1986 (7) TMI 27 - HC - Wealth-tax

Summary

Issues Involved:
The issues involved in this case include the jurisdiction of the Wealth-tax Officer to refer property valuation to the Valuation Officer for finalized assessment years, the validity of such references for assessment years where valuations are not finalized, and the duty of the Valuation Officer to consider the applicability of rule 1BB of the Wealth-tax Rules.

Jurisdiction of Wealth-tax Officer for Finalized Assessment Years:
The petitioner challenged the Wealth-tax Officer's referral of property valuation to the Valuation Officer for assessment years 1975-76 to 1977-78, which had already been finalized. The court held that such references were illegal and without jurisdiction as per section 16A(1) of the Wealth-tax Act. The court cited the decision of the Calcutta High Court in Smt. Uma Debi Jhawar v. WTO [1982] 136 ITR 662 to support this conclusion. The respondents also conceded the illegality of the references for these assessment years.

Validity of References for Unfinalized Assessment Years:
The petitioner further contended that the Wealth-tax Officer's references for assessment years beyond 1977-78 were invalid due to lack of material supporting the opinion that the assets' value was understated. The court disagreed, stating that section 16A allows the Wealth-tax Officer to refer valuations based on subjective satisfaction and relevant circumstances. The court emphasized that the Officer's opinion need not be demonstrated with specific material in each case, upholding the references for assessment years 1978-79 onwards.

Duty of Valuation Officer to Consider Rule 1BB:
The petitioner objected to the Valuation Officer's refusal to consider the applicability of rule 1BB of the Wealth-tax Rules, which governs the valuation of residential properties. The court found merit in this objection, emphasizing that the Valuation Officer must adhere to the rules and value properties accordingly. The Valuation Officer's duty includes considering rule 1BB and not advising the assessee to raise complaints with the Wealth-tax Officer. The court directed the Valuation Officer to proceed with the valuation for specific assessment years in accordance with the Act and Rules, emphasizing the importance of following the prescribed procedures.

In conclusion, the court partially granted the petitioner's petition, directing the Valuation Officer to value the properties for certain assessment years as per the Act and Rules, while striking down the references for finalized assessment years. No costs were awarded in this case.