1990 (10) TMI 137 - AT - Wealth-tax

Appellate Assistant Commissioner, Appellate Authority, Assessment Order, Dispose Of, Reference To Valuation Officer

Summary

Issues Involved:
1. Valuation of property by the Wealth Tax Officer (WTO)
2. Mandatory reference to the Valuation Officer under section 16A
3. Jurisdiction of the CIT(Appeals) to direct the WTO
4. Procedural irregularities and their curability
5. Deduction claims for liabilities

Detailed Analysis:

1. Valuation of Property by the Wealth Tax Officer (WTO):
The primary issue revolves around the valuation of the property owned by the assessee. The assessee declared the property value at Rs. 1,64,000, while the WTO assessed it at Rs. 10,06,000 based on prior assessment years. The WTO did not refer the matter to the Valuation Officer, which the assessee contested.

2. Mandatory Reference to the Valuation Officer under Section 16A:
The assessee argued that the WTO was mandated to refer the valuation to the Valuation Officer under section 16A if the fair market value exceeded the declared value by more than Rs. 50,000. This mandatory requirement was supported by precedents from the Delhi High Court (Sharbati Devi Jhalani v. CWT) and Punjab and Haryana High Court (Raj Paul Oswal v. CWT). The CIT(Appeals) agreed that the WTO should have referred the matter but did not accept that the WTO must adopt the declared value in the absence of such a reference.

3. Jurisdiction of the CIT(Appeals) to Direct the WTO:
The assessee contended that the CIT(Appeals) lacked the jurisdiction to direct the WTO to refer the matter to the Valuation Officer, citing the Madhya Pradesh High Court decision in M. V. Kibe v. CWT. The Department argued that the CIT(Appeals) had plenary powers, including setting aside the assessment and directing the WTO to cure procedural irregularities. The Tribunal held that the CIT(Appeals) was justified in directing the WTO to refer the matter, aligning with the broader interpretation of appellate powers.

4. Procedural Irregularities and Their Curability:
The Tribunal emphasized that procedural irregularities, such as failing to refer the matter to the Valuation Officer, are curable. Citing various precedents, including the Supreme Court's decision in Guduthur Bros. v. ITO, the Tribunal noted that procedural lapses do not render an assessment order null and void. The Tribunal preferred to follow the principle that appellate authorities have the power to correct procedural errors.

5. Deduction Claims for Liabilities:
The assessee raised additional points regarding deductions for liabilities. The WTO had disallowed a deduction of Rs. 19,292, which was remitted back for reassessment, following the procedure from earlier assessment years. The deductions of Rs. 2,891 and Rs. 90,001 were upheld based on prior Tribunal decisions.

Conclusion:
The Tribunal concluded that the WTO's failure to refer the matter to the Valuation Officer was a procedural irregularity that the CIT(Appeals) could direct to be corrected. The appeal was partly allowed, with specific issues remitted back to the WTO for reassessment.