1982 (5) TMI 60 - AT - Wealth-tax

Summary

Issues:
Assessment of HUF for the years 1965-66 to 1969-70; Discrepancy in valuation of immovable properties; Jurisdiction of Commissioner under section 25(2) of the Wealth-tax Act, 1957; Admissibility of valuation report obtained by WTO post-assessment; Compliance with Board's Instruction No. 365; Validity of circular extending beyond Act's provisions.

Analysis:
The appeals pertain to the assessment of a Hindu Undivided Family (HUF) for the years 1965-66 to 1969-70, concerning the valuation of immovable properties owned by the HUF in Bombay. Initially, the properties were valued at Rs. 3,50,000 for the first three years and Rs. 8,03,000 for the subsequent two years based on a report by a government-approved valuer. The WTO accepted these values. However, a departmental Valuation Officer later valued the properties significantly higher, leading the Commissioner to suspect undervaluation detrimental to revenue interests. The Commissioner set aside the assessments, directing a fresh valuation for each year. The HUF challenged this decision, arguing against the admissibility of the post-assessment valuation report and the Commissioner's jurisdiction under section 25(2) of the Wealth-tax Act, citing legal precedents.

The HUF contended that the post-assessment valuation report obtained by the WTO was inadmissible as evidence and that the Commissioner erred in relying on it to deem the assessments erroneous. The HUF relied on the Calcutta High Court's decision in Ganga Properties v. ITO [1979] to support its argument that the WTO lacked jurisdiction to request the report, and the Commissioner could not base his decision solely on this report without independent assessment. Conversely, the departmental representative supported the Commissioner's decision, citing the Delhi High Court's ruling in Gee Vee Enterprises v. Addl. CIT [1975] and Board's Instruction No. 365, which mandates valuation referral for properties exceeding Rs. 5,00,000. The HUF challenged the validity of this instruction, arguing it extended beyond statutory provisions.

Upon careful consideration, the Tribunal found the post-assessment valuation report unnecessary and inadmissible under the Act. The Tribunal agreed with the HUF's contention that the Commissioner could not base jurisdiction on this report, citing the Calcutta High Court's ruling. Additionally, the Tribunal deemed the Board's circular, extending valuation referral requirements, as exceeding the Act's provisions, following the Madras High Court's decision in A.L.A. Firm v. CIT [1976]. Consequently, the Tribunal held that the Commissioner's order was unsustainable, setting it aside and allowing the appeals.