1986 (9) TMI 153 - AT - Wealth-tax

Agricultural Land, Assessment Proceedings, Assessment Year, Jurisdiction For Reassessment, Reassessment Proceedings

Summary

Issues Involved:
1. Validity of reassessment proceedings under section 17(1)(a) of the Wealth-tax Act, 1957.
2. Applicability of section 17(1)(b) to the reassessment proceedings.
3. Justification of the WTO's inference on the value of agricultural land.
4. Validity of the AAC's direction to refer the valuation of land to the departmental valuer.

Detailed Analysis:

1. Validity of Reassessment Proceedings under Section 17(1)(a):
The primary issue was whether the reassessment proceedings initiated by the Wealth Tax Officer (WTO) under section 17(1)(a) were valid. The assessee contended that there was no basis for the WTO to believe that any wealth chargeable to tax had escaped assessment. The WTO had initiated reassessment proceedings on the grounds that the value of agricultural land disclosed by the assessee was significantly low compared to the sale price of the land in subsequent years. The AAC held that the reopening of the assessments under section 17(1)(a) was not valid as the assessee had disclosed all material facts necessary for the assessment.

2. Applicability of Section 17(1)(b) to the Reassessment Proceedings:
The AAC, however, held that the reassessment proceedings could be justified under section 17(1)(b). The assessee argued that the AAC was not justified in converting the proceedings from section 17(1)(a) to section 17(1)(b). The Tribunal examined whether section 17(1)(b) was applicable and concluded that the sale of land at a much higher price within two to three years of the valuation dates constituted sufficient information for the WTO to believe that the wealth had escaped assessment. The Tribunal upheld the applicability of section 17(1)(b), stating that the WTO had the jurisdiction to reassess under this provision.

3. Justification of the WTO's Inference on the Value of Agricultural Land:
The assessee contended that the WTO was not justified in inferring that the value of the land on the relevant valuation dates was much higher than the disclosed value based on the sale price in 1982. The Tribunal held that it was not necessary for the WTO to come to a definite conclusion about the value of the land before initiating reassessment proceedings. The sale of the land at a significantly higher price within a short period provided a reasonable ground for the WTO to believe that the wealth had escaped assessment. The Tribunal upheld the WTO's action for reassessment.

4. Validity of the AAC's Direction to Refer the Valuation of Land to the Departmental Valuer:
The AAC had directed the WTO to refer the matter of the valuation of land to the departmental valuer before completing the reassessment. The assessee challenged this direction. The Tribunal referred to a decision of the Chandigarh Bench in a similar case and vacated the AAC's direction. However, it left the discretion to the WTO to refer the matter to the valuation cell if deemed necessary.

Conclusion:
The Tribunal concluded that the reassessment proceedings under section 17(1)(a) were not valid but upheld the applicability of section 17(1)(b) to justify the reassessment. The Tribunal also upheld the WTO's inference on the value of the land and vacated the AAC's direction regarding the valuation of the land. The appeals were partly allowed.