1988 (12) TMI 164 - AT - Wealth-tax

Summary

Issues Involved:
1. Whether the assessment based on the valuation report of the wrong Valuation Officer can be vacated.
2. Whether the Wealth-tax Officer can be directed to make a fresh assessment relying on the valid valuation report of the registered valuer filed by the assessee.
3. Whether the co-owners constitute an association of persons.
4. Whether procedural sections/rules should be interpreted to further the working of the Act.
5. Whether the order of the ITAT for the earlier years should be followed.
6. Whether the question of jurisdiction can be raised for the first time at the stage of the ITAT.
7. Whether the District Valuation Officer's report should be considered.
8. Whether the valuation by the District Valuation Officer under section 16A of the Act is valid.
9. The effect of the Board's circular (instruction No. 808) on the valuation of property in which the assessee has a share.

Detailed Analysis:

1. Assessment Based on Wrong Valuation Officer's Report:
The Tribunal held that the valuation reports made by the District Valuation Officer (DVO) were invalid due to the lack of a valid reference under section 16A of the Wealth-tax Act (WT Act). Consequently, the reports of the DVO had to be ignored. The Tribunal emphasized that a report from a Valuation Officer is not a sine qua non for a wealth-tax assessment, and the Wealth-tax Officer (WTO) has the discretion to make or not make a reference to a Valuation Officer.

2. Fresh Assessment by Wealth-tax Officer:
The Tribunal decided against referring the matter back to the WTO for revaluation by a proper Valuation Officer, reasoning that the assessee should not be subjected to unnecessary and avoidable harassment. The assessee had already discharged her duties by furnishing a proper wealth-tax return supported by a valuation by a duly qualified valuer.

3. Co-owners Constituting an Association of Persons:
The Tribunal concluded that the assessee and the co-owners do not constitute an association of persons. The shares of the co-owners were definite and ascertainable, and thus, the assessee's status remains that of an individual.

4. Interpretation of Procedural Sections/Rules:
The Tribunal opined that procedural sections and rules should be interpreted to further the working of the Act rather than impeding it. The assumption of jurisdiction by the DVO must be for good and valid reasons and should not be for mala fide reasons.

5. Following the ITAT Order for Earlier Years:
The Tribunal noted that the earlier order of the ITAT, which declared the DVO's report invalid, was based on the Central Board of Direct Taxes' directions under rule 3A(2). However, in the present case, specific arguments about the DVO's jurisdiction were considered, leading to a different conclusion.

6. Raising Jurisdiction Question at ITAT Stage:
The Tribunal held that the question of jurisdiction, being a pure issue of law, can be raised at any stage by any party. The Tribunal has the jurisdiction to entertain a new question if it can be decided on the facts already on record.

7. Consideration of District Valuation Officer's Report:
The Tribunal decided that the DVO's report should be considered as it retained its character as a piece of evidence. The report should be adopted for framing the assessment as provided in sub-section (6) of section 16A of the Act.

8. Validity of Valuation by District Valuation Officer:
The Tribunal held that the reference to the DVO under section 16A and the resultant report were valid and in accordance with law. The DVO justifiably considered it necessary and expedient to perform the functions himself.

9. Effect of Board's Circular (Instruction No. 808):
The Tribunal referred to the Board's circular, which suggested that valuation of properties in which the assessee has a share should be done by Valuation Officers in terms of the proviso to rule 3A and not by Assistant Valuation Officers. This circular advanced the case of the revenue.

Conclusion:
The Tribunal concluded that the assessment made on the basis of the DVO's report is valid and should be adopted for framing the assessment. The impugned order of the first appellate authority was set aside, and the appeal was restored for fresh decision in accordance with law. The DVO's report and the assessee's registered valuer's report should be considered in full, and the DVO should be heard during appellate proceedings. The assessee failed for statistical purposes as the question posed to the Special Bench was answered against her.