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TMI Blog1979 (3) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year 1963-64, the WTO, District III(I), " E " Ward, Calcutta, accepted the said cost of construction. The petitioner states that immediately on completion of the said building, i.e., from 1st December, 1962, the said house property was let out on a contractual basis to one Dr. C. Otto and Co. Ltd. (afterwards changed to Otto India Private Ltd.) on a monthly rent of Rs. 2,000 on lease basis. The first deed of lease, which was registered, was operative from 1962 to 1969 and then again renewed by a further registered lease for 5 years, i.e., from 1969 to 1974. It was again sought to be renewed for another 5 years from December, 1974, on the same rent of Rs. 2,000 per month as before but the lease in respect thereof was not registered as on the last occasion. The said tenant, M/s. Otto India Private Ltd., is still a tenant at a monthly rent of Rs. 2,000. Although the cost of construction was accepted by the aforesaid WTO in the assessment year 1963-64, the WTO, in the assessment of the said house property for the assessment year 1964-65, took the valuation of the self-same house property at 16/2, Raja Santosh Road, at Rs. 4,00,708 by adopting the land and building method of va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the W.T. Act. The petitioner states that the petitioner has also submitted his return for the assessment years 1975-76 and 1976-77 and the valuation of the said property was shown on the same basis, i.e., 17 times of the net annual rent, as finally determined by the Tribunal, but no assessment has yet been made. The petitioner states that from the years 1962 to 1976 there has been no change in the said monthly rent of Rs. 2,000 nor has the said property undergone any change. The said property was under two leases as aforesaid with an option for renewal of years. The last deed of lease was stamped and signed by the petitioner but not registered as the said tenant declined to be on lease basis and they preferred to remain as monthly tenant from 1975 onwards. Thereafter, all of a sudden, to his utter surprise the petitioner received a purported notice bearing No. I/I.T.O./AVO/U-IV/75-76/817 dated 29th March, 1976, from respondent No. 2, the Assistant Valuation Officer, U-IV, Calcutta. By the said purported notice the petitioner was informed that an alleged reference had been made to the Valuation Cell by the WTO, " K " Ward, Comp. I-P-7, Chowringhee Square, Calcutta-700069, for dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1976, between 11-30 to 12-30 hours with all the relevant records. Thereafter, again the petitioner received on September 6, 1976, another notice bearing No. 2 (W.T.)/AVO/U-IV/75-76/1189 dated 31st August, 1976, from the said respondent No. 2. By the said notice it was stated that the determination of the fair market value of the property at premises No. 16/2, Raja Santosh Road, Calcutta, as on 31-3-68. 31-3-69, 31-3-70, 31-3-71, 31-3-72, 31-3-73. 31-3-74, 31-3-75 and 31-3-76, for the purpose of wealth-tax, was alleged to have been referred to his office by the WTO, " K " Ward, Comp. Dist. 1, Calcutta-700069. It was also stated that the property was inspected by the said respondent No. 2 on 2nd June, 1976. It was also alleged that the said respondent No. 2 had perused the relevant document as produced before the respondent No. 2 and considering the relevant circumstances of the case, the respondent No. 2 freshly estimated the fair market value of the said property at Rs. 3,39,000 on 31-3-68, Rs. 3,55,300 on 31-3-69, Rs. 3,64,000 on 31-3-70, Rs. 3,92,700 on 31-3-71, Rs. 4,45,600 on 31-3-72, Rs. 4,96,300 on 31-3-73, Rs. 5,56,500 on 31-3-74, Rs. 6,07,200 on 31-3-75 and Rs. 6,62,200 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice, his objections either in person or in writing before the Valuation Officer and to produce or cause to be produced on that date such evidence as the assessee may rely in support of his objections. (5) On the date specified in the notice under sub-section (4), or as soon thereafter as may be, after hearing such evidence as the assessee may produce and after considering such evidence as the Valuation Officer may require on any specified points and after taking into account all relevant material which he has gathered, the Valuation Officer shall, by order in writing, estimate the value of the asset and send a copy of his order to the Wealth-tax Officer and to the assessee. (6) On receipt of the order under sub-section (3) or sub-section (5) from the Valuation Officer, the Wealth-tax Officer shall, so far as the valuation of the asset in question is concerned, proceed to complete the assessment in conformity with the estimate of the Valuation Officer. " Mr. Bhattacharya has firstly submitted that the WTO has no jurisdiction to send for valuation of property or make a reference for valuation of property excepting for the purpose of the W.T. Act (hereinafter referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a posh locality where only the well-to-do people reside. On the land at No. 16/2, Raja Santosh Roy Road, Calcutta, a two storeyed building with R.C.C. roof and out-house and garage with a mazarine floor were constructed. There is a big lawn on the western side of the building and the entire building With lawn is bounded by a compound wall and gates. The total land is 18 cottahs 5 chhataks and the construction consists of a modern residental building single unit with attached bath and W. C.in each floor. The foundation provides for construction of one more storey and the plinth area of, the building in the ground floor is 3,215 sft., in the first floor 3,495 sft. and the garage and the mazarine floor is 420 sft. (c) In the premises aforesaid I was prima facie satisfied that the fair market value of the asset in question exceeded the value of the asset as claimed by the assessee by more than 15% and having regard to the nature of the said and the other relevant facts and circumstances as stated hereinbefore I was of opinion that for the purpose of making proper assessments for the assessment years 1968-69 to 1976-77, the fair market value of the said assets should be determine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gupta has submitted that in respect of the years 1975-76 and 1976-77, definitely the assessment is not complete and accordingly the action under S. 16A cannot be challenged on this ground. On the question of the method to be followed, Mr. Sengupta has submitted that the petitioner has come at a stage where no final opinion has been expressed either by the WTO or by the Valuation Officer. What has merely happened is that on the basis of a reference under s. 16A notices have issued. In justification of such issue of notice under s. 16A(4), the reasons have been set out. It is open to the petitioner to satisfy the Valuation Officer that his reasonings are wrong and that the valuation must be made on the basis of the rental method. Accordingly, he has submitted that in any event in respect of the assessment years 1975-76 and 1976-77, no such objection of the petitioners should be entertained at this stage. On the question of the jurisdiction of the WTO to refer the matter for valuation to the Valuation Officer, I must accept the contention of Mr. Bhattacharya. The language of s. 16A is "for the purpose of making an assessment ". This would no doubt include reassessment but this cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar that such a power of reference can be exercised only when the assessment is not complete. In a case, where the assessment is complete and it has not been reopened, this power under s. 16A cannot be exercised by the WTO. In the facts of this case excepting for the periods 1975-76 and 1976-77, the assessment is complete and it has not been reopened. Accordingly, the WTO has no jurisdiction to make any reference under s. 16A in respect of these years. However, this objection would not apply in respect of the assessment years 1975-76 and 1976-77, in respect of which the assessment is not complete. On the next question, as to what is the correct principle to be followed in respect of such valuation, various decisions have been cited before me including the following : CED v. Radha Devi Jalan [1968] 67 ITR 761 (Cal), Debi Prosad Poddar v. CWT [1977] 109 ITR 760 (Cal), J. N. Bose v. CWT[1976] 104 ITR 83 (Cal), CIT v. Smt. Ashima Sinha [1979] 116 ITR 26 (Cal), CIT v. Panchanan Das [1979] 116 ITR 272 (Cal). In these cases principles have been laid down by the courts as to the method which is to be followed in valuing the property which is rented. I have already held that excepting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s finally formed any opinion which ignores any law laid down in connection thereto. In that view of the matter, I pass the following order. This application is allowed and the rule is made absolute to the following extent. I hold that so far as the assessment years 1968-69, 1969-70, 1970-71, 1971-72, 1972-73, 1973-74 and 1974-75 are concerned, the reference by the WTO under s. 16A(1) is invalid and without jurisdiction. Obviously, the notices under, s. 16A(2) and 16A(4) by the Valuation Officer so far as these assessment years are concerned, are also invalid-and without jurisdiction. I further hold that the order, of reference under s. 16A(1). so far as it relates to the assessment years 1975-76 and 1976-77, is valid and within the jurisdiction of the WTO and accordingly the notices under as 16A(2) and 16A(4) issued by the Valuation Officer for these years are also valid and within jurisdiction. There will be a. writ of certiorari quashing the order of reference under 3. 16A(1) so far as the years 1968-69, 1969-70, 1970-71, 1971-72, 1972-73, 1973-74 and 1974-75 are concerned. There will be a writ of prohibition directing the respondents not to proceed or any further proceed wit ..... 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