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2009 (12) TMI 658 - HC - Wealth-taxValuation Building and vacant land - After assessment under section 16(1), the Assessing Officer (AO) noticed that the Land and Development Officer of the Ministry of Urban Development, vide notification dated June 1, 1987, had fixed the value of land at Rs. 23,000 per square metre as against Rs. 200 sq. yard - proceedings under section 17 of the Act and reopened the assessment made under section 16(1) of the Act - Held that - Prior to April 1, 1989, the property of the assessee was required to be assessed as per the provision of rule 1BB which was then in existence, on the basis of the scheduled rates circulated by the Government of India for bifurcating the property in dispute for separate valuation, but for the assessment year 1989-90 the wealth assessment has to be determined in the manner laid down in Part B of Schedule III Penalty - respondent-assessee had been showing value of their property with effect from 1967-68 onwards without a supportable document of valuation, but surprisingly the Department had accepted the same value - Assessing Officer had accepted the same value under section 16(3) of the Act - substantial portion was rented out in the said property and the assessee had a reason to believe that value was required to be assessed in view of the basis of capitalization method as the said property was under lis Held that - it was not a case falling under section 18(1)(c) of the Act for imposing penalty Penalty not sustainable In favor of assessee.
Issues Involved:
1. Reopening of assessments under section 17 of the Wealth-tax Act. 2. Valuation of the property under Rule 1BB of the Wealth-tax Rules. 3. Imposition of penalty under section 18(1)(c) of the Wealth-tax Act. Issue-wise Detailed Analysis: 1. Reopening of Assessments under Section 17 of the Wealth-tax Act: The respondent-assessee filed returns for the assessment years 1987-88, 1988-89, and 1989-90, declaring the value of a property at Rs. 200 per square yard. The Assessing Officer (AO) later discovered that the Land and Development Officer had fixed the value at Rs. 23,000 per square metre. Consequently, the AO reopened the assessments under section 17 of the Act and made additions to the declared wealth. The Income-tax Appellate Tribunal (ITAT) upheld the reopening, citing that the information about the higher value was valid and relevant for reopening the assessments. 2. Valuation of the Property under Rule 1BB of the Wealth-tax Rules: The AO valued the property at Rs. 23,000 per square metre, leading to significant additions to the assessee's declared wealth. The ITAT directed the AO to value the built-up portion of the property under Rule 1BB, ensuring the value was not less than Rs. 20,730 as shown by the assessee. The ITAT also instructed to ignore the value of certain portions of the land and to add 50% of the value of the back lawn. The High Court agreed that prior to April 1, 1989, the property should be assessed under Rule 1BB, but for the assessment year 1989-90, the valuation should follow the amended provisions in Part B of Schedule III of the Act. 3. Imposition of Penalty under Section 18(1)(c) of the Wealth-tax Act: The AO initiated penalty proceedings under section 18(1)(c) for concealment of net taxable wealth. The Commissioner of Wealth-tax (Appeals) allowed the appeal for the assessment year 1987-88 but dismissed the appeals for subsequent years. The ITAT later dismissed the Department's appeal for 1987-88 and allowed the assessee's appeals for 1988-89 and 1989-90, holding that the penalty was unjustified. The High Court noted that the assessee had consistently shown the same property value since 1967-68, which the Department had accepted. There was no evidence that the assessee knew about the Ministry of Urban Development's notification when filing returns. Given these circumstances, the High Court concluded that penalty under section 18(1)(c) was not warranted. Conclusion: The High Court dismissed the Revenue's appeals and upheld the ITAT's decisions. The property should be valued under Rule 1BB for years prior to April 1, 1989, and under the amended provisions for 1989-90. The penalty imposed under section 18(1)(c) was deemed unjustified due to the lack of evidence of concealment and the consistent valuation accepted by the Department over the years. The High Court directed the ITAT to pass necessary orders to dispose of the quantum cases in conformity with this judgment.
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