1982 (6) TMI 126 - AT - Wealth-tax

Issues Involved:
1. Validity of proceedings initiated under Section 17(1)(a) and 17(1)(b) of the Wealth Tax (WT) Act, 1957.
2. Legality of references made under Section 16A of the WT Act, 1957.
3. Adequacy of valuation of immovable properties as determined by the Wealth Tax Officer (WTO).

Detailed Analysis:

Issue 1: Validity of proceedings initiated under Section 17(1)(a) and 17(1)(b) of the WT Act, 1957
The primary contention was whether the WTO was justified in initiating proceedings under Section 17(1)(a) or 17(1)(b) of the WT Act, 1957. The assessee argued that all material facts were disclosed truly and correctly in the original returns, which were supported by the valuer's report. The WTO's subsequent reliance on a new valuation report to initiate reassessment was deemed a mere change of opinion, insufficient to assume jurisdiction under Sections 17(1)(a) or 17(1)(b).

The Tribunal emphasized that the "reason to believe" must have a rational connection with the formation of the belief and should not be based on extraneous or irrelevant considerations. The Tribunal cited several judicial precedents, including *Tulsidas Kilachand vs. D.R. Chawla & Ors.*, *Naginchandra Chandual Parikh vs. WTO*, and *Achhutkumar S. Inamdar*, which held that mere change of opinion is not a valid ground for reopening assessments.

The Tribunal concluded that the initiation of proceedings under Sections 17(1)(a) and 17(1)(b) was invalid as it was based on a subsequent valuation report and not on any failure or omission by the assessee to disclose material facts.

Issue 2: Legality of references made under Section 16A of the WT Act, 1957
The assessee challenged the validity of references made under Section 16A of the WT Act, arguing that such references are permissible only in the case of pending assessments and not completed ones. The Tribunal agreed, noting that Section 16A is intended for use in making assessments, not for reopening completed assessments. The Tribunal cited the case of *Brigadier B Lal vs. WTO*, which supported the view that references under Section 16A should not be used to reopen completed assessments.

The Tribunal held that the references made under Section 16A were invalid and without jurisdiction, as they were used to reopen completed assessments, which is not the purpose of Section 16A.

Issue 3: Adequacy of valuation of immovable properties as determined by the WTO
The Tribunal examined whether the valuations determined by the WTO, based on the Valuation Officer's (VO) reports, were justified. The assessee argued that the WTO failed to consider the objections raised against the VO's reports and that the original valuations were supported by the assessee's valuer's reports, which were accepted by the WTO during the initial assessments.

The Tribunal noted that the WTO had initially accepted the valuations provided by the assessee's valuer and was satisfied with the correctness of the returns. The subsequent reassessments based on new VO reports were deemed a mere change of opinion. The Tribunal reiterated that mere conflicting valuation reports are not sufficient grounds for reopening assessments, as established in *Lakhmani Mewal Das* and other cited cases.

The Tribunal concluded that the reassessments based on the new VO reports were invalid, as they constituted a mere change of opinion and did not justify the reopening of assessments.

Conclusion
The Tribunal annulled all the reassessment orders, declaring them ab initio illegal, void, and without jurisdiction. The appeals were allowed, and the original assessments were upheld as valid. The Tribunal emphasized that the initiation of proceedings under Sections 17(1)(a) and 17(1)(b) and the references made under Section 16A were invalid and without jurisdiction.

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