1990 (4) TMI 113 - AT - Wealth-tax

Summary

Issues Involved:
1. Jurisdiction of the Commissioner under Section 25(2) of the Wealth-tax Act, 1957.
2. Doctrine of merger concerning the appellate order and assessment order.
3. Valuation of immovable property and its consideration in the appeal.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Commissioner under Section 25(2) of the Wealth-tax Act, 1957:

The Commissioner issued a notice proposing to set aside the assessment for the purpose of making an assessment considering the valuation report received after the initial assessment. The Commissioner held that the assessment order was erroneous and prejudicial to the interests of the revenue. He noted a decision of the Calcutta High Court in A.R. Abu Baker v. WTO, which held that completing a wealth-tax assessment shortly before it became time-barred without waiting for the Valuation Officer's report could not be regarded as erroneous. However, the Commissioner opined that this decision was not binding in other states. The Commissioner cited the Explanation below Section 25(2) introduced in 1988, which extended his jurisdiction to matters not subject to appeal, and since the assessee had not appealed the valuation of the property, it was open to review. Consequently, the Commissioner set aside the assessment order and directed the WTO to substitute the value determined by the Valuation cell.

2. Doctrine of Merger Concerning the Appellate Order and Assessment Order:

The assessee contended that the appellate authority had jurisdiction over the valuation of the property, and when it confirmed the assessment, it merged with the appellate order, rendering it not amenable to review under Section 25(2). The Tribunal agreed with the assessee, stating that the appellate authority had ample powers to consider the matter and his decision was within the jurisdiction conferred by the section. The Tribunal cited the Supreme Court's recognition of this principle in CIT v. Rai Bahadur Hardutroy Motilal Chamaria and CIT v. Amritlal Bhogilal & Co., emphasizing that the appellate decision is the operative decision in law, and the original decision merges with the appellate decision. The Tribunal also referenced the Supreme Court's explanation in State of Madras v. Madurai Mills Co. Ltd. that the doctrine of merger depends on the nature of the appellate or revisional order and the scope of the statutory provisions conferring the appellate or revisional jurisdiction.

3. Valuation of Immovable Property and its Consideration in the Appeal:

The assessee did not initially appeal the valuation of the property, but the CWT (Appeals) considered the valuation and confirmed the assessment. The Tribunal noted that the valuation was a subject of assessment where the WTO determined a different value from what the assessee showed in the return. The CWT (Appeals) reviewed and confirmed this valuation, exercising his jurisdiction within the assessment's scope. The Tribunal found that the order of assessment had merged with the appellate order. The Tribunal rejected the revenue's reliance on the Explanation added by the Amendment Act of 1988, stating that the subject matter of the appeal extends to the entire field of the assessment order. The Tribunal concluded that the Commissioner's power under Section 25(2) could not extend to the valuation of the property already considered in the appeal.

Conclusion:

The Tribunal held that the order of the Commissioner made under Section 25(2) was without jurisdiction and had to be canceled. The appeal was allowed in favor of the assessee, and the Tribunal found it unnecessary to address other submissions made by the assessee.