T KANAGASABAPATHY PILLAI Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THE following question has been referred to us under section 27(1) of the Wealth-tax Act "Whether, on the facts and circumstances of the case, there was legal justification for the adoption of the valuation of Rs. 81, 620 in regard to the above-said immovable properties ?" *THE assessee is an individual subject to wealth-tax. He owns house properties within the municipal limits of the town of Tuticorin. For the assessment year 1957-58 he valued these properties at Rs. 51, 270 on the basis of an estimate of valuation prepared by a retired municipal engineer. THE Wealth-tax Officer did not accept this valuation as correct and valued the properties at Rs. 81, 620. This figure was arrived at by multiplying the net annual letting value of the premises, which was Rs. 4, 081, into twenty times. Apparently this mode of valuation, viz., twenty times the net annual letting value, was adopted having regard to the circular of the Central Board of Revenue to which we shall refer a little later. THE assessee preferred an appeal to the Appellate Assistant Commissioner but failed.

(2.) THERE was no further appeal to the Income-tax Appellate TribunalThe question of valuation came up for consideration for the subsequent year 1958-59. Both the Wealth-tax Officer and the Appellate Assistant Commissioner saw no reason to differ from the valuation adopted for the asgessment year 1957-58 and they, therefore, fixed the same valuation of Rs. 81, 620 for the subsequent year alsoThe assessee, however, took up the matter by way of further appeal to the Income-tax Appellate Tribunal. The Tribunal was not prepared to accept the valuation of the retired municipal engineer and affirmed the valuation adopted by the department on the basis of twenty times the net annual letting value. The reason given by the Tribunal in reaching this conclusion is as follows "The assessee has not placed before us any data, such as what price any building situated in the neighbourhood of the buildings in question fetched in the open market on or about the crucial date, nor is he prepared to have the question of the disputed value referred to arbitration of the two valuers in terms of section 24(6) of the Wealth-tax Act. In these circumstances, we must hold that the assessee has failed to show that the valuation adopted by the Wealth-tax Officer is in any way excessive or unreasonable." *The important question that arises for consideration is whether the Tribunal has approached the matter of correct valuation from the proper legal perspective. Section 3 of the Wealth-tax Act is the general charging section. It brings to tax the net wealth of every individual and Hindu undivided family at the rate specified in the Schedule for every financial year commencing on and from the first day of April, 1957.

(3.) THE Tribunal observes in its present order that the assessee was not prepared to have the question of dispute referred to arbitration. We understand this to mean that the appellant (assessee) was not willing to nominate his arbitrator. THE arbitration procedure can be sabotaged by the assessee failing to co-operate by nominating an arbitrator. This is a lacuna in the section. THE Tribunal must be given power to nominate an arbitrator in case the assessee acts unreasonably and fails to do what is fair and proper. No doubt the statute uses the expression "one of whom shall be nominated by the appellant" but there is no penalty attached to non-conformity. THE existing provision is unsatisfactory and is certainly unworkable. THE Tribunal should, notwithstanding all this, determine the market price, or, if there has been no proper determination by the department, direct a further enquiry into the matter by the Wealth-tax Officer. THEre is no presumption that the officer has arrived at the proper valuation and the Tribunal is in error in dismissing the appeal on the ground that the valuation has not been shown to be unreasonableIn all the circumstances of the case, we are of opinion that there has been no proper determination of the net value of the house properties of the assessee in accordance with section 7 of the Act. After this reference is returned to the Tribunal it would be open to it to dispose of the matter either referring the matter to arbitration as provided for under section 24(6)of the Act, or by remitting the matter to the Wealth-tax Officer for the proper determination of the valueTHE question referred is therefore answered in favour of the assessee. THEre will be no order as to costs.