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TMI Blog1987 (11) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... litan city of Calcutta. Long after the death of his father, on 31-12-1975 the assessee disclosed after promulgation of the Voluntary Disclosure of Income and Wealth Ordinance, 1975, the assets and liabilities inheritated from his father by submitting wealth-tax returns for the assessment years 1966-67 to 1975-76. The assessments were completed under section 16(3) /15(7) of the Voluntary Disclosure Ordinance of Income and Wealth, 1975, for the assessment years 1966-67 to 1974-75 by the WTO on 27-3-1979. While doing so, the WTO disallowed, inter alia, inherited tax liabilities including the disputed liabilities of the assessee's deceased father (Investigation, commission and demand) which were sub judice before the High Court as the same were not allowable as per section 2(m) (iii) of the WT Act, 1957. Being aggrieved, the assessee filed appeals before the CWT (Appeals) questioning the jurisdiction of the WTO, improper valuation of immovable properties and disallowance of liabilities. The CWT (Appeals) by his order dated 23-7-1979 set aside the assessments with the comment that the assessments were made in a perfunctory without referring the matter to the were adopted improperly with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the properties were made without getting the valuation done by the Departmental Valuation Officer and the tax liabilities were also allowed by the WTO though the same were sub judice before the High Court and were not allowable under section 2(m) (iii). The assessments for the assessment years 1980-81 and 1981-82 were also completed on 15-3-1985. 7. According to the CWT all the assessments for the 12 assessment years under consideration were erroneous insofar as they were prejudicial to the interests of the revenue. The CWT accordingly initiated proceedings for all the 12 assessment years under section 25(2) and issued a show-cause notice to the assessee. 8. In response to the notice under section 25(2), appearance was put in before the CWT on behalf of the assessee. It was urged that the assessments for the assessment years 1966-67 to 1975-76 were completed by the WTO on the basis of the net wealth determined and accepted by the CWT under the Voluntary Disclosure Scheme, 1975 and, therefore, it could not be said that the WTO committed any error in computing the net wealth of the assessee. It was further pointed out that the value of the rented properties was taken on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O to make fresh assessments as per law after giving the assessee an opportunity of being heard. Aggrieved, the assessee has come up in appeal for all the twelve assessment years under consideration. 10. Shri P. T. Sanyal, learned authorized representative for the assessee submitted before us that the power of revision conferred on the CWT under section 25(2) of the WT Act, 1957 can be exercised by him only if two conditions are satisfied, namely, (1) the order proposed to be revised should be erroneous, and (2) that such an order should have resulted in prejudice to the revenue. It was submitted that the assessments for the assessment years 1966-67 to 1975-76, i.e., for ten assessment years were completed by the WTO on the basis of returns which accompanied the declaration filed by the assessee under the Voluntary Disclosure Ordinance of Income and Wealth, 1975. Those returns could not be treated as valid returns and, therefore, the WTO had no jurisdiction to make assessments on the basis of those returns. It was then contended by Shri Sanyal that ass the assessments for the said ten assessment years were completed on the basis of the invalid returns, no prejudice was caused to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Valuation Officer and that for that assessment year the assessment could not be said to be erroneous simply because the WTO did not wait for the report of the Valuation Officer and that the assessment order for this reason also cannot be said to be prejudicial to the interests of the revenue. In support of this contention reliance has been placed on the decision of the Calcutta High Court in the case of Ganga Properties v. ITO [1979] 118 ITR 447. Shri Sanyal then contended that thought the WTO completed the assessment for the assessment year 1981-82 without waiting for the report of the Valuation Officer, his order for that assessment year could not be said to be erroneous or prejudicial to the interests of the revenue. 13. Regarding tax liabilities, Shri Sanyal pointed out that the matter was pending before the High Court only in respect of the demand which arose out of investigation and that inherited tax liabilities were not in dispute and in respect of those liabilities no writ has been filed by the assessee. Shri Sanyal then contended that the tax liabilities arising out of investigation which have been challenged in the High Court through a writ did not fall within the mis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs even for the purpose of saying that the order of the WTO determining the valuation of various immovable properties is not prejudicial to the interests of the revenue because the assessments were framed on the basis of invalid returns. The plea of invalidity of returns is no longer open to the assessee. In the Third Member case of Smt. Mohini Coomar it was, no doubt, held by the Tribunal that returns filed along with the declaration u/s 15 of the Voluntary Disclosure Act, 1976 read with Rule 5(2) thereof were not and could not be treated as returns filed u/s 15 of the WT Act, 1957, to give the WTO jurisdiction to make valid assessments without invoking the provisions of sec. 17 of the WT Act, 1957. As the WTO framed the assessments pursuant to the directions of the CWT (Appeals) which became final between the parties, it cannot be successfully argued at this stage that no prejudice was caused to the Revenue because the assessments were framed on the basis of the invalid returns. So, the contention of the assessee in this regard is rejected. 16. The CWT has held that the assessments are erroneous and prejudicial to the interests of the revenue on two specific grounds, namely, (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nyal to the effect that the valuation of the properties for the aforesaid ten years was not referred to the Valuation Officer u/s 16A by the WTO. Moreover, the order of the CWT on the point is somewhat vague. The CWT says in his impugned order that in pursuance of the direction of the CWT (Appeals) the WTO referred the matter to the District Valuation Officer. He does not say as to for which assessment year or years the valuation of immovable properties was referred by the WTO to the Valuation Officer. We have, therefore, no hesitation in coming to the conclusion that the WTO did not refer the valuation of the properties to the Departmental Valuation Officer for the assessment years 1966-67 to 1975-76. So, the reasons pressed into service by the CWT while coming to the conclusion that on the question of valuation the assessments are erroneous and prejudicial to the interests of the revenue, are untenable and cannot be accepted. The Commissioner of Wealth-tax has not found the assessments erroneous and prejudicial to the interest of the revenue insofar as the valuation is concerned on any other ground. It must, therefore, be held that the CWT was in error in holding that the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m) as clause (a) of sec. 2(m) (iii) was not applicable in this case. Clause (a) of sec. 2(m) (iii), inter alia, says that the amount of tax which is outstanding on the valuation date and is claimed by the assessee in appeal, revision or other proceeding as not being payable by him, is not deductible in computation of the net wealth of the assessee. The contention advanced on behalf of the assessee is that the words 'other proceeding' occurring in clause (a) of sec. 2(m) (iii) mean a proceeding only by way of reference and this expression does not include a proceedings initiated by filing a writ in the High Court. We are unable to persuade ourselves to accept the contention advanced on behalf of the assessee. In this connection reference to sub-sec. (4) of sec. 17A is not at all relevant. Sub-secs. (1) and (2) of sec. 17A prescribed time limit for completion of assessment and re-assessment. Sub-sec. (4) lays down that sub-secs. (1) and (2) shall not apply to the assessment or re-assessment made in consequence of, or to give effect to, any finding or direction continued in an order u/s 23, sec. 24, sec. 25, sec. 27 or sec. 29 or in an order of any Court 'in a proceeding otherwise tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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