1980 (7) TMI 127 - AT - Wealth-tax

Summary

Issues Involved:
1. Valuation of Pamposh Hotel for assessment years 1973-74, 1974-75, and 1975-76.
2. Opportunity for the Departmental Valuation Officer to be heard regarding the valuation.
3. Disallowance of Rs. 50,000 for the assessment year 1975-76.

Detailed Analysis:

1. Valuation of Pamposh Hotel:
The primary issue revolves around the valuation of Pamposh Hotel. The assessee initially declared the value of the Pamposh Building at Rs. 4,93,500. The Wealth Tax Officer (WTO) felt this was undervalued and required the assessee to get it evaluated by a registered valuer, who valued it at Rs. 5,27,000. The WTO, still unsatisfied, referred the valuation to the Departmental Valuer, who estimated it at Rs. 6,08,700 using the rent capitalization method.

The Appellate Assistant Commissioner (AAC) found no justification for the WTO's suspicion against the registered valuer's valuation of Rs. 5,27,000. The AAC criticized the method adopted by the Departmental Valuer and upheld the valuation of Rs. 5,27,000 as reasonable. The AAC noted that the Departmental Valuer did not consider the construction cost method and only used the rental method, which was not appropriate. The AAC's decision was based on the principle that repairs should be taken at 1/6th of the Annual Letting Value (ALV), and there was no justification for reducing collection charges.

2. Opportunity for Departmental Valuation Officer:
The Revenue contended that the AAC erred in not giving the Departmental Valuation Officer an opportunity to be heard regarding the valuation of the Pamposh Hotel building, as required under Section 23(3A) of the Wealth Tax Act, 1957. However, the tribunal observed that the WTO did not make any representation before the AAC when aware that the valuation was being contested by the assessee. The tribunal held that the reference under Section 16A(1) of the Act was uncalled for, and the AAC did not breach statutory provisions by not providing a separate hearing opportunity to the Valuation Officer. The tribunal concluded that the valuation by the registered valuer, which the WTO himself invited, should have been accepted.

3. Disallowance of Rs. 50,000 for Assessment Year 1975-76:
The WTO disallowed Rs. 50,000 as sundry creditors in the absence of documentary evidence. The AAC lifted this addition, noting that the WTO had arbitrarily disallowed the amount without asking for any documentary evidence. The AAC directed the WTO to allow the sundry creditors at Rs. 50,000, reducing the net wealth of the assessee by this amount for the assessment year 1975-76. The tribunal confirmed the AAC's order, stating that any other decision would have been incorrect and wrong.

Conclusion:
The appeals by the Revenue were dismissed. The tribunal upheld the AAC's decision on all counts, including the valuation of Pamposh Hotel at Rs. 5,27,000 and the relief of Rs. 50,000 for sundry creditors for the assessment year 1975-76. The tribunal emphasized that the valuation by the registered valuer should have been accepted and criticized the WTO's approach and the Departmental Valuer's method.