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TMI Blog1980 (3) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... its instruction in No. 772 dt. 29th Oct., 1974. This was further revised by instruction No. 835 dt. 24th May, 1975. It was therein desired that the WT practice should not be followed for GT and that Rule 10(2) of the GT Rules should be applied. On the basis of these instructions, the ITO reopened the assessment and issued notice under s. 16(1) on 23rd June, 1977. The taxable gifts which was computed after appeal deductions at Rs. 1,90,810 was now enhanced to Rs. 3,15,322 by revaluing the land and building belonging to M/s Coimbatore Lakshmi Cotton Press (P) Ltd. At Avanashi Road, P.N. Palayam, Coimbatore from Rs. 2,16,075 to Rs. 8,61,000. The assessee had objected to the jurisdiction, but this was overruled on the ground that the Board's circular constituted information. 3. In appeal, the first Appellate Authority found that the fair market value as adopted in the original assessment was correctly arrived at. He also found that certain other sales of shares in the same company were found less than the figure adopted in the original assessment. He was of the view that the Board's later instruction was not in consonance with s. 6(1) of the GT Act which stipulated that only the fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the shares in the same company at Rs. 1,300 per share as against the original value of Rs. 1,402 adopted in the original assessment. He claimed that the entire transactions of the shares of this company would reveal that there is no such under-assessment as feared by the authorities. He questioned the valuation made by the valuation authorities, who, he claimed, had no statutory power to make valuations during the relevant period. He also pointed out that the Textile Mills were doing badly during the period and the outlook for future was even worse. The fair market value, according to him, was found less than the resultant value of the break up method and the allowance of discount thereafter. He therefore contended that there was neither jurisdiction nor merit in the reassessment. The ld. Deptl. Rep. In reply claimed that sales to relatives cannot form comparable basis as held by the Madras High Court in the case of Addl. CGT vs. S.V.R. Cycle Mart (2). He questioned the claim that the comparable sales are near the value adopted in the original assessment. He repeated his contention that the GTO had no opportunity of checking this claim. He objected to the action of the first appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ify action within the shorter time limit, following the decision of the Supreme Court in Kalyanji Mavji Co. vs. CIT (5). However, a Full Bench of the Supreme Court in the case of Indian and Eastern Newspaper Society vs. CIT (6), practically over-ruled the earlier decision by observing as under on the earlier Bench decision: "It appears to us, with respect, that the proposition is stated too widely and travels farther than the statute warrants in so far as it can be said to lay down that if, on re appraising the material considered by him during the original assessment, the ITO discovers that he has committed an error in consequence of which income has escaped assessment, it is open to him to reopen the assessment. In our opinion, an error discovered on a reconsideration of the same material (and no more) does not give him that power". It was further observed that any suggestion of the Bench decision to the contrary "do not, we say with respect, lay down the correct law." Here is a case where the materials on record were the same at the time of initiation of reassessment, except for reappraisal of the same materials. Hence, the jurisdiction cannot be justified even on this gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to assume that the original assessment is based upon a well-known method and does not get discredited merely because it has followed the WT method. 9. Fourthly, even assuming that the individual asset-wise valuation is preferable for ascertaining the break up value rather than the global value adopted in the original assessment, we would still be unable to support the reassessment on the question of jurisdiction. Once it is concluded that the method followed in the assessment is a recognised method, a different method which yield a higher tax revenue cannot, by itself, justify revision of assessment. There is direct authority for this view. In the decision of the Supreme Court in CIT vs. Simon Carves Ltd.(8) while dealing with s. 147(b) of the IT Act, 1961, which is pari materia with s. 16(1)(b) of the GT Act, it was pointed out that the taxing authorities have quasi-judicial powers and in exercising such powers, they must Act in a fair and not a partisan manner. While it is their duty to ensure that no tax which is legitimately due remains unrecovered, they must also at the same time not Act in a manner as might indicate that scales are weighted against the assessee. Discr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merits. R. 10(2) merely assumes free sale of shares in an open market, "if not ascertainable by reference to the value of the total assets of the company". Reference to the value of total assets in a company in the case of a share holder may well mean the recorded value in the balance sheet and adoption of the global method is a recognised method only for this reason. We are therefore not in a position to say that the adoption r. 10(2) of GT Rules would justify the reassessment on merits. We are not in a position to say that the original assessment was not in consonance with this rule. As pointed out by the first Appellate Authority, s. 6(1) of the GT Act authorities the authorities to collect gift-tax on a value "which in the opinion of the GTO it would fetch if sold in the open market". Any method which gives a result different from such market value itself cannot be a correct method as adoption of a higher value would be beyond the jurisdiction of the GTO. It is in this view, we have not considered it necessary to go into the question of whether the individual asset as valued by the Valuation Officer is correct or not. At any rate, the valuation is of the individual assets of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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