1991 (4) TMI 197 - AT - Wealth-tax

Summary

Issues Involved:

1. Jurisdiction of the Wealth-tax Officer after reference under section 16A.
2. Validity of assessments made without final valuation reports.
3. Procedural irregularities and their impact on assessments.
4. Power of the appellate authority to set aside or correct assessments.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Wealth-tax Officer after reference under section 16A:

The primary contention was that once a reference is made under section 16A(1), the Wealth-tax Officer (WTO) loses jurisdiction to complete the assessments unless the final report from the valuation officer under section 16A(5) is received. The argument was that any assessment made without incorporating the values from the final report would be a nullity in law. However, it was held that section 16A is a procedural section, and the WTO retains the authority to complete assessments for properties not referred to the Valuation Cell. The appellate authority can direct the WTO to incorporate the final values once they are received.

2. Validity of assessments made without final valuation reports:

The assessments for the years 1973-74 and 1978-79 were made without waiting for the final valuation reports, which were received after the assessments were completed. The argument was that the WTO should have adopted the returned values of the properties in the absence of final reports. The Commissioner (Appeals) set aside the assessments and directed the WTO to substitute the values with those in the final reports. The Tribunal upheld this decision, stating that the failure to wait for the final reports was a procedural irregularity, not rendering the assessments void but voidable.

3. Procedural irregularities and their impact on assessments:

The Tribunal emphasized that procedural irregularities, such as not waiting for the final valuation reports, do not invalidate the assessments ab initio. Citing the Karnataka High Court decision in G.R. Steel & Alloys (P.) Ltd. v. CIT, it was held that such irregularities are curable. The appellate authority has the power to direct the WTO to correct these irregularities by incorporating the final values from the valuation officer.

4. Power of the appellate authority to set aside or correct assessments:

The Tribunal affirmed that the appellate authority has plenary powers, coterminous with those of the WTO, to correct assessments. The appellate authority can direct the WTO to adopt the values from the final valuation reports, ensuring compliance with section 16A(6). This power includes taking cognizance of subsequent events, such as the receipt of final valuation reports, and molding the relief accordingly. The Tribunal referenced the Supreme Court's decision in Hasmat Rai v. Raghunath Prasad, which supports the appellate authority's ability to consider subsequent developments.

Conclusion:

The Tribunal upheld the Commissioner (Appeals)'s decision to set aside the assessments and directed the WTO to incorporate the final values from the valuation officer's reports. The appeals for the assessment years 1982-83 and 1983-84 were dismissed, and the procedural irregularities were deemed curable, not rendering the assessments void. The appellate authority's powers to correct such irregularities were affirmed.