1978 (8) TMI 74 - HC - Wealth-tax

Summary

Issues Involved:
1. Challenge to the valuation report dated July 20, 1974.
2. Basis and method of valuation used by the District Valuation Officer.
3. Maintainability of the petition under Article 226 of the Constitution of India.
4. Principles of natural justice and quasi-judicial powers of the Valuation Officer.

Issue-wise Detailed Analysis:

1. Challenge to the Valuation Report:
The petitioners challenged the valuation report dated July 20, 1974, submitted by the District Valuation Officer to the Wealth Tax Officer (WTO), Special Circle XI, New Delhi. The report assessed the fair market value of the "Wenger Building" at Rs. 32,80,000. The petitioners argued that the valuation of Rs. 27,96,000 for the portion of the property they occupied was based on no cogent evidence or basis and relied on undisclosed information.

2. Basis and Method of Valuation:
The District Valuation Officer used two methods for valuation:
- Owner-occupied portion: Valued based on the rates prevailing for the sale of commercial flats in the Connaught Place Extension Area.
- Tenanted portion: Valued by capitalizing the rental value.
The Valuation Officer also considered the reversionary value of the land at Rs. 3,200 per square yard, based on the sale of an adjacent property. The petitioners contended that the valuation should have been based on the annual letting value fixed by the New Delhi Municipal Committee, as per the principles laid down by the Full Bench of the Delhi High Court in Dewan Daulat Ram Kapur v. New Delhi Municipal Committee.

3. Maintainability of the Petition:
The respondents argued that the petition under Article 226 was not maintainable because the valuation report was not a final order and an appeal could be filed against the assessment order. However, the court held that the petition was maintainable because the impugned report affected the petitioners' rights and was a step in the final process of assessment. The court noted that the Valuation Officer's report must be accepted by the WTO under Section 16A(6) of the Wealth Tax Act, 1957, making the report quasi-judicial in nature.

4. Principles of Natural Justice and Quasi-judicial Powers:
The court emphasized that the Valuation Officer must act in accordance with the principles of natural justice. The petitioners had the right to show that the report was based on irrelevant or undisclosed material. The court cited the Supreme Court's observations in A. K. Kraipak v. Union of India, stating that the dividing line between administrative and quasi-judicial power is thin and gradually being obliterated. The Valuation Officer's duty to act fairly and justly was highlighted.

Court's Conclusion:
The court found that the Valuation Officer's approach and method were rational, based on material evidence, and in keeping with accepted principles of valuation. The petitioners had the opportunity to contest the proposed valuation but relied only on the annual letting value, which was not accepted for the self-occupied portion. The court held that the report was not based on conjectures and surmises and dismissed the petition.

Final Judgment:
The petition was dismissed, and the rule was discharged. No order as to costs was made.

Petition Dismissed.