COMMISSIONER OF WEALTH TAX Vs. SAJU THOMAS

JUDGEMENT

(1.) AT the instance of the Revenue, the Income-tax Appellate Tribunal had referred the following question of law for the decision of this court :

(2.) THE respondent is an assessee to wealth-tax. He is a partner in a firm, M/s. Popular Automobiles, Ernakulam. We are concerned with the assessment year 1975-76. THE valuation date for the said year is March 31, 1975. Amongst others, the assessee had a building on the Municipal Road, Thrissur. In the original return filed under the Wealth-tax Act, the assessee valued the said property at Rs. 49,750. THE return was filed on January 17, 1976. Later, the assessee filed a second (revised) return on March 25, 1980, stating the value of the said property at Rs. 1 lakh. THE Wealth-tax Officer computed the wealth on the basis of the value so declared by the assessee and passed the assessment order on March 20, 1981. THE value of the building in the Municipal Road was fixed at Rs. 1 lakh. THE assessee had filed an appeal before the Commissioner of Wealth-tax (Appeals) against certain other additions made by the Wealth-tax Officer. THE Commissioner passed the appellate order on December 14, 1981. It should be stated that the valuation of the property in the Municipal Office Road, Thrissur, was not the subject-matter of appeal before the Commissioner of Wealth-tax (Appeals). Subsequent to the order passed by the Commissioner of Wealth-tax, noticing that the order passed by the Wealth-tax Officer dated March 20, 1981, is prejudicial to the Revenue regarding the valuation of the municipal office road property, he initiated proceedings in revision under Section 25 of the Act. He noticed that, on May 21, 1975, about 1 1/2 months after the valuation date, the assessee had entered into an agreement for the sale of the above said property for a sum of Rs. 1,75,000 and it was actually sold for the same amount on November 10, 1976. This aspect was overlooked by the Wealth-tax Officer when he made the assessment on March 20, 1981. In suo motu revision initiated by the Commissioner of Wealth-tax, the assessee objected to the initiation of the proceedings on many grounds. One of the objections raised was that the order of the Wealth-tax Officer had merged in the order passed by the Commissioner of Wealth-tax (Appeals) dated December 14, 1981. THE said plea was repelled by the Commissioner of Wealth-tax. He directed that the assessment should be enhanced by valuing the property at Rs. 1,75,000. THE order so passed is dated March 15, 1983. THE assessee filed an appeal before the Income-tax Appellate Tribunal. THE Appellate Tribunal accepted the plea of the assessee that there will be a total merger of the assessment order in the appellate order passed by the Commissioner of Wealth-tax (Appeals), though the particular issue which was the subject-matter of suo motu revision under Section 25 of the Act was not the subject-matter of appeal. Accordingly, the Appellate Tribunal set aside the order passed by the Commissioner of Wealth-tax dated March 15, 1983. It is thereafter, at the instance of the Revenue, that the question of law formulated hereinabove has been referred for the decision of this court.

(3.) THE reference is answered as above.