COMMISSIONER OF WEALTH TAX Vs. NIRANJAN KUMAR HIRJEE

JUDGEMENT

(1.) This reference at the instance of the Commissioner of Wealth-tax under Section 27(3) of the Wealth-tax Act, 1957, relates to the assessment years 1977-78 and 1979-80.

(2.) Shortly stated, the facts are that the assessee was having one-fifth share in a two-storeyed building at 9, Wood Street, Calcutta. The market value for the purpose of wealth-tax was determined by capitalising the annual value at 15 times and, accordingly, one-fifth share was disclosed by the assessee being the market value of his share in 9, Wood Street, Calcutta. The value was roughly shown at Rs. 60,000 in each year though the same had wrongly been mentioned by the Commissioner at Rs. 56,575. This property was sold to M/s. Amar Jyoti Investment Ltd. of P-34, India Exchange Place, Calcutta, on October 31, 1982, for Rs. 45 lakhs. The property represented an area of land measuring 1 bigha 13 chhatak 22 sft. and there was a super-structure on the above land. The assessee was granted a tax clearance certificate for the proposed sale of the property. On the basis of this fact, the Commissioner of Wealth-tax found that the assessments completed by the Wealth-tax Officer for the assessment years 1977-78 to 1980-81 were erroneous as these were prejudicial to the interests of the Revenue, and, consequently, he issued show cause notices to the assessee. The contention of the assessee, inter alia, before the Commissioner of Wealth-tax was that on the basis of the subsequent facts, the Commissioner of Wealth-tax could not come to the conclusion that the assessments made by the Wealth-tax Officer were erroneous. It was also indicated that the property no doubt was sold for Rs. 45 lakhs, but the same was under the Acquisition Scheme of CMDA for long for the purpose of the widening of Wood Street. It was also indicated that there was another restriction on the property. This property could not be sold to anyone other than any institution. The Commissioner of Wealth-tax, after considering the contentions of the assessee, found that the orders passed by the Wealth-tax Officer were erroneous and prejudicial to the interests of the Revenue and, accordingly, he did not accept the argument of the assessee and he directed the Wealth-tax Officer to revise the wealth-tax assessment relating to the assessment years 1977-78 to 1980-81 after taking into consideration the enhanced value of the assessee's share in the immovable property being one-fifth share of the sale proceeds.

(3.) Counsel for the assessee made four submissions. The first submission was that the Commissioner did not find any material on perusal of the records for the assessment years 1977-78 to 1980-81 that the assessments made by the Wealth-tax Officer were erroneous. It was indicated by the assessee's counsel that the Commissioner could not look into the future record of the assessee but he must look into the record at the time of assessment. The second argument of counsel was that the Commissioner was required to pass a quasi-judicial order under Section 25(2) of the Wealth-tax Act. The Commissioner had not indicated any material to show that the orders passed by the Wealth-tax Officer were erroneous. Therefore, the order of the Commissioner should be set aside. The third argument of the assessee was that the market value of the property was to be determined under Section 7(1) of the Wealth-tax Act read with Rule 1BB. If the value of the property was determined under Rule 1BB, the value would be much lower than that shown by the assessee. The assessee in this connection filed the computation of market value under Rule 1BB. The fourth argument of the assessee was that the property was let out for the assessment year 1982-83. The assessee was getting a rent of Rs. 3,000 per month. The assessee's share in the annual value of 9, Wood Street, was determined at Rs. 4,980 net. If the same was capitalised at twelve and half times, the value shown by the assessee was more and, therefore, it could not be said that the orders passed by the Wealth-tax Officer were erroneous. Accordingly, the assessee urged that, even on this ground, the order of the Commissioner could be set aside. The assessee further filed a copy of the letter dated June 9, 1983, from CMDA to show that there was a restriction on sale of the property at 9, Wood Street, Calcutta.