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TMI Blog2005 (9) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... AGRAWAL., RAJES KUMAR. JUDGMENT The judgment of the court was delivered by Rajes Kumar J.-At the instance of the Revenue, the Tribunal has referred the following three questions under section 27(1) of the Wealth-tax Act, 1957, (hereinafter referred to as "the Act"), for the opinion of this court relating to the assessment years 1980-81 to 1983-84: "1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in holding that the Commissioner of Wealth-tax (Appeals) was bound to get the matter of valuation of property referred to the Valuation Officer before enhancing the value of the same, while disposing of the appeal under section 23(5) of the Wealth-tax Act, particularly when the matter of valuation of property was not referred to the Valuation Officer by the Assessing Officer? 2. Whether, on the facts and in the circumstances of the case and having upheld the orders of the Commissioner of Wealth-tax (Appeals) in quantum appeal, the Income-tax Appellate Tribunal is legally correct in holding that the assessee is not debarred from raising the plea of illegality of assessment for the limited purpose of penalty proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of the property the Commissioner of Wealth-tax (Appeals) also issued show-cause notice for the levy of penalty. The explanation furnished by the assessee was rejected by the Commissioner of Wealth-tax (Appeals), who noted that the assessee had not given any basis for returning the value of the property, whereas as per rule 1BB the value determined was far more. He levied penalty under section 18(1)(c). Against the order of the Commissioner of Wealth-tax (Appeals) against the levy of penalty under section 18(1)(c) of the Act, the dealer filed appeal before the Tribunal. The Tribunal has allowed the appeal and deleted the penalty. The Tribunal held as follows: "We have heard the learned representative of the parties at length and have also gone through the relevant record. We find ourselves in agreement with the submission made by the learned Authorised Representative for the assessee that the learned Commissioner of Wealth-tax (Appeals) having decided to draw the mantle or the Assessing Officer when he proposed enhancement of the value of the property was legally required to make a reference to the Valuation Officer under section 16A of the Wealth-tax Act, when admittedly the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st the said order has been filed. Therefore, the said order has become final. Learned standing counsel submitted that by accepting the order of the Tribunal it amounts to that the assessee has accepted the valuation determined by the Commissioner of Wealth-tax (Appeals) and it was not open to the assessee to challenge the said valuation before the Tribunal in penalty proceedings on the ground that since there was a difference in the valuation shown by the assessee and the valuation proposed by the Commissioner of Wealth-tax (Appeals), on the request being made by the assessee for referring the matter to the Valuation Cell under section 16A of the Act, the Commissioner of Wealth-tax (Appeals) ought to have referred the matter to the Valuation Cell as was mandatory and since it has not been referred the estimate of the valuation was unjustified and could not be made the basis for the levy of penalty. He submitted that the Tribunal has illegally entertained the aforesaid plea of the assessee and deleted the penalty on the ground that section 16A of the Act read with rule 3B of the Wealth-tax Rules was mandatory and reference ought to have been made to the Valuation Cell when the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted in [1991] 190 ITR 39 (Gauhati); (2) Maney and Co. v. CIT reported in [1963] 47 ITR 434 (Ker); (3) Raj Paul Oswal v. CWT reported in [1988] 171 ITR 489 (P H); (4) Sharbati Devi Jhalani v. CWT reported in [1986] 159 ITR 549 (Delhi); (5) CIT v. Khoday Eswarsa and Sons reported in [1972] 83 ITR 369 (SC); (6) Vishwakarma Industries v. CIT reported in [1982] 135 ITR 652 (P H) [FB]; (7) CIT v. Chetan Dass Lachhman Dass reported in [1995] 214 ITR 726 (Delhi); (8) CIT v. H. Abdul Bakshi and Bros, reported in [1986] 160 ITR 94 (AP) [FB]; and (9) CIT v. Bimal Kumar Damani reported in [2003] 261 ITR 87 (Cal). We have given our anxious consideration to the various submissions made by learned counsel for the parties. Appeal is merely a continuation of the original proceedings. The first appellate authority has plenary powers in disposing of the appeal. His power is co-terminous with that of the Assessing Officer. He can do what the assessing authority can do. In this view of the matter, the Commissioner of Wealth-tax (Appeals) had proposed to enhance the valuation of the property exercising the powers of the assessing authority. Since the Commissioner of Wealth-tax (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under section 16A(1)(b)(i). If the value as computed according to rule 1D is in excess of what is returned by the assessee, then, at the instance of the assessee, a reference has to be made to the Valuation Officer. It is only in cases under section 16A(1)(b)(ii) that the Wealth-tax Officer has the discretion to refer or not to refer the question of the value of an asset to the Valuation Officer. It is now well-settled that in certain circumstances the word 'may' can mean 'shall'. In the context in which the word 'may' is used in section 16A, we have no doubt that where there is a question of conflict of opinion with regard to the value of a particular asset, then the word 'may' has to mean 'shall' and, on being called to do so, the Wealth-tax Officer has to refer the question of valuation of the asset to the Valuation Officer .... The aforesaid circular clearly states that the provisions of section 16A are mandatory and not directory as contended by the learned counsel for the respondents. The Wealth-tax Officer is bound by the circular issued by the Central Board of Direct Taxes and, in our opinion, the interpretation of the said provision by the Central Board of Direct Taxes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice under section 148 of the Income-tax Act. However, in the penalty proceedings under section 271(1)(c) of the Income-tax Act it was raised that the entire proceeding under section 147 of the Income-tax Act was bad because notice under section 148 of the Income-tax Act was issued without recording the reasons, which was a condition precedent. The Division Bench of this court after considering the various decisions held that since the reassessment order had not been challenged in appeal or in any proceeding, it cannot be held to be a void order in collateral proceedings. In this view of the matter question No. 2 is answered in the negative, i.e., in favour of the Revenue and against the assessee. So far as question No. 3 is concerned let us examine whether, on the facts and circumstances of the case, the Tribunal was right in allowing the appeal and deleting the penalty. Section 18(1)(c) of the Act reads as follows: "18.(1) If the Wealth-tax officer, Appellate Assistant Commissioner, Commissioner (Appeals), Commissioner or Appellate Tribunal in the course of any proceedings under this Act is satisfied that any person- ... (c) has concealed the particulars of any assets o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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