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TMI Blog1990 (10) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... he had no option to change the valuation. Reference was made to the Board's Circular which gave instructions to the officers to this effect. The CIT(Appeals) accepted the assessee's contention that, on the facts, reference to Valuation Officer was mandatory. But he could not accept the contention that, in the event of non-reference, the returned value should be accepted. According to him, it was a mistake in the procedure with regard to the valuation. In this view of the matter, he sent back the matter to the assessing officer. 3. The assessee is in further appeal. It was submitted by Shri Mittal, the learned counsel for the assessee that the WTO not having referred the matter to the Valuation Officer, had no alternative, but to adopt the value given in the return. He further submitted that the CIT(Appeals) was not justified and had no power to require the WTO to refer the matter to the Valuation Officer. Shri Mittal first pointed out that the Delhi High Court in the case of Sharbati Devi Jhalani v. CWT [1986] 159 ITR 549, had held that the provisions of section 16A are mandatory. A similar view has been expressed by the Punjab and Haryana High Court in the case of Raj Paul Oswal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e argument is misconceived and it ignores the vast jurisdiction exercised by the appellate authorities in the assessment proceedings. 5. We have considered the submissions. There cannot be any dispute that the provisions of section 16A are mandatory and, where the circumstances exist, the WTO has to make a reference to the Valuation Officer. Where the fair market value, in the opinion of the WTO, exceeds the value of the asset as returned, by more than Rs. 50,000, the rules and the section require the WTO to make a reference to the Valuation Officer. Factually, these conditions have been satisfied. So the failure of the WTO to make a reference has given rise to a grievance and the CIT(Appeals) rightly had accepted that the WTO ought to have referred the matter to the Valuation Officer. 6. But the point raised by Shri Mittal is that, having failed to refer the matter to the Valuation Officer, the WTO has to complete the assessment by accepting the return. The CIT(Appeals) cannot direct the WTO to make a reference. This submission of Shri Mittal is supported by a decision of the M.P. High Court in the case of M. V. Kibe. In that case also, the WTO failed to refer to the Valuation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h assessment after serving a fresh and complete draft of the order. It was submitted before the High Court that the order passed by the ITO was a nullity and the Tribunal could not have given the direction. Reference was made to the well-known principle that if a power is conferred and the manner of exercising the power is indicated, it must be exercised in that manner. Dealing with this point, the High Court observed at page 493 :---- " Learned counsel for the assessee relied on the well-known principle that if a power is conferred and the manner of exercising the power is also indicated, the power must be exercised in the manner indicated by the Act conferring the power and not otherwise. But this principle does not mean that every defect in the manner of exercise of the power makes the ultimate order passed in the exercise of the power invalid. A question of this nature has to be answered having regard to the relevant statutory provision, the object behind it and the deviation in the particular case from its strict compliance." 7. It will be seen from the above that, even if there is deviation in the way in which the power has to be exercised, the order does not become a nul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atters. In the case of V. Subramonia Iyer v. CIT [1978] 113 ITR 685, the ITO had initiated penalty proceedings and passed penalty order without considering the assessee's written submissions why penalty should not be levied. It was argued in that case that the section required the ITO to consider the facts of the case and decide, whether penalty is to be levied or not and if it had failed to do so, the levy is invalid and the appellate authorites cannot make good his omission. The order was submitted to be null and void. Dealing with this submission, the Kerala High Court observed at page 688 : " An order ab initio void will not become a valid order by virtue of the fact that it has been confirmed by an appellate authority. An order, which is not void ab initio but which suffers from some infirmity, however great that infirmity may be, can merge with an appellate order which is valid and the appellate order can, therefore, govern the matter. The principles of natural justice are not embodied rights but must take its content and scope from the statutory provisions where such provisions exist. If there has been an infringement of fundamental rights guaranteed by the Constitution by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court decisions themselves in analogous matters where different views have been expressed. We have also referred to the well known proposition of irregularity in procedure being curable as laid down by the Supreme Court in the case of Guduthur Bros. v. ITO [1960] 40 ITR 298. In view of this, we would prefer to follow the other decisions already quoted by us than the Madhya Pradesh High Court in M.V. Kibe's case. In this connection we may refer to the decision of the Bombay High Court in the case of CIT v. Jayantilal Ramanlal Co. [1982] 137 ITR 257. The High Court has observed therein at page 265 " unless the judgments of other High Courts dealing with an identical or comparable provision can be regarded as per incurium, it should originally be followed ". In our opinion, the decisions of the Madhya Pradesh High Court in all other analogous matters being more in line with the Supreme Court decision in Guduthur Bros'. case and the decisions of the Karnataka and Kerala High Courts, we would prefer to follow those decisions. 14. We may also notice a submission of Mrs. Kumar, Departmental Representative, which makes the entire discussion above, academic. She had pointed out that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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