9911796707
TMI Blog1997 (12) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... epted the valuation at Rs. 1,60,000 and completed the assessment on March 6, 1975. Some interesting developments arose in the donee's assessment. The donee, on the basis of a valuation report, admitted the value of the gifted property at Rs. 2,91,000 as on June, 1976, in the wealth-tax assessment proceedings of the donee. In pursuance of the admission by the donee of the value of the property at Rs. 2,91,000, the wealth-tax assessment of the donee for the assessment year 1974-75 was reopened and the property was reassessed at the value of Rs. 2,20,000. The Wealth-tax Officer, by a letter, informed the valuation of the gifted property to the Gift-tax Officer and on the basis of the information received, the Gift-tax Officer issued a notice under section 16(1)(b) of the Gift-tax Act to the assessee on February 26, 1979, to show cause as to why the gift-tax assessment already made should not be reopened to reassess the value of the gifted property at Rs. 2,20,000. The assessee objected to the reopening of the assessment and contended that the valuation of the property was determined by the Gift-tax Officer and the market value of the property as on the date of the gift was only the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer that the same property was valued at Rs. 2,20,000 for the same assessment year 1974-75 and, therefore, that letter would constitute information. He strongly placed reliance on a decision of this court in the case of Virudhunagar Co-operative Milk Supply Society Ltd. v. CIT [1990] 183 ITR 545, and submitted that the fact discovered during the assessment proceedings of the subsequent year would constitute "information" within the meaning of section 16(1)(b) of the Gift-tax Act and the reassessment proceeding based on such information is valid in law. He submitted that it is not as if on the basis of the valuation report, the assessment was re-opened, but on the basis of the order passed by the Wealth-tax Officer for the same assessment year, the assessment was reopened. He submitted that the decision of the Bombay High Court in Tulsidas Kilachand's case [1980] 122 ITR 458, has no application as it was a case of re assessment on the basis of the valuation report of a valuer. He further submitted that the decision of the Bombay High Court in Dr. Keki Hormusji Gharda v. B. H. Raisinghani, WTO [1982] 135 ITR 386, has distinguished the earlier decision in Tulsidas Kilachand's case [1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation to the Gift-tax Officer that the property gifted to the donee was assessed for a sum of Rs. 2,20,000 in the hands of the donee for the same assessment year, viz., 1974-75. The information given to the Gift-tax Officer by the Wealth-tax Officer was with reference to the same property and for the same assessment year. But, no doubt it is true that there is a gap of nearly one year from the date of gift to the relevant valuation date for the assessment of the donee under Wealth-tax Act for the assessment year 1974-75 and the Wealth-tax Officer made the assessment and determined the value of the same property gifted at Rs. 2,20,000 after applying his mind as to the determination of the fair market value of the property and the order passed by the said officer was passed by virtue of the provisions of the Act and it is a statutory order. We are of the view that the valuation report submitted by a valuer, be it by a Department valuer or by an independent valuer, cannot be equated to the order of the Wealth-tax Officer. The Wealth-tax Officer made the assessment on the basis of the valuation report and after considering the evidence on record and therefore, as he has applied his mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we ire of the view that the second test adumbrated by the apex court is satisfied in the instant case. The third test that is laid down by the Supreme Court is whether its quintessential value lies in its definitive vitality. We are of the view that the third test is also satisfied. The information furnished as such has made it significant to the Gift-tax Officer that there was undervaluation in the assessment of the property gifted and thus, the information regarding the market value of the property has a definitive vitality. Therefore, we are of the view, all the tests laid down by the Supreme Court regarding "information" are fully satisfied in this case and the letter of the Wealth-tax Officer would constitute information for the purpose of reopening of the assessment. The contention of Mr. Janakiraman, learned counsel for the assessee, is that there was no live link or nexus between the materials before the Assessing Officer and the belief of the officer to form an opinion regarding undervaluation of the property as there is a yawning gap of nearly one year between the date of gift and the valuation date. Though there is a time-gap of nearly one year, we are of the view that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y upon a decision of the Bombay High Court in Tulsidas Kilachand v. D. R. Chawla [1980] 122 ITR 458 where the assessment was reopened on the basis of the valuation report prepared by an executive engineer of the Department on the ground that the properties were not properly valued by the assessee therein. In that situation, the Bombay High Court held that the fact that two valuers had given two conflicting reports about the true value of the property was not sufficient to enable the Wealth-tax Officer to reopen the assessment under section 17(1) of the Wealth-tax Act. The said decision of the Bombay High Court has no application to the facts of the case. Here, it is not a case of reopening of assessment on the basis of a valuation report furnished by the valuer, but the assessment was re-opened on the basis of an order of the Wealth-tax Officer and, therefore, the decision of the Bombay High Court has no application to the facts of the case. Further, the abovesaid decision of the Bombay High Court was distinguished in Dr. Keki Hormusji Gharda v. B. H. Raisinghani, WTO [1982] 135 ITR 386. The later decision of the Bombay High Court relates to the reopening of the assessment and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eopen the assessment under clause (b) of section 17(1) of the Wealth-tax Act. It is relevant to notice that information regarding the value of the property came into possession in the year 1975. But, that information was held by the Delhi High Court to be valid for the purpose of reopening the assessment for the years 1971-72 to 1974-75. Applying the same principle to the facts of the case, we are of the view that though the assessment was made on the donee for the same assessment year at a higher rate, that would constitute information for the purpose of reopening the assessment under the Gift-tax Act for the same assessment year. The information regarding the market value of the property was with reference to the same property for the same assessment year and, in our opinion, that piece of evidence would constitute information for the purpose of reopening the assessment under section 16(1)(b) of the Gift-tax Act. In Virudhunagar Co-op. Milk Supply Society Ltd. v. CIT [1990] 183 ITR 545, this court held that a subsequent assessment proceeding or a fact discovered from the subsequent assessment proceedings would constitute "information" within the meaning of section 147(b) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Supreme Court are fully satisfied in the case before this court. Therefore, the decision of the Supreme Court in Indian and Eastern Newspaper Society's case [1979] 119 ITR 996, is not of much help to the assessee. The decision of the Calcutta High Court in Allahabad Bank v. CIT [1993] 199 ITR 664holding that mere change of opinion would not amount to information has no application to the facts of the case as it cannot be said that the present case is a case of mere change of opinion on the part of the Gift-tax Officer, as there was information from the Wealth-tax Officer and that material was not available at the time of completion of the original asessment. Therefore, the conditions precedent for re opening the assessment under section 16(1)(b) of the Gift-tax Act are fully satisfied on the facts of the case. Therefore, the view of the Appellate Tribunal that the reopening of the assessment was invalid in law is not sustainable in law. On a study of various case law cited on behalf of the Revenue as well as the assessee, we are of the view that the Gift-tax Officer had information to reopen the assessment under section 16(1)(b) of the Gift-tax Act and the Appellate Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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