed by the Revenue and also the three appeals filed by the assessee by a common order dated October 15, 1984. THE Appellate Tribunal declined to condone the delay caused in filing the appeals by the assessee. In this view, the appeals filed by the assessee were dismissed. In the appeals filed by the Revenue, the Appellate Tribunal held that the Appellate Assistant Commissioner acted erroneously in deviating from his earlier orders dated December 31, 1975, and in holding that the value of the shares should be computed on the basis of the stock exchange rates. THE Appellate Tribunal took the view that the Appellate Assistant Commissioner, in the revised proceedings, really set aside the earlier orders dated December 31, 1975, passed by him, which had become final. In this perspective, holding that it is illegal and not permissible and that, in the implementation proceedings, the only question that arose before the Wealth-tax Officer was the actual purchase price of the shares by the assessee, the Appellate Tribunal set aside the orders passed by the Appellate Assistant Commissioner in the revised proceedings and restored the orders passed by the Wealth-tax Officer. THE appeals filed by the Revenue were allowed. It is thereafter at the instance of the assessee that the Income-tax Appellate Tribunal has referred the two questions of law formulated hereinabove for the decision of this court.

(3.) FURTHER, in paragraph 10 of the same order, the Appellate Assistant Commissioner has held as follows :