1989 (3) TMI 1 - SC - Wealth-tax

Revision application under s. 25(1) before CIT contesting AAC s order who allowed partly relief to assessee - department appeal pending before tribunal - In the meantime Tribunal dismissed department s appeal and CIT rejected assessee s revision appeal as incompetent - revision order is infructuous and is liable to be dismissed

Issues:
1. Interpretation of the proviso to subsection (1) of section 25 of the Wealth-tax Act, 1957 regarding the invocation by the Revenue.
2. Valuation of shares held by the respondent for assessment under the Wealth-tax Act, 1957.
3. Competency of revision applications by the respondent before the Commissioner of Wealth-tax.
4. Merger of orders passed by the Appellate Assistant Commissioner and the Appellate Tribunal.
5. Correct procedure for the respondent in case of simultaneous appeals and revision applications.

Analysis:

1. The main issue in this case was the interpretation of the proviso to subsection (1) of section 25 of the Wealth-tax Act, 1957, regarding the invocation by the Revenue. The High Court had held that the proviso cannot be invoked by the Revenue in this particular case. However, the Supreme Court disagreed with this interpretation, stating that the proviso operates as a bar to a revision application by an assessee before the Commissioner, even if the appeal before the Appellate Tribunal has been filed by the Revenue. The Court emphasized that once an appeal is filed before the Appellate Tribunal against an order of the Appellate Assistant Commissioner, the impugned order merges with the order of the Appellate Tribunal upon disposal. Therefore, the Commissioner cannot pass any revision order against the Appellate Assistant Commissioner's order, regardless of who filed the appeal or revision application.

2. Another crucial issue was the valuation of shares held by the respondent for assessment under the Wealth-tax Act, 1957. The respondent had adopted the break-up value of the shares for assessment, while the Wealth-tax Officer estimated their value based on capitalization of profits. The Appellate Assistant Commissioner then determined the value based on capitalization of investment income. The Appellate Tribunal dismissed the appeals, stating that the valuation determined by two valuers in a separate case should be applied. The Supreme Court upheld the Tribunal's decision, emphasizing that the Appellate Tribunal's valuation was appropriate and the revision applications had become infructuous.

3. The competency of the revision applications by the respondent before the Commissioner of Wealth-tax was also at issue. The Commissioner had rejected the revision applications as incompetent, leading to a writ petition by the respondent in the High Court. The High Court initially allowed the writ petition, but the Division Bench later dismissed the appeal. The Supreme Court concluded that the revision applications had become infructuous due to the merger of orders between the Appellate Assistant Commissioner and the Appellate Tribunal.

4. The judgment also addressed the merger of orders passed by the Appellate Assistant Commissioner and the Appellate Tribunal. The Court clarified that once an appeal is filed before the Tribunal, the order of the Appellate Assistant Commissioner merges with the Tribunal's order upon disposal. Therefore, any revision application against the Appellate Assistant Commissioner's order becomes irrelevant and infructuous.

5. Lastly, the Court outlined the correct procedure for the respondent in case of simultaneous appeals and revision applications. The respondent should have withdrawn the revision applications upon knowing about the Revenue's appeal before the Appellate Tribunal and filed her own appeals with an application for condonation of delay if necessary. The Court highlighted that the Appellate Tribunal is superior to the Commissioner, and both parties' appeals could have been considered simultaneously for a comprehensive decision.

In conclusion, the Supreme Court allowed the appeals, set aside the impugned orders, and dismissed the writ petitions, emphasizing the importance of following the correct legal procedures in matters of appeal and revision applications.

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