2002 (6) TMI 16 - HC - Wealth-tax

(i) Whether on the facts and in the circumstances of the case the Appellate Tribunal was right in law in setting aside the order of the Commissioner of Wealth-tax under section 25(2) of the Wealth-tax Act 1957? - (ii) Whether the finding of the Appellate Tribunal that the Commissioner of Wealth-tax had exceeded his jurisdiction and his order cannot be sustained is correct in law? - we are of the same view that the Commissioner of Wealth-tax was justified in setting aside the assessment made by the Wealth-tax Officer and in directing the Wealth-tax Officer to recompute the correct net wealth and tax after considering the valuation made by the Departmental Valuer. - In view of the above our answer to both the questions referred to us is in the negative i.e. in favour of the Revenue and against the assessee.

Summary

Issues:
1. Setting aside the order of the Commissioner of Wealth-tax under section 25(2) of the Wealth-tax Act, 1957.
2. Whether the Commissioner of Wealth-tax exceeded his jurisdiction and his order cannot be sustained.

Analysis:
1. The respondent-assessee, a partner in a firm, had a 40% share in a commercial-cum-office building. The Wealth-tax Officer initially adopted the value determined by the assessee's valuer. Subsequently, the Departmental Valuer valued the property at a higher amount. The Commissioner of Wealth-tax found the assessments prejudicial to the Revenue due to the undervaluation. Under section 25(2) of the Wealth-tax Act, the Commissioner set aside the assessments for recomputation. The Tribunal overturned this decision, leading to the reference. The court considered the Supreme Court's interpretation in a similar income tax case and held that the Commissioner can examine additional records beyond those considered by the Wealth-tax Officer. The court agreed with the Madras High Court's decision that the Commissioner was justified in setting aside the assessment for a correct valuation by the Departmental Valuer.

2. The court noted that the Commissioner's action was valid under section 25(2) of the Wealth-tax Act, as supported by the Supreme Court's interpretation in a related income tax case. The Madras High Court's decision in a similar case further reinforced the validity of the Commissioner's decision. Consequently, the court ruled in favor of the Revenue, upholding the Commissioner's authority to set aside the assessment and direct a reassessment based on the correct valuation by the Departmental Valuer. The court answered both questions in the negative, supporting the Revenue's position and concluding the reference.