1986 (8) TMI 139 - AT - Wealth-tax

Summary

Issues:
Reassessment validity based on omission of properties in wealth-tax assessment.

Detailed Analysis:

1. The appeals before the Appellate Tribunal ITAT Hyderabad-B arose from the reassessment for the year 1972-73, where the assessee challenged the finding of the AAC regarding the valid initiation of reassessment. The department objected to the valuation of certain properties. The Tribunal decided to address the assessee's appeal first, as it pertained to the root of the assessment.

2. The assessee, a Hindu Undivided Family (HUF), had several immovable properties with a valuation date of Diwali 1971. The original assessment valued the net wealth at Rs. 6,33,660.

3. Following a partial partition in the family, the properties were revalued based on a partition deed, resulting in a worth of Rs. 7,64,040 effective from 14-12-1971, shortly after the valuation date.

4. The Wealth Tax Officer (WTO) reopened the assessment as the valuation in the partition deed differed significantly from the original assessment. After a total revaluation by the Valuation Officer, the value was fixed at Rs. 9,33,200.

5. The AAC upheld the reopening, citing the omission of properties and discrepancies in valuation. The assessee contended that the valuation in the partition deed did not reflect market value and argued against the reopening.

6. The assessee's counsel argued that the valuation in the partition deed was not indicative of market value, emphasizing the thorough scrutiny during the original assessment. The counsel also disputed the alleged omission of properties.

7. The department contended that the reopening was valid due to the assessee's admission of omitting properties. Correspondence between the assessee and the department regarding property valuation in earlier years was presented to support this claim.

8. The Tribunal analyzed whether there was an omission of properties in the original return, which would justify the reopening. The statement of total wealth in the reassessment proceedings indicated the omission of two properties, as admitted by the assessee.

9. The Tribunal determined that the omission of properties was evident, supporting the validity of the reopening. The assessee's argument regarding the valuation in the partition deed and the signatory of the statement of total wealth was addressed and rejected.

10. The Tribunal emphasized that a mere omission was not sufficient for reopening; there must be a belief that wealth escaped assessment. The Tribunal found that the value of the omitted properties justified the reopening.

11. The assessee argued that the application of Wealth-tax Rules, specifically rule 1BB, would result in a lower valuation, negating any wealth-tax escape. However, the Tribunal rejected this argument, as rule 1BB was not applicable retroactively.

12. The Tribunal upheld the validity of the reopening based on contemporary evidence and the apparent omission of property value. The reassessment was deemed valid.

13. The valuation of the properties was then discussed, with the department challenging the AAC's valuation based on the departmental valuer's opinion. The Tribunal agreed that rule 1BB should apply, with a limitation that the valuation should not be less than the original assessment.

14. The Tribunal directed the WTO to apply rule 1BB in valuing the properties, ensuring that no property's value was less than the original assessment.

15. Despite the Valuation Officer's report in the reassessment, the Tribunal maintained the applicability of rule 1BB.

16. The Tribunal partially allowed the assessee's appeal and dismissed the department's appeal, concluding the judgment.