COMMISSIONER OF WEALTH TAX Vs. A A PATEL

JUDGEMENT

(1.) THIS is a WT reference made by the Income-tax Appellate Tribunal (Tribunal) at the instance of CWT under Section 27 (1) of WT Act in RA Nos. 122 to 129/ind/1987 which arises out of WTA Nos. 220 to 227/ind/1987 to answer the following questions of law. In fact, it may be stated that initially the Tribunal had declined to make the reference by order (Annex. 'd') to this Court and this Court also while upholding the order of Tribunal declined to call for the reference by order dt. 3rd Oct. , 1989 (reported as CWT v. A. A, Patel (1989) 80 CTR (MP) 187--Ed. ]. It was when the CWT went to the Supreme Court against the said dismissal, when their Lordships by order dt. 9th Aug. , 2001 in CA Nos. 4620 to 4629 of 1994 [reported as CWT v. A. A. Patel (Dead) by LRs (2002) 174 CTR (SC) 218--Ed. ] allowed the appeal and directed the Tribunal to make the reference to this Court under Section 27 (1) of the Act at the instance of CWT. This is how, the Tribunal has now made this reference to this Court on following questions of law which arise out of the order passed by the Tribunal on 3rd July, 1987 in WTA. Nos. 220 to 227/ind/1987 in relation to asst. yrs. 1966-67 to 1973-74 :

(2.) FACTS in brief, as mentioned in statement of case, are these ; The questions referred, arises for consideration in the asst. yrs. 1964-65 to 1973-74. They relate to wealth-tax. The question arose in these assessment years as to what is the proper valuation of one plot belonging to assessee situated at Tukoganj, Indore, for the purposes of payment of wealth-tax under the WT Act. The WTO applied the rate of Rs. 3 per sq. ft. to the plot for determining its value for payment of wealth-tax for asst. yrs. 1964-65 to 1969-70 whereas for asst. yrs. 1970-71 to 1973-74 he applied the rate of Rs. 4 per sq. ft. The assessee challenged these rates in appeal before CWT (A) who by order dt. 6th March, 1981 set aside all the assessment orders passed by AO (WTO) and remanded the case to WTO for redetermination of the value of the plot. While remanding the case the CWT (A) directed the WTO to refer the case to Valuation Officer for determining the real value of the plot in question and then make fresh assessment after granting an opportunity to the assessee. This is what the CWT (A) held while remanding the case to WTO for making fresh assessment: It appears that all the ten impugned assessments completed on 27th March, 1979, were getting time-barred on 31st March, 1979, and as such the WTO has completed the assessment without making the statutory reference to the Valuation Officer. I, therefore, set aside all these assessments and direct the WTO to refer the matter of the valuation of the plot to the Valuation Officer and make the assessments afresh after giving proper opportunity to the appellant. Pursuant to this, the WTO made the reference to the Valuation Officer under Section 16a of the Act who submitted his report on 15th July, 1982, to the AO. He then passed the assessment order. However, while determining the value of plot, the AO (WTO) did not take into consideration the report of Valuation Officer at all but made his own valuation in relation to plot in question. This is clear from the following conclusion which he arrived at in his assessment order: The case was originally decided on 27th March, 1979, determining wealth at Rs. 2,43,101. Aggrieved with this order of the WTO, the assessee went in appeal before the learned AAC who vide order dt. 6th March, 1981, set aside the assessment directing the WTO to make fresh assessment after giving proper opportunity to the assessee. In response to statutory notice, Shri K. C. Betala, chartered accountant, attended the proceedings from time-to-time. Case discussed. After discussion net wealth is determined at Rs. 1,68,348. On the similar lines, the assessments in respect of other assessment years were made.

(3.) THE order of assessment being in favour of assessee, the CWT felt aggrieved of the same as in his opinion, the assessments made by the AO were not only erroneous but equally prejudicial to the interest of Revenue. Accordingly, he invoked suo motu powers under Section 25 of the WT Act and called upon the assessee to show cause as to why the assessment orders be not set aside because they were erroneous and equally prejudicial to the interest of Revenue. The assessee objected to the proposed action initiated by the CWT. However, by order (Annexs. B to B/7) the CWT did not accept the explanation of assessee and set aside all the assessment orders. He held that it was obligatory upon the AO to have completed the assessments strictly in accordance with the directions contained in the order passed by CWT (A ). In other words, in the opinion of CWT since the WTO (AO) failed to pass the order of assessment in conformity with the valuation report obtained by AO from the Valuation Officer under Section 16a (6) of the Act and hence the order of AO valuing the property in question is bad in law and is not liable to be sustained. The CWT further held that since the order of CWT (A) directing the AO to refer the matter to Valuation Officer had become final because it was not challenged by assessee in appeal, the same had to be given effect to in letter and spirit for its implementation by AO. As a consequence of this finding, the CWT set aside all the assessment orders. The assessee felt aggrieved of the order passed by CWT (and) filed an appeal to Tribunal. By impugned order, the Tribunal allowed the appeal and set aside the order of CWT. In consequence, the order of assessment passed by AO was restored. It is against this order, the Revenue (CWT) sought reference to begin with from the Tribunal to this Court. It was declined by the Tribunal holding that no question of law arises. The Revenue then approached to this Court for a direction to the Tribunal for referring the question to this Court. This application was also dismissed by this Court holding that no referable question arises. The Revenue then filed SLP to the Supreme Court. Their Lordships by order dt. 9th Aug. , 2001, passed in CA Nos. 4620 to 4629 of 1994 allowed the appeal filed by Revenue and held that referable question of law does arise out of the order passed by Tribunal dt. 3rd July, 1987, at the instance of Revenue and hence, reference ought to have been made to this Court by the Tribunal on the questions so formulated supra at the instance of Revenue. In these circumstances and pursuant to the directions of their Lordships of the Supreme Court, the Tribunal referred the aforementioned questions of law to this Court for being answered on merits in our reference jurisdiction. This is how the aforementioned questions have been referred to this Court.