1996 (4) TMI 155 - AT - Wealth-tax

Summary

Issues Involved:
1. Legality of reference to the Valuation Officer (VO) under Section 16A.
2. Validity of reopening the assessment under Section 17(1)(a) and 17(1)(b).
3. Adequacy of the valuation report as information for reopening the assessment.
4. Procedural validity of the notice issued under Section 17.

Issue-wise Analysis:

1. Legality of Reference to the Valuation Officer (VO) under Section 16A:
The assessee contended that the reference to the VO under Section 16A was unlawful as it was made on 7th December 1987, prior to the issuance of the notice under Section 17 on 15th January 1988. The CWT(A) observed that on the date of the reference, no proceedings were pending before the Assessing Officer (AO), and thus, the reference was premature. The CWT(A) concluded that the reference under Section 16A was invalid and could not form the basis for the assessment proceedings.

2. Validity of Reopening the Assessment under Section 17(1)(a) and 17(1)(b):
The CWT(A) held that the reopening of the assessment was not valid. It was established that the assessment was completed based on the valuation report provided by the assessee and that there was no omission or failure on the part of the assessee to disclose all material facts necessary for the assessment. Consequently, the conditions for reopening the assessment under Section 17(1)(a) were not met. Furthermore, the CWT(A) determined that the valuation report from the VO did not constitute valid information under Section 17(1)(b) to justify reopening the assessment. The CWT(A) cited the case of Tulsidas Kilachand vs. D.R. Chawla, where it was held that conflicting valuation reports do not provide sufficient grounds for reopening under Section 17(1)(b).

3. Adequacy of the Valuation Report as Information for Reopening the Assessment:
The AO argued that the valuation report from the VO constituted information under Section 17(1)(b). However, the CWT(A) and the Tribunal found that the valuation report, received after the completion of the assessment, did not qualify as new information justifying the reopening of the assessment. The Tribunal upheld the CWT(A)'s view that the mere difference in valuation reports did not provide a sufficient basis for reopening the assessment under Section 17(1)(b).

4. Procedural Validity of the Notice Issued under Section 17:
The Tribunal noted that the notice under Section 17 was dated 11th March 1991, while the reasons for issuing the notice were recorded on 12th March 1991. This indicated a procedural irregularity, rendering the notice invalid. Additionally, the reasons recorded by the AO did not specify whether the reopening was under Section 17(1)(a) or 17(1)(b), further invalidating the notice and the consequent assessment.

Conclusion:
The Tribunal upheld the CWT(A)'s decision to annul the assessment order dated 5th February 1993. The reopening of the assessment was deemed invalid due to the premature reference to the VO, the inadequacy of the valuation report as new information, and procedural defects in the issuance of the notice under Section 17. Consequently, the appeal filed by the Revenue was dismissed.