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Issues:
1. Interpretation of section 17(1)(b) of the Wealth-tax Act regarding reassessment validity based on audit objection. 2. Application of rule 1BB of the Wealth-tax Rules in determining property value retrospectively. Analysis: The High Court of MADRAS addressed the issue of reassessment validity under section 17(1)(b) of the Wealth-tax Act based on an audit objection. The case involved an individual assessee for the assessment year 1976-77, where the value of a property was under-assessed initially. The Wealth-tax Officer reopened the assessment based on the audit objection, considering it as information under section 17(1)(b). The Appellate Assistant Commissioner canceled the reassessment, stating that the audit objection did not qualify as information. However, the Appellate Tribunal overturned this decision, emphasizing that the Wealth-tax Officer had applied his mind to the valuation, making the audit note insufficient to trigger reassessment under section 17(1)(b). In the subsequent arguments, the Department's counsel contended that the audit report informed the correct property value, justifying the reassessment. On the other hand, the assessee's counsel argued that the original assessment already considered the property value, and applying rule 1BB of the Wealth-tax Rules would lead to a higher valuation. The Court agreed with the Tribunal's finding that the Wealth-tax Officer had indeed considered the property value during the original assessment. Moreover, the Court clarified that rule 1BB, despite being effective from April 1, 1979, had retrospective application to all pending assessment proceedings. This rule mandated the determination of property value based on a statutory formula, which, if applied, would result in a higher valuation compared to the original assessment. Consequently, the Court upheld the Tribunal's decision, ruling that section 17(1)(b) could not be invoked validly in the assessee's case. By affirming the Tribunal's stance, the Court answered the referred question against the Revenue. The judgment concluded without any cost orders in the circumstances of the case.
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