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TMI Blog1990 (1) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... s against the face value of Rs. 50 per share, and the value as originally assessed are as follows :-- Value admitted by Value determined in Asst. year the assesees original assets ----------------------------- ---------------------------------- per share Rs. per share Rs. 1980-81 90.62 90.62 1981-82 105.61 105.61 1982-83 126.75 134.28 1983-84 142.84 150.54 From the assessment orders, it is seen that the audit party raised an objection that the gross liability towards taxes was allowed in computing the value of the shares held by the assessees in M/s S.R.M.T. Ltd., under rule ID of the Wealth-tax Rules and in this connection the audit party had brought to the notice of the Wealth-tax Officer the decision of the Honourable Supreme Court in CWT v. Sardar Ajaib Singh [1971] 82 ITR 842. On the basis of the audit objection, proceedings under sec. 35 of the wealth-tax were initiated which came in appeal before the Tribunal and the Tribunal set aside the orders of rectification on the ground that the issue was not free from doubt but was a debatable one and hence recourse to sec. 35 could not be had. 3. Subsequent to these developments, the Wealth-tax Officer proposed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the learned Deputy Commissioner(Appeals) erred in holding that there was full and true disclosure of all the facts material for the computation of the valuation of shares. The assessees only stated the number of shares held, their face value and the value admitted. This would not be enough. The balance-sheets for the relevant years ought to have been enclosed along with the returns, but the same do not appear to have been enclosed with the returns. Thus, there was no-disclosure of primary facts. Hence, re-assessment under sec. 17(1)(a) was justified. Even assuming that sec. 17(1)(a) is not applicable, he submitted, action under sec. 17(1)(b) was warranted and it was within the time. The Supreme Court in Sardar Ajaib Singh's case, has held that the liability to tax had to be reduced by the amount of advance tax, which was not done in computing the value of the shares and thus there was information in the possession of the Wealth-tax Officer. There was also other decisions of High Courts, viz., CWT v. Arvindbhai Chinubhai [1982] 133 ITR 800 (Guj.) ; T.V. Srinivasan v. CWT [1985] 152 ITR 599/22 Taxman 545 (Mad.) ; CWT v. N. Krishnan [1986] 162 ITR 309/24 Taxman 269 (Kar. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alth-tax Officer accepted the value as admitted by the assessees for the assessment years 1980-81 and 1981-82, he adopted a different value for the subsequent two years and that would not be possible unless the balance-sheets necessary for the valuation of the shares were available before him at the time of original assessments. There is a history behind these cases. They were subject to audit objections and the main plank of audit objection was that the advance tax was not deducted from tax liabilities and such a conclusion would not be possible unless the balance-sheets of the company were available on record. Moreover, the Wealth-tax Officer who was assessing the shareholders was also the assessing officer of the company in which the shares are held. So, it cannot be said that the Wealth-tax Officer did not apply his mind to the mode of computation of the value of the shares under rule 1D. The proceedings taken under sec. 35 were all quashed by the Tribunal. The same issue is agitated by the revenue by resorting to the provisions of sec. 17. He also submitted that in the re-assessments, the assessees are at liberty to agitate the determination of the value of the shares on the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax from the gross tax liabilities as a result of which proceedings under sec. 35 were initiated though without success, it could be inferred that the material balance-sheets necessary for the computation of the value of the shares on break-up value basis was available in the records. This is only an inference based on the developments. It is also seen that in the case of the assessees, as for example, Sri K.V.R. Chowdary (Indl.) and Sri K.V.R. Chowdary (HUF), the assessments for all the assessment years were completed only in February 1984 almost at the same time. In the case of Smt. M. Annapoorna, the assessments were completed in February 1984 for the assessment years 1981-82 to 1983-84. Therefore, it could be safely inferred that the balance-sheets, so necessary for the valuation of the shares for all these years, were available to the Wealth-tax Officer. Pursuant to the proceedings under sec. 35 of the Wealth-tax Act initiated in the case of the assessees, they had also indicated the method of valuation by their letter dated 14-2-1985 and the proceedings under sec. 35 have been held to be only an extention of the original assessment proceedings. Sec. 35 speaks of mistake appa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivered the judgment in the case of Dr. D. Renuka. The decision of the Honourable High Court in the case of Dr. D. Renuka is in consonance with the decision of the Honourable Supreme Court in the case of CGT v. Smt. Kusumben D. Mahadevia [1980] 122 ITR 38 and Mahadeo Jalan which were pressed into service by the assessees in the re-assessment proceedings but were rejected by the Wealth-tax Officer in his orders of re-assessment. In view of the later decision of the Andhra Pradesh High Court, we hold that there was no escapement of wealth arising from information in the possession of the Wealthtax Officer. 11. Sri Ashok Aneja vehemently contended that the question whether the shares should be valued on yield basis cannot be agitated in the reassessment proceedings and in this connection he relied on certain High Court decisions including the decision of the Andhra Pradesh High Court cited in para 5. We are not persuaded by his argument. In State Bank of Hyderabad's case, the scope of reassessment was considered in depth by their Lordships of the Andhra Pradesh High Court. They held as follows as per head notes :-- " Once an assessment is reopened under section 148 of the Income-ta ..... 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