DAYA NAND Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THE assessee has filed this appeal under s. 27A of the WT Act, 1957 (for short the "Act"), against the order of the

(2.) BEFORE adverting to the dispute, the relevant facts may first be noted. The original assessment of the assessee for the asst. yr. 1991 -92 was finalised under s. 16(3) of the Act on the total of the assessee had escaped assessment on account of undervaluation of immovable property. It was found that while calculating the value of immovable property under Sch. III to the Act, the assessee had adopted the gross maintainable rent at Rs. 1,51,550 as per his IT return. However, this amount included rent of one property for two months only, whereas the rent receivable for the entire year ought to have been included as provided in r. 3 of Part B of Sch. III to the Act. The correct value of the immovable property on that basis worked out to Rs. 26,92,125 against Rs. 15,23,375 declared by the assessee. Accordingly, the AO was satisfied that the value to the extent of Rs. 11,68,750 (26,92,125 - 15,23,775) had escaped assessment. Consequently, the assessment was reopened by initiating proceedings under s. 17 writing and also obtain approval of the higher authority. In the present case, although the AO had recorded reasons, he had not obtained the prior approval of the higher authority. Realising this mistake, the AO referred the matter for approval of the Dy. CWT, Rohtak Range, Rohtak, and after obtaining his approval, fresh notice under s. 17 of the Act 1996, at the total wealth of Rs. 29,33,800 by adding the amount of Rs. 11,68,750 representing the difference in value of the property in question. The assessee preferred an appeal before the CWT(A) against the reassessment order which was dismissed. Aggrieved by the same, the assessee filed further appeal before the Tribunal which has also been

(3.) MR . Lokesh Sinhal, learned counsel for the appellant, did not dispute the fact that while computing the valuation of the property under Sch. III to the Act, the gross maintainable rent in respect of the property in question had been adopted at Rs. 22,000 which represented rent for two months only and not rent for the whole year. Thus, he could not dispute the fact that the property had indeed been undervalued. He, therefore, confined his challenge to the validity of the proceedings under s. 17 of the Act. He contended that all the relevant facts had duly been disclosed by the assessee in the original return and as such the escapement of wealth was attributable to the failure of the AO to draw correct inferences from the facts disclosed. He then contended that the AO had no jurisdiction to issue notice under s. 17 of the recorded any reasons as required under the proviso to sub -s. (1) of s. 17 of the Act.