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TMI Blog1991 (4) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... 21-12-1983 with a direction to refer the valuation of the three immovable properties mentioned below to the departmental valuation officer as per the provisions of section 16A of the Wealth-tax Act :-- 1. Land at Ambathur, 2. Pallikarnai property, and 3. Greenways Road property. The assessee besides having movable properties had also got immovable properties both agricultural and non-agricultural in nature. The important point that is to be kept in mind is that apart from the three properties with regard to which a reference under section 16A of the Wealth-tax Act is directed to be made by the Commissioner (Appeals), the assessee had other movable and immovable properties also as part of its assets for the assessment years 1973-74 and 1978-79. References to the Valuation Cell, Madras, were made to value the above properties by the Wealth-tax Officer on 21-10-1986 and again on 12-8-1987. A preliminary valuation report was prepared by the Valuation Cell under section 16A(4) with regard to the Ambathur property as well as Pallikarnai property on 17-3-1988. With reference to Greenways Road property the Valuation Cell had prepared a preliminary report under section 16A(4) on 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,20,000 44 12,05,700 12,05,700 1978-79 1,80,000 25.97 41,28,800 41,28,800 1982-83 not declared 25.97 65,22,600 65,22,600 1983-84 - do - 25.97 1,14,20,000 1,14,20,000 Greenways Rd. Property Preliminary Final Report Report dt. dt. 17-4-1988 11-3-1988 1973-74 5,00,000 7,00 18,07,500 18,07,500 1978-79 5,40,000 5.74 58,37,300 58,37,300 1982-83 Claimed as 5.11 73,44,500 73,44,500 agricultural 1983-84 -do- -do- 96,63,900 96,63,900 ----------------------------------------------------------------------------------- It is essential to note that as far as the assessments for 1973-74 and 1978-79 are concerned, since they are made under the directions of the Commissioner (Appeals) as per his appellate order dated 21-12-1983. They have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the properties which were the subject-matter of reference with reference to which a valuation report was not received. It is further argued that time limits are built into the Act so as to provide a safeguard to the assessee to avoid long drawn out proceedings. Therefore it would not be proper to merely set aside the assessments instead of cancelling the assessments. Therefore it is ultimately requested of the learned Commissioner (Appeals) that the assessments for the assessment years 1973-74 and 1978-79 may be cancelled. Having evaluated the arguments advanced before him the Commissioner (Appeals) held in his impugned order, covering 1973-74 and 1978-79, stated that the system of valuation of properties had been incorporated in the Act to see that proper valuation of properties are made. He further held that in case the assessments have been completed without taking the valuation report of the valuation officer it will be proper to set aside the order to see that the Wealth-tax Officer incorporates the value made by the valuation officer. He, therefore, set aside the assessments with a direction to the Wealth-tax Officer to substitute the valuation made by the Wealth-tax Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 16A(5), deliberately flouts and consciously disregards the provisions of law, should he be given second innings to legalise his action, asks the learned counsel. He submitted that from the peculiar facts and circumstances of this case the assessments for all these assessment years deserve to be cancelled instead of being merely set aside. The learned departmental representative argued that simply because a reference is made to the Valuation Cell it does not mean that the powers of the Assessing Officer to complete the assessments are completely lost. With regard to the other properties constituting the assets of the assessee and the valuation of which was not referred to the Valuation Cell, the Assessing Officer had full authority to complete the assessments. The learned departmental representative drew the analogy of an assessee approaching the Settlement Commission under section 22F(2) under Chapter V-A of the Wealth-tax Act. Simply because petition is filed before the Settlement Commission it would not debar the jurisdiction of the Assessing Officer to complete the assessment. So also on the same analogy it is argued that simply because a reference is made to the Valuation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion made before the Settlement Commission under section 22F on the other is improper. In the case of a reference to the Settlement Commission the petition would be filed by the assessee and the Assessing Officer may not be knowing about the proceedings pending before the Settlement Commission. That is the reason why he is at liberty to complete the assessment. However, in this case the Assessing Officer himself referred the question of valuation of the impugned properties to the Valuation Cell and so the Assessing Officer cannot be heard to say that he does not know the pendency of proceedings before the Valuation Officer. Thus the analogy drawn is improper and cannot be accepted. Shri Prasad brought to our notice the Circular No. 96 dated 25-11-1972 seeking to provide explanatory note on the provisions of Taxation Laws (Amendment) Act, 1972 published at pages 1 to 30 of 91 ITR. He particularly brought to our notice that Shri C.S. Sastri, the father manager of the joint family was seriously ill and was admitted into the Apollo Hospital from October 1987. Further the Greenways Road property was acquired in June 1987 under Chapter XX-C of the Income-tax Act and the whole record with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l only to signify the tentative figure of valuation which it sought to put on each of the three impugned properties. It is only a preliminary step for inviting the objections of the assessee on the question of valuation of the impugned properties. The report submitted under section 16A(5) is the final report and the values disclosed therein should have been adopted by the Wealth-tax Officer while making the assessment under the mandatory provisions of section 16A(6). Therefore in the absence of the final report figures, being available with the Assessing Officer, he cannot make use of the tentative figures given, in the preliminary report given under section 16A(4), and complete the assessments. In our opinion section 16A comes into play only in the enquiry pending before the Wealth-tax Officer before an assessment is being passed in order to ascertain the real market value of the property. It can be invoked only if the Wealth-tax Officer feels that the returned value of the asset does not represent the market value and the real market value exceeds by 33 1/3% of the returned value or by more than Rs. 50,000 in value. Thus section 16A is procedural section to be followed during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter the assessments the question would be whether the appellate authority while passing the impugned orders is entitled to take cognizance of the subsequent events and in the light of such subsequent events can he pass his impugned orders. In Hasmat Rai v. Raghunath Prasad AIR 1981 SC 1711 at 1716-17 it is held that during the progress and passage of proceeding from the taxing authority to appellate authority or authorities if subsequent events occur, the appellate authority has to examine and evaluate the same and mould the relief accordingly. This is so because for making the right or remedy claimed by the party just and meaningful as also legally and factually in accord with the current realities, the court can, and in many cases must, take cautious cognisance of events and developments subsequent to the institution of the proceedings provided the rules of fairness to both sides are scrupulously obeyed. In this case the assessee fully participated in the valuation proceedings conducted by the valuation officer. The valuation officer fully considered the objections filed before him in the reports prepared by him under section 16A(5) and therefore the rules of fairness were scrup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act when the conditions laid down therein for its invocation is held to be only a procedural irregularity which can be rectified on direction from the appellate authority. In the case before the Tribunal (Delhi Bench 'B') all the conditions for invoking section 16A were existing. Still reference was not made to the valuation officer. When the matter was carried in first appeal, the Commissioner (Appeals) set aside the assessment order with a direction to redo the assessment after curing the procedural irregularity. In second appeal the Tribunal held the following as per the head note at page 326 : "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 were satisfied in the instant case. So the failure of the WTO to make a reference had given rise to a grievance and the Commissioner (Appeals) had rightly accepted that the WTO oug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aras that the assessment framed in violation of section 16A(5) and (6) can be held to be voidable orders of rectifiable orders which the first appellate authority has every right to set aside or correct as the case may be. The argument of Shri Prasad, the learned counsel for the assessee that a wealth-tax assessment should necessarily be a single integrated and whole assessment and it is the net wealth of the assessee and not the assets separately which are to be assessed is to be accepted as correct but nothing turns on the acceptance of this argument in favour of the assessee. So also the argument that according to the decision in K.P. Varghese v. ITO [1981] 131 ITR 597 (SC) the charging and machinery section makes a complete code also does not have relevance for our purposes though we cannot have any quarrel with the said proposition. 7. In the view we take the question who contributed for the belated final order under section 16A(5) for these impugned properties need not be enquired into and a specific finding need not be given on that aspect. In the result we find that the setting aside of the assessment orders dated 17-3-1988 for these four assessment years under considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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