COMMISSIONER OF WEALTH TAX Vs. RAMNARAYAN BHOJNAGARWALA

JUDGEMENT

(1.) In this reference under Section 27(1) of the Wealth-tax Act, 1957, for the assessment years 1975-76 and 1976-77, the following question of law has been referred to this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in annulling the order of the Commissioner of Wealth-tax and in holding that the decision in the case of Ganga Properties, applies to the facts of the case ?"

(2.) The facts relating to this reference shortly stated are that the assessment for the assessment year 1975-76 was completed on March 6, 1980, whereas the assessment for the assessment year 1976-77 was completed on January 16, 1981. In both the assessment orders, an item of Rs. 4,45,000 has been included under the head "Immovable property" and this is described as the value of Jaipur land as per return. Subsequently, the assessee filed an application for a clearance certificate under Section 230A of the Income-tax Act on April 16, 1981. According to this application, the asses-see proposed to sell this land at Jaipur to various parties for a total consideration of Rs. 3,69,600. Further, in the wealth-tax return for the assessment year 1981-82 filed on September 23, 1981, the value of this land was shown at Rs. 3,63,000. It is pertinent to mention that, in all the returns of net wealth subsequent to the two assessment years under reference and up to the assessment year 1980-81, the value of this land was shown at Rs. 45,000. According to the Commissioner of Wealth-tax, the assessments made for the said assessment years were erroneous in so far as they were prejudicial to the interests of the Revenue. He issued a show cause notice under Section 25(2) of the Act and, after hearing the assessee, passed an order setting aside the assessment and directing the Wealth-tax Officer to make a fresh assessment after proper enquiry relating to the land at Jaipur.

(3.) Being aggrieved, the assessee preferred an appeal before the Tribunal. The Tribunal, following the decision of a single Bench of this court in Ganga Properties v. ITO [1979] 118 ITR 447, held that the materials which were relied on by the Commissioner of Income-tax were not in existence at the time when the assessments were made and came into existence afterwards and, accordingly, they cannot form part of the record of the proceedings of the Income-tax Officer at the time when he passed the order and cannot be taken into account. The Tribunal, therefore, annulled the order passed by the Commissioner setting aside the assessment and directing a fresh assessment to be made in accordance with law.