9911796707
TMI Blog2001 (2) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... JESH BALIA J.-Heard learned counsel for the Revenue. Learned counsel for the respondent has not appeared on previous two occasions and the matter was adjourned on last two hearings. The matter was heard during the course of the day, but has been kept pending as an opportunity to the respondents to avail for putting its case before the court assistance. Today at the commencement of the day, Mr. Mahendra Trivedi for the respondent has appeared only to seek adjournment which was declined. Thereafter, Mr. Trivedi withdrew himself from the court and did not appear. The two Wealth-tax References Nos. 103 of 1995 and 106 of 1995 arise out of the same set off facts and, therefore, are being heard and decided together. The reference in each case made by the Income-tax Tribunal, relates to the assessment years 1980-81 to 1986-87 in connection with the proceedings under the Wealth-tax Act, 1957. The respondents assessee in each case during the relevant assessment period was one of the five partners of a firm, Ashoka Palace Hotel, Banswara. Returns for all the assessment years were filed by the assessee in both the cases on March 10, 1989, and the assessment was completed under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermined by assessee DVO ----------------------------------------------------------------------------------- 1980-81 1,01,610 3,15,200 1981-82 1,21,150 3,62,400 1982-83 1,31,454 3,88,400 1983-84 1,72,457 4,69,000 1984-85 1,91,509 5,19,000 1985-86 2,33,720 6,71,600 1986-87 2,59,595 7,66,200 ----------------------------------------------------------------------------------- With these considerations, the Commissioner of Wealth-tax set aside the assessment under section 16(1) of the Act and directed the Assessing Officer to proceed to make assessments afresh in accordance with and after taking into consideration that material. In the meantime, the Assessing Officer has himself reopened the assessment under section 17(1) of the Act on September 28, 1989, by issuing notice to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is court for its opinion in each case by the Tribunal: "1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that the acceptance of the return under section 16(1) is no order which could enable the Commissioner of Wealth-tax to assume revisionary jurisdiction for issue of notice under section 25(2) of the Wealth-tax Act? 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally justified in holding that on the basis of the valuation in the case of the firm, the share of valuation taken in the hands of the partners is unjustified?" Section 16 of the Wealth-tax Act as it existed prior to April 1, 1989, before it was substituted reads as under: "16. Assessment.--(1) If the Assessing Officer is satisfied without requiring the presence of the assessee or production by him of any evidence that a return made under section 14 or section 15 is correct and complete, he shall assess the net wealth of the assessee and determine the amount of wealth-tax payable by him or the amount refundable to him on the basis of such return. (2) If the Assessing Officer is not so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y as regular assessment under section 16 is concerned. Both constitute determination of tax liability under the Act and are amenable to the same process. We assume that since the orders under section 16(1) come on the basis of the admitted facts submitted by the assessee himself, ordinarily there is no room for the assessee to resort to appeal. It appears to us that the Tribunal was perhaps led by the amended provisions of section 16 which was substituted with effect from April 1, 1989. Under the scheme of section 16 as now existing, the word "intimation" has been used when the Wealth-tax Officer resorts to making computation of tax under section 16(1)(a) of the Wealth-tax Act. It permits the Assessing Officer to make certain adjustment in the returns submitted by the assessee on the basis of the information available from the returns. However, when provisions have been made for adjustment, provision has also been made for enjoining a duty upon the Assessing Officer, if any objection is raised by the assessee within the period of one month from the date of service of intimation, to have recourse to proceedings under sub-section (3) of section 16 and frame a regular assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on has to be determined in the prescribed manner. Thus, the value of property owned by the firm in which the assessee is a partner has direct link and relevance with the computation of net wealth of the assessee on the corresponding valuation date. The mode of valuing the interest of a partner in the assets of partnership or association of persons has been prescribed by the Rules. Rule 2 of the Wealth-tax Rules, 1957, which prescribes that manner reads as under: "2. Valuation of interest in partnership or association of persons.--(1) The value of the interest of a person in a firm of which he is a partner or in an association of persons of which he is a member, shall be determined in the manner provided therein. The net wealth of the firm or the association on the valuation date shall first be determined. That portion of the net wealth of the firm or association as is equal to the amount of its capital shall be allocated among the partners or members in the proportion in which capital has been contributed by them. The residue of the net wealth of the firm or association shall be allocated among the partners or members in accordance with the agreement of partnership or associat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Be that as it may, in the present case, the Commissioner of Income-tax merely on the basis of the valuation report of one of the assets of the firm known as Ashoka Palace Hotel has taken it to be relevant piece of evidence for the purpose of making the assessment for the purpose of allocating the assessee's share in the valuation of the building as a partner and has held the order passed by the Assessing Officer to be erroneous and prejudicial to the interests of review by ignoring the relevant material on record. We are of the opinion that in the aforesaid scheme of the Act in the matter of value of interest of an assessee in the assets of the partnership or association of persons of which he is a member, the individual value of a particular asset belonging to a firm is wholly irrelevant in the absence of any material to suggest the value of net wealth of the firm in the prescribed manner under rule 2 of the Wealth-tax Rules. It needs no emphasis that the firm as such is not an assessee subjected to levy of wealth-tax under the Act of 1957. The entities which have been recognised as an assessable entity for levy of wealth-tax are only, an individual, a Hindu undivided ..... X X X X Extracts X X X X X X X X Extracts X X X X
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