1999 (8) TMI 17 - HC - Wealth-tax

Summary

Issues Involved:
1. Characterization of land as agricultural or non-agricultural.
2. Determination of the fair market value of the land.
3. Legality of penalty orders under section 18(1)(c) of the Wealth-tax Act.

Analysis:

1. Characterization of Land as Agricultural or Non-Agricultural:
The primary issue was whether the land in question, previously treated as agricultural and exempt from wealth-tax, had lost its character as agricultural land on the relevant valuation dates (March 31, 1990, and March 31, 1991). The Assessing Officer concluded that the land ceased to be agricultural due to several factors:
- An agreement to sell the land to Konarka Builders was executed on May 19, 1989, for residential and commercial development.
- Approval for a colony layout was sought from the Bulandshahr Khurja Development Authority (BKDA) in June 1989.
- Payments were made to BKDA for development purposes.
- Sale of plots from the land commenced before the valuation dates.

The petitioner contended that no development work had been undertaken on the land up to the relevant valuation dates and that the land retained its agricultural character. The Commissioner upheld the Assessing Officer's decision, noting that the land's intended use had shifted to non-agricultural purposes, supported by the agreement and subsequent actions.

The court referenced several precedents, including Sarifabibi Mohamed Ibrahim v. CIT and CWT v. Officer-in-charge (Court of Wards), emphasizing that the determination of land as agricultural is a question of fact based on cumulative consideration of various factors, such as actual use, intention, and surrounding circumstances. The court concluded that the authorities' findings were based on relevant considerations and evidence, thus not warranting interference under Article 226 of the Constitution.

2. Determination of the Fair Market Value of the Land:
The valuation of the land was another significant issue. The Assessing Officer valued the land at Rs. 2,11,52,750 for the assessment year 1990-91 and Rs. 1,98,68,894 for 1991-92, based on the rate at which Plot No. 119 was sold. The Commissioner adjusted these valuations by deducting development and supervision charges.

The petitioner argued that the land should be valued based on the agreed sale price with Konarka Builders (Rs. 1,04,28,000), as the petitioner had no control over the sale prices of individual plots. The court agreed with the petitioner, stating that the fair market value should not exceed the agreed sale price, adjusted for amounts already received. The court found that the authorities acted arbitrarily in their valuation and directed a reassessment based on the agreed sale price.

3. Legality of Penalty Orders under Section 18(1)(c) of the Wealth-tax Act:
The petitioner challenged the penalty orders under section 18(1)(c) for alleged concealment of wealth. However, the petitioner did not utilize the statutory remedies of appeal and reference under sections 23, 24, and 27 of the Act, instead seeking relief directly through writ petitions.

The court emphasized that judicial review under Article 226 is limited and cannot substitute for statutory appeals. The court noted that the petitioner had an adequate remedy through the appellate process and dismissed the writ petitions concerning the penalty orders.

Conclusion:
The court partially allowed the writ petitions, setting aside the assessment orders concerning the determination of the fair market value of the land and directing a reassessment based on the agreed sale price with Konarka Builders. The petitions were dismissed in other respects, including the challenge to the penalty orders under section 18(1)(c). The court vacated the interim orders, and each party was directed to bear its own costs.