COMMISSIONER OF WEALTH TAX Vs. UMRAOMAL DHADDHA

JUDGEMENT

(1.) THIS is a reference application under Section 27(3) of the Wealth-tax Act arising out of the following facts :

(2.) NOTICE was issued and arguments have been heard on behalf of both the parties.

(3.) THE provisions of Rule 2B(2) of the Wealth-tax Rules have been considered by this court in Moti Chand Daga's case [1988] 174 ITR 379 (Raj). In that case, this court was considering the question whether the market value of the closing stock could not be determined on the basis of the gross profit rate alone shown by the assessee. This court has held that where the only material available is the gross profit rate and there is no positive material to indicate the extent of deduction which has to be made therefrom for the purpose of arriving at a figure which alone can be added to the cost price for determining the market value, there is no definite evidence to determine the market value on the sole basis of the gross profit rate. In that case, this court has considered the question whether the onus of proof with regard to the valuation of the closing stock lies on the assessee or on the Revenue. After referring to the decisions of the Supreme Court in CWT v. Tungabhadra Industries Ltd. [1970] 75 ITR 196 and CWT v. Hindustan Motors Ltd. [1976] 104 ITR 430, this court has held that where the balance-sheet value is asserted to be the true value by the assessee, but is assailed by the Revenue, the burden lies on the Revenue to show that the balance-sheet value is not the true value and that the market value is higher, and when material is shown by the Revenue that the market value exceeds the balance-sheet value by more than 20%, then only the aid of Rule 2B(2) can be invoked.