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TMI Blog2008 (4) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... -89 to 1992-93. As there are differences on facts, we will briefly set out the relevant facts in each of the appeals. 3. W. T. A. No. 188 of 2004 is in respect of the assessment year 1988-89. In that case, return of wealth was filed on July 29, 1988. The assessment under section 16(1) was made on March 27, 1992. The reference was made to the District Valuation Officer (DVO) on November 9, 1993. The valuation report was received on March 29, 1994. The notice under section 17 for reopening the assessment was issued on March 29, 1996. The reference to the DVO, thus was made after the completion of assessment. 4. W. T. A. No. 174 of 2004 is for the assessment year 1989-90. The original assessment under section 16(1) was made on March 27, 1992. The reference to the DVO was made on April 9, 1993. The report from the DVO was received on March 29, 1994. Notice under section 17 was issued on March 29, 1996. The reopening was thus sought based on the report of DVO which was called for after the assessment order was passed. 5. W. T. A. No. 195 of 2004 is in respect of the assessment year 1990-91. The original return was filed on December 28, 1990. It was processed under section 16( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 'reason to believe' based on which notice under section 17, could have been issued for reopening the assessments already completed ?" 11. Before answering these issues, it would be necessary to refer to the relevant provisions of section 16A of the Wealth-tax Act, 1957. "16A. Reference to Valuation Officer.-(1) For the purpose of making an assessment (including an assessment in respect of any assessment year commencing before the date of coming into force of this (section) under this Act, where under the provisions of section 7 read with the rules made under this Act or, as the case may be, the rules made in Schedule III, the market value of any assets is to be taken into account in such assessment, the Assessing Officer may refer the valuation of any asset to a Valuation Officer- (a) in a case where the value of the asset as returned is in accordance with the estimate made by a registered valuer, if the Assessing Officer is of opinion that the value so returned is less than its fair market value ; (b) in any other case, if the Assessing Officer is of opinion- (i) that the fair market value of the asset exceeds the value of the asset as returned by more than such percenta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion or to disclose fully and truly all material facts necessary for his assessment for that assessment year : Provided further that the Assessing Officer shall before issuing any notice under this sub-section, record his reasons for doing so. Explanation.-Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. (1A) No notice under sub-section (1) shall be issued for the relevant assessment year,- (a) if four years have elapsed from the end of the relevant assessment year unless the case falls under clause (b) ; (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the net wealth charge-able to tax which has escaped assessment amounts to or is likely to amount to rupees ten lakh or more for that year. Explanation.-For the purposes of sub-section (1) and sub-section (1A), the following shall also be deemed to be cases where net wealth chargeable to tax has escaped assessment, namely :- (a) where no return of ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled for only when there are proceedings pending before the Wealth-tax Officer. There is nothing in the Wealth-tax Act, 1957, or Rules which provides that the Wealth-tax Officer can call for a report from the DVO after the order of assessment is completed. That jurisdiction is conferred when he is seized of the matter under section 16 of the Act. 15. We may also note that in so far as reassessment is concerned, in cases covered by section 16(3) there is a limitation. There is no limitation in so far as assessments completed under section 16(1) of the Act. 16. With that background before answering the issues we may gainfully refer to the law as understood by this court and several other High Courts. 17. In Tulsidas Kilachand v. D. R. Chawla [1980] 122 ITR 458 (Bom) the proceedings were sought to be reopened by issuing show-cause notice under section 17(1)(b) of the Wealth-tax Act, 1957. After the assessment was completed, the Wealth-tax Officer called for the report from the DVO and based on this issued notice under section 17(1)(b). A learned judge of this court noted that the jurisdiction to open assessment orders which had become final can be exercised provided the officer ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the pendency of assessment proceedings are condition precedent for making reference to Valuation Officer and if a reference is made after the assessment is completed, it would be unauthorised and reopening based solely on this information under section 17(1)(b) for reassessment was equally unauthorised and illegal. 21. In CWT v. Shriniwas Sharma [1993] 204 ITR 587 (Raj) the learned Division Bench of the Rajasthan High Court held that it is open to the Wealth-tax Officer to form opinion for making reference to the Valuation Officer under section 16A of the Wealth-tax Act, 1957 but after the assessment is completed, the Wealth-tax Officer becomes functus officio and that reference to Valuation Officer under section 16A after the assessment is completed is not possible for initiating reassessment proceedings. 22. In CWT v. Malhar Rao Tatya Saheb Holkar [1986] 220 ITR 466 (MP) the learned Division Bench of the Madhya Pradesh High Court was considering the cases where the report under section 16A was called for after the completion of assessment. On the basis of the said report, notice was issued under section 17. The learned Division Bench held that the proceedings initiated were m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The law in such cases would be that the jurisdiction conferred on the Wealth-tax Officer is limited to calling for the report when the proceeding are pending and not when the Wealth-tax Officer becomes functus officio. 27. As we have noted earlier, under section 16A it is only in the event the Wealth-tax Officer is of the opinion that the valuation report submitted to him by the registered valuer does not disclose the fair market value, that the report of the DVO can be called for. It is, therefore, a discretion to be exercised in the course of exercise of quasi-judicial powers of Wealth-tax Officer. Such exercise cannot be resorted to after the assessment is completed as it would be without jurisdiction. A report called for by an authority having no jurisdiction would be a nullity at law and consequently proceedings based solely on such report considering the requirement of section 17 would be illegal and will have to be quashed. The report of the DVO in such circumstances cannot constitute "reason to believe" to reopen a concluded assessment. 28. The position in law in so far as report which was called for but not received during the pendency of the proceedings but received ..... X X X X Extracts X X X X X X X X Extracts X X X X
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