MANORMA DEVI Vs. ASSISTANT COMMISSIONER

JUDGEMENT

(1.) THIS bunch of eight appeals is directed against the consolidated order of the learned Dy. Commissioner of Wealth-tax (Appeals) [in short DCWT (A)] dated 14-6-1989. The impugned assessments can be classified into two grounds. The first five appeals relating to the asst. years 1980-81 to 1984-85 relate to the assessment orders u/s 16(3) /17 of the Wealth-tax Act, 1957 (the Act for short) and other three appeals relating to the asst. years 1985-86 to 1987-88 relate to the assessments framed u/s 161(3) of the Act. Barratry of these appeals relates to the controversy of valuation of jewelries, more preciously, the diamond jewelries. The assessee got these jewelries valued by one Sri Gopi Nath Mahendra of Kanpur, stated to be an approved valuer, on 31-3-1976. The Wealth tax Officer (for short WTO) estimated the value as per valuation report of the Govt. valuer dated 6-12-1986. THIS valuation was obtained at the time of search at the assessees premises.

(2.) THE first group of appeal : For the asst. years 1980-81 to 1984-85, the assessee declared the value of these jewelries, in her return, on estimate basis. THE learned counsel for the assessee, Sri A. K. Rastogi, clarifies that the valuation adopted in these returns are by adding certain percentages with the estimate made by the approved valuer as on 31-3-1976. THE value declared for the asst. years 1980-81, 1981-82, 1982-83, 1983-84 & 1984-85 were Rs. 40,777, Rs. 40,777, Rs. 40,777, Rs. 73,440 and Rs. 61,200 respectively. THE WTO in the original assessments had estimated the value at Rs. 51,000 Rs. 61,200 and Rs. 61,200 for the asst. years 1980-81, 1981-82 and 1982-83 and accepted the value declared by the assessee for the asst. years 1983-84 & 1984-85 at Rs. 61,200 respectively. In the reassessments, he has estimated the value for all the relevant asst. years at Rs. 1,95,650. A search was conducted in the premises of the appellant on 26-9-1986. THEse jewelries were valued by the Govt. valuer at Rs. 1,95,650 as per his valuation report dated 6-12-1986. THE WTO issued notices u/s 17 of the Act. According to him, the assessee had failed to disclose fully and truly all material facts relating to the assessments. THE assessees representatives were asked to explain the differences of value declared in the return and the value determined by the Govt. valuer. THEy advocated that proceedings u/s 17 of the Act was on account of mere change of opinion. THEy relied several decisions before the WTO (decisions cited by them, however, not recorded in the order). THE WTO did not accept the plea of the representatives. He relied on two decisions in support of his section. THE first decision in Ganeshi Lal & Sons \ ITO [1980] 4 Taxman 400 (All.) in which the Court has held that (WTO wrote) any document seized during the search operations showing under valuation of asset can form a good information for taking action u/s 17. Since, the valuation was done in the presence of the assessee and the witnesses by a registered valuer in the course of search operation, the information regarding under valuation of jewellery can be considered as document found in the course of search and seizure operation. For the contention of change of opinion, the WTO relied on CIT v. A. Raman & Co. [1968] 67 ITR 11(SC) to justify his action u/s 17 of the Act. He adverted that in that case information from internal sources concerning facts or law relating to a matter bearing on the assessment can be utilised for the reassessment purpose. He pointed out that in that case, it was observed that the Taxing Officer should be learnt something or know something which he did not know previously. If there is information leading to the belief that there was escapement of tax the mere fact that the information resulted in a change of opinion will not make the section inapplicable. THE learned counsel of the assessee before the DCWT (A) relied on the decision of the Honble Rajasthan High Court in the case of Saroj Devi v. WTO [1984] 148 ITR 452 wherein it was held that the WTO must have reason to believe that under the assessment was by reason or omission or failure on the part of the assessee to disclose fully & truly all material facts necessary for the assts. and as the appellant had disclosed all the items of jewelries and the ornaments and had also given their valuation on the basis of approved valuers report, there was no concealment of any primary fact.

(3.) THE learned counsel for the assessee, Sri A. K. Rastogi, appeared on behalf of the assessee before us. He submitted that there were full disclosure of primary facts before the WTO at the time of original assessment, therefore, proceedings u/s 17 have been wrongly initiated. He pointed out that weight and descriptions of the jewelries were made available to the WTO at the time of making original assessments. In three of the asst. years, i. e., in the asst. years 1980-81, 1981-82 & 1982-83 the WTO estimated the value which in his opinion the jewellery could fetch if sold in the open market on the valuation date. For the asst. years 1983-84 and 1984-85 he had accepted the value which was declared by the assessee herself in the return in the asst. orders u/s 16(3) of the Act which presupposes the fact that they were made after scrutiny. In the above circumstances, if the WTO reopened the assessments which are already completed invoking provisions u/s 17 it will be contrary to law as has been described in various Courts. He placed (the decision of Saroj Devi (supra) which was cited before the DCWT (A). In the opinion of the learned counsel, the distinction tried to be made by the DCWT (A) from the facts of this case and the case of the Honble Rajasthan High Court is irrelevant. THE issue decided in that case is fully applicable in the case before us. He then relied on the decision of the Honble Patna High Court in Magni Ram Baidyanath v. CBDT [1985] 153 ITR 154 (SC) (sic) where it was held that when the assessee had furnished the profit & loss account, the balance sheet, the interest account and all material facts necessary for the purposes of assessment during the relevant assessment proceedings, the assessments cannot be re-opened u/s 147(1) (a) of the IT Act, 1962. Mere change of opinion with regard to the losses incurred will not empower an ITO to invoke proceedings u/s 147(a) of the I. T. Act. THE next case relied by him was CWT v. Smt. Gulnar Marfatia [1986] 159 ITR 311 (Raj.) where it has been held, valuation report of a Valuation Officer u/s 16A of the Act cannot be formed a basis for reassessments u/s 17(1) (a) or (b) of the Act. In that case, the Honble Rajasthan High Court had repeated his view expressed in another case of the same Honble High Court in the case of Brig. B. Lall v. WTO [1981] 127 ITR 308 where it has been held that a completed assessment cannot be reopened by reference to the report of the Valuation Officer for the purposes of reopening as it is not a reason for belief within the meaning of clause (a) or (b) of section 17 (1) of the Act.