TMI Blog1983 (9) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... sions contained in paragraphs 156 to 161 of Chapter of the White Paper on the Indian States issued by the Central Government. In accordance with the contents of paragraph 158 of the said White Paper ' Palaces and other residential buildings ' were earmarked and allocated as private properties of the rulers on the basis of the previous use of the said palaces, etc., and the needs of the ruler and of the Government. Umed Bhavan, Kota, was described as the private property of the Maharao of Kota in the inventory of the private properties allocated to the said Maharao. The relevant entry in the inventory reads as follows : " Umed Bhavan including gardens, rari, buildings, etc., comprising the entire compound." The aforesaid inventory was signed by one Shri C. Ganeshan, Deputy Secretary to the Government of India in the Ministry of States. Certain concessions with regard to the payment of income-tax were given to the rulers of the erstwhile States. One of the concessions given was not to tax the property income from such palaces to be designated by the Government of India, which were declared to be the official residences of the rulers. In pursuance of the powers vested in the Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regarding official residences which have been issued by the Central Government for the purposes of income-tax will, therefore, apply for the purposes of the wealth-tax also and no fresh or further declaration by the Central Government is necessary. In cases where more than one building has been declared by the Central Government as the official residence of a ruler the rulers concerned have to select the particular building in respect of which they would like exemption under section 5(1)(iii) of the Wealth-tax Act. We notice that the Central Government have declared more than one palace as your Highness's official residence. Since the exemption from the wealth-tax is available for only one such building, we shall be grateful if your Highness will please let us know which palace you would like to select for this purpose." The aforesaid letter of Shri Vishwanathan was replied to by Maharao Bhim Singh on 23-1-1958, wherein the Maharao wrote as follows : " With reference to your D.O.F. No. 23/16/57 Poll III dated the 10th instt. I write to request you kindly to move the Government to exempt Umed Bhavan under section 5(1)(iii) of the Wealth-tax Act." Since then ' Umed Bhavan ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land 892 bighas was covered by groves and that no land revenue was payable with reference to the said land." [Emphasis supplied] 7. On receipt of the above information from the Tahsildar the WTO addressed a letter to the assessee on 1-2-1969, wherein he wrote to him, inter alia, as follows : " Revenue authorities of the State Government have given me to understand that the area of the compound surrounding the Umed Bhavan Palace is 2732 bighas and out of this, about 892 bighas is used for agriculture and fruit garden. The rest of the land, i.e., two-third part of the total area is either lying barren or used for keeping various types of forest animals. This fact has also been admitted in your letter .... Under the definition of ' assets ' in Wealth-tax Act, 1957, assets includes ' property of every description, movable or immovable but does not include agricultural land '. According to this definition only the agricultural land is not liable to wealth-tax. The barren land or the land which is used for any other purpose such as for forest animals is not exempt from wealth-tax . . . ." The WTO then drew the assessee's attention to the decision of the Hon'ble Gujarat High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... His Highness which was declared as one of the buildings of His Highness. That as the rulers of the various States were not subject to any tax in the States over which they ruled, a guarantee was given by the Government of India as contained in paragraph 240 of the White Paper and article 362 of the Constitution by which the personal rights, privileges and dignities of the rulers were maintained. That in pursuance of this guarantee, the Central Government in exercise of the powers under section 60A of the Indian Income-tax Act, 1922, was pleased to promulgate the Part B States (Taxation Concessions) Order, 1950, under notification No. S.R.O. 998, dated 22nd December, 1950. Under clause 15 of the said order, the bona fide annual value of the palaces of rulers of Indian States which are declared by the Central Government as official residences of such rulers was exempted from payment of income-tax and super tax and also from such income being included in total income or total world income of rulers receiving them. That in pursuance of these provisions of the Part B States (Taxation Concessions) Order, 1950, the Central Government issued notification dated 14th May, 1954, under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exempt from payment of wealth-tax for a common man, only one building or a part of a building having valuation of not more than Rs. 1 lakh is so exempted. In one case the unit of a palace cannot be split up irrespective of size or valuation and in other cases a house can be split up and its valuation should not be more than the prescribed valuation. That in view of the above provisions of law it is submitted that entire Umed Bhavan Palace comprised in one compound is one palace and is treated as such in the inventory and in the notification of the Central Government dated 14th May, 1954." The assessee thereafter gave instances of as many as eight palaces of the erstwhile rulers wherein lands up to 400 acres were covered by the palaces and the compounds attached therewith and were, according to the assessee, exempted in terms of section 5(1)(iii). The assessee also drew attention of the WTO to the observations of A.C. Sampath Iyengar in his commentary, The Three New Taxes, vol. 1, 5th edn., wherein the said learned author had observed as follows : ". . .The significance is that, unlike a building, a palace would consist of several buildings, though in a cluster, consisting of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do- Page 54 of the assessee's paper book 1963-64 -do- Page 60 of the assessee's paper book 1964-65 In respect of exemption under section 5(1)(iv), in my view, this exemption is not available to the assessee, as the exemption is provided in respect of a house belonging to and exclusively used by him for residential purpose. In fact the assessee is a ruler and has already got exemption under section 5(1)(iii) of the Wealth-tax Act, 1957, in respect of a building occupied by him. He is residing in this building and as such he cannot avail of the concession provided under section 5(1)(iv). [Emphasis supplied] ------------------------------------------------------------------------------------------------------------------------------------------------- 11. It appears that reference of the above exemption under section 5(1)(iii) to Umed Bhavan and the land attached with it and forming its compound was not made in the assessment orders for the assessment years 1965-66 to 1969-70 and, in fact, in returns for the assessment years 1966-67 to 1969-70, the assessee did not declare the said land even in his returns of wealth. 12. With effect from 1-4-1970, there was amendment to the defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d land is not agricultural land but abadi land, the copy of which is enclosed herewith. Therefore, the entire land comprising in Umed Bhavan is exempt under section 5(1)(iii) of the Wealth-tax Act, 1957, and the same point has already been finalised in assessment year 1957-58." [Emphasis supplied]. 14. The letter of the Additional Chief Secretary to the Collector of Kota, dated 17-9-1966, referred to above, by the assessee, has been placed by the assessee at pages 21 and 22 of his first paper book. Its relevant part may be extracted as below : " Sub : Personal, property of His Highness the Maharaja of Kota. Ref : Your letter No.Rev./KS/65-3739 dated the 10th June, 1965. Sir, I am directed to say that having regard to the definition of words ' estate ' and ' land ' as given in the Rajasthan Land Reforms and Acquisition of Land Owners Estate Act, 1963, ' Umed Bhavan ' including gardens, rari, building, etc., comprising the entire compound entered in the inventory of the private property of His Highness, Kota, mentioned in the covenant, cannot be regarded as estate for the purposes of the aforesaid Act. Such property cannot, therefore, be acquired .... The land revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s exempt under section 5(1)(iii) of the Wealth-tax Act, 1957, and this point has been discussed at length in the past and since then exemption is being allowed. Therefore, we hope your goodself would now be quite satisfied on this point . . . . . As regards Ladpura land out of 310 bighas, 304 bighas is comprising in Umed Bhavan compound and is not agricultural land. Umed Bhavan is official residence of ex-ruler of Kota and, hence, it is exempt under section 5(1)(iii) and as discussed at length as above." [Emphasis supplied] 17. Regarding the other lands, the assessee explained that they had either been sold away or they belonged to some other members of the assessee's family. 18. After receiving the aforesaid reply of the assessee, the WTO reported to the IAC, vide his letter dated 3-1-1978, that there was no discrepancy in the figure of agricultural lands, as had been pointed out by the note of the Accountant General's Audit party. The relevant part of the report of the WTO to the said IAC, may be extracted here for ready reference : " The case of H.H. Bhim Singh of Kota was examined. Assessee had shown agricultural land measuring 1345.12 bighas whereas in the Tehsil rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assets which are not taxable, hence, excluded from the wealth-tax return. Item No. 8 --- Umed Bhavan, section 5(1)(iii) of Wealth-tax Act. 1972-73 Annexure forming Part IV of Annexure ' K ' of the the wealth-tax return. wealth-tax return.List of assets which are not taxable and claimed as exempt, hence, excluded from the wealth-tax return. Item No. 7 --- Umed Bhavan --- This house is an official residence of ex-ruler, hence, value exempt under section 5(1)(iii) of the Wealth-tax Act, 1957. 1973-74 List of land sold to co-operative societies, Kota. Land comprising in Umed Bhavan compound was sold to the following co-operative societies : (a) Shri Grah Nirman Samiti, Kota 30,00,000 (b) Shri Nath Grah Nirman Samiti, Kota 24,50,000 -------------------- 54,50,530 -------------------- Less : Cash received this year 2,40,000 -------------------- 52,10,530 -------------------- Notes 1. The above lands comprising of Umed Bhavan compound were sold to above co-operative societies as per sale agreement dated 18-8-1972. These sale deeds were presented for registration to Sub-Registrar of Kota on 18-8-1972 but the documents have not been realised so far and un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,56,000 received from co-operative societies as an advance money was deposited in the bank and the bank balances were increased. This reply is not sufficient. You are requested to please produce the bank pass book so that it may be ascertained that on what date and what amount was deposited in the bank. You are requested to produce the relevant documents so as to make sure that this amount of Rs. 4,56,000 has been included in the net wealth declared by you, within five days of the receipt of this letter." 22.2 On 12-6-1979, the assessee attended the office of the WTO and filed before him a letter stating, inter alia, as follows : " With reference to your above referred letter (i.e., 8-6-1979), we submit that advance money received by the assessee has been credited in the cash book of the assessee, and also deposited with the bank. The cash book as well as pass book is ready for your kind verification ...." 22.3 The occasion to make the aforesaid enquiry from the assessee is not clear, but what the record made available to us, however, makes clear is that on 25-6-1979 (i.e., within 13 days of the above proceeding), the WTO submitted proposals under section 25(2) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he WTO in the assessment years 1966-67, 1967-68, 1968-69, 1969-70 and 1970-71 are erroneous so far as prejudicial to the interests of revenue . . . ." 22.5 No action on the above noting, however, appears to have been taken. On 31-10-1979, the WTO appears to have sent another letter No. WTO/A/KTK/79-80 dated 31-10-1979 to the Commissioner, a copy of which was also endorsed by him to the Chief Auditor. This letter is not on the file of the Commissioner, produced before us, but reference to it is contained in the letter of the Chief Auditor being D.O. No. M.O. 88/7980/6025 dated 18-12-1979 found placed on the file of the Commissioner for the assessment year 1970-71. In the aforesaid letter, the WTO had brought to the notice of the Commissioner, the dates on which limitation for finalising proceedings under section 25(2) in respect of different years was to expire. 22.6 On 14-11-1979, the WTO again submitted proposals under section 25(2) to the Commissioner in respect of the assessment years 1970-71 to 1977-78. The proposals for the assessment years 1970-71 to 1973-74 were absolutely identical to those submitted earlier, and the contents of which have been noted by us above. Propos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertaining to Shri Bhim Singh of Kota : File No. Subject 1. DP-149/WT/Vol. II C. and A.G. Report 1976-77---para 71---Agricultural WT--Kota District--DP--1/49/WT 2. DP-149/WT/Vol. VI Guard file--C. and A.G. report 1976-77-- para 71--Agricultural WT--DP--149/WT---Correspondence with Board and Directorate. 3. DP-149/WT/Vol. VII Guard file--DP--149/WT--C. and A.G's report--para 71--Agricultural WT correspondence with Board. 4. DP-149/WT/Vol. XI C. and A.G's report 1976-77--para 71 Agricultural WT--Correspondence with Board and Directorate." 22.9 On 18-12-1979, the Chief Auditor again wrote to the ITO (Judicial) inviting his attention to the dates of limitation for action under section 25(2) in respect of the various assessment years and requested him as follows : " You may kindly put up the matter to the learned Commissioner so that the action is concluded well in time. The connected records have already been sent to you on 6-12-1979." 23. It appears that the WTO had sent to the Commissioner the following records for his perusal vide his letter No. ITO/A/KTH/79-80/1064 dated 7-11-1979 : 1. Miscellaneous Cover for 1957-58. 2. WT 40 Cover 1957-58. 3. Miscellaneous C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in no circumstances, it could be said that the entire land is appurtenant to the Umed Bhavan and is exempted under section 5(1)(iii) of the Wealth-tax Act, 1957. The failure on the part of the WTO in not examining the assessment records and to bring to charge the said property to tax is considered by me to be erroneous and prejudicial to the interests of revenue." [Emphasis supplied] On the facts and in the circumstances of the case discussed above, the Commissioner required the assessee to explain as to why action under section 25(2) be not taken by him. 24.3 In respect of the assessment year 1971-72, the case for taking action under section 25(2) was made out by the Commissioner in the show cause notice dated 27-12-1979 in the following words : " A perusal of records of proceedings was made. It is found that you owned 2507 bighas of land in surroundings of Umed Bhavan at Kota. The value of the aforesaid land was not declared in the wealth-tax return filed by you on 28-1-1972. The assessment for the assessment year 1971-72 was made by the WTO on 28-1-1978. The value of the aforesaid property could not be brought to charge because of failure on your part to declare the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the interests of revenue." 24.6 The show-cause notices for the assessment years 1974-75 and 1975-76 were in identical terms. 24.7 In respect of the assessment year 1976-77, however, the facts mentioned in the show-cause notice were slightly different and may be extracted as follows : " A perusal of records of proceedings was made. It is found that you owned 2507 bighas of land in the surroundings of Umed Bhavan at Kota. The value of the aforesaid land was not declared in the wealth-tax return filed by you on 30-9-1976. The assessment for the assessment year 1976-77 was made by the WTO on 31-3-1978. The value of the aforesaid property could not be brought to charge because of failure on your part to declare the said asset in the return of wealth filed by you. You have, however, filed annexure G-2 along with the return. In the annexure, you have shown the details of land comprising in Umed Bhavan sold to the two co-operative societies. In a note annexed to the said annexure it is mentioned that ' the land comprising of Umed Bhavan compound was sold to the co-operative societies as per sale agreement dated 18-8-1972. These sale deeds were presented for registration to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eat detail and then exemption was granted to the assessee under section 5(1)(iii). 5. That, therefore, it was not correct to say that there was any failure on the part of the WTO to examine the issue in question and form his opinion about it. He had verified all the facts and had examined all the facts and had also gone through the past records and, therefore, the order passed by the WTO was not at all erroneous and prejudicial to the interests of the revenue. 6. That in the past the revenue had all along accepted that Umed Bhavan including rari and entire compound was entitled to exemption under section 5(1)(iii) and that, there was no basis for upsetting that finding. The WTO had given exemption to the assessee only after he had been fully satisfied with the explanation of the assessee. 7. That, therefore, it was not warranted to re-open the settled issue under the provisions of section 25(2) and that as such ' Your honour would not have jurisdiction in this matter '." 25.2 On merits, the assessee reiterated the same submissions, as he had made earlier in the course of assessment proceedings for the assessment year 1957-58, which have been extracted by us in extenso above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tire compound has been accepted. An extract copy of AAC judgment in income-tax cases enclosed will also throw light on the point at issue in the wealth-tax cases." The assessee also invoked the principle of res judicata with regard to the aforesaid subject-matter and submitted in para 9 of his letter as follows : " That it is beyond doubt that question of exemption of entire Umed Bhavan including land has been decided in the assessment year 1957-58 and there is no change in the nature of property, then law of res judicata applied in the above assessment also. There is no change in the property. The property continues the same in all these years and as such the law of res judicata applies in this case and exemption continued to be allowed." 25.5 Similar submissions were reiterated by the assessee in respect of the assessment years 1975-76 and 1976-77 vide his letter dated 14-3-1980. 25.6 The Commissioner's action under section 25(2) as is evident from the above was challenged, firstly, on the ground that he had no jurisdiction to initiate action under section 25(2) as the WTO had not made any error in framing these assessments and that he had examined the matter thoroughly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said land. It, thus, reveals from the assessment records that the WTO failed to make enquiries and to consider the question of exemption of the land. On the facts and in the circumstances of the case discussed above, it was considered that the assessment orders passed by the WTO on 28-1-1978 for the assessment years 1970-71, 1971-72, 1972-73, 1973-74 and 1974-75 were erroneous insofar as they were prejudicial to the interests of revenue. It was, therefore, proposed to take action under section 25(2) of the Wealth-tax Act including an order enhancing or modifying the order or cancelling the order or directing a fresh order to be passed." 26.3 He then referred to the submissions made by the assessee in his joint reply to the notices under section 25(2) issued to him by the Commissioner and then rejected the same by observing as follows : " Facts of the case and arguments made challenging the validity of action under section 25(2) on behalf of the assessee are more or less the game as have been discussed in detail in my order dated 23-8-1979 passed under section 25(2) of the Wealth-tax Act, in this very case for the assessment years 1966-67 to 1969-70 whereby I have set aside th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... going through them it appears that the Commissioner had looked into some files re : audit objections kept by the Chief Auditor. No note is there on the file as to what was in the audit files. His satisfaction appears to have taken note of the audit objection. It will, therefore, be necessary to look into those files also. They may, therefore, be produced... 2-4-1981 may be fixed for producing the files of the Chief Auditor, which were looked into by the Commissioner. It is necessary to look into the above files in order to dispose of the contention that the Commissioner's assumption of jurisdiction under section 25(2) was not valid. Both sides be informed of the above date and the above subject-matter." Accordingly, the matter was brought to the attention of both the sides. 27.3 The assessment records of the WTO, referred to above, were also gone through, and it was felt that, in the interest of substantial justice, the following letters/communications/reports borne on the wealth-tax records of the WTO for the assessment years 1957-58 and 1970-71 ... are necessary to be placed on record : " WT records of 1957-58 1. Letter dated 8-1-1969 written by the WTO Kota to the Tehs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is necessary. It was also submitted by the learned departmental representative that ' for further hearing of the case the department will like to engage standing counsel for which purpose too an adjournment is necessary '. The learned departmental representative further averred that : " I am also directed to submit that since certain records have already been examined by the Hon'ble Accountant Member in his chamber without the presence of the parties, natural justice demands that the points noted and the inference drawn by the Hon'ble Accountant Member from such examination may kindly be intimated to us and an opportunity provided to us to make necessary submissions about the same in the Court." 27.7 A copy of the above-mentioned submissions of the revenue was given to the opposite side and both the sides were heard in detail. Thereafter, the Tribunal passed the following order on the department's application : " Both the sides have been heard with regard to the departmental representative's application for adjournment. It is opposed by the assessee's counsel on the ground that all the points in appeal have already been heard at length over two days and that nothing furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er himself admits that the replies of the assessee dated 25-9-1977 and 29-11-1977 were before the WTO wherein the assessee had given full details regarding the land comprised in the compound of Umed Bhavan palace and had further claimed exemption in respect thereto in terms of section 5(1)(iii), after claiming that the said lands were not agricultural lands. 2. That it was not factually correct for the learned Commissioner to have observed that the WTO had failed to make enquiries whether the land in question was appurtenant to Umed Bhavan and was exempt under section 5(1)(iii). The enquiries on this point were made by the WTO and the assessee pointedly reiterated all these pleadings, which he had earlier raised before the WTO in the course of his assessment proceedings for the assessment year 1957-58, and had urged that the entire land, forming part of the compound of Umed Bhavan palace, was part of the palace and was exempt under section 5(1)(iii). The aforesaid plea was taken by the assessee not only in his letter dated 25-9-1977, but, again, in his letter dated 29-11-1977. The Commissioner had, therefore, made a mis-statement that the WTO had made no enquiries with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion on this point had already been expressed by the WTO right from the assessment years 1957-58 to 1964-65, and inasmuch as the facts remained identical for the years under consideration also, the WTO might not have considered it necessary to make a separate mention of the discussion, which he definitely had had with the assessee on this point. 5. That inasmuch as all the points, which have been mentioned by the Commissioner in his order for the assumption of jurisdiction, have been found to be factually incorrect, the assumption of jurisdiction by the Commissioner on the facts and in the circumstances of the case, was void ab initio and, therefore, the orders passed by him deserved to be quashed. 29.1 On merits, the emphasis of the learned counsel for the assessee has been on the fact that what was exempted under section 5(1)(iii) was the Umed Bhavan, and what constituted the said palace has been specified and agreed upon between the assessee and the Government of India vide the terms of the agreement of merger of the State of Kota in the United States of Rajasthan and reference to which has been made in the letter of the Government of India dated 13-9-1950 and the inventory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercised his option for Umed Bhavan Palace vide his letter dated 23-1-1958 (the above letters are placed at Sl. Nos. 17 18 of the assessee's first paper book). The combined reading of the aforesaid material would, according to the learned counsel for the assessee, clearly indicate that what was exempted under section 5(1)(iii) was the Umed Bhavan Palace and, therefore, whatever constituted the said palace would be exempt and there would be no question of trying to make a distinction between the building of the palace and the surrounding land of the palace. The palace consisted not only of the building but also of the area demarcated on the map, which was shown to the WTO in the course of the assessment proceedings for the assessment year 1957-58, and a copy of which has been given by the assessee in its paper book. The entire palace is surrounded by one compound wall and what is contained within it is the palace and, therefore, according to the learned counsel, it is this palace which is exempt under section 5(1)(iii). 29.4 The learned counsel for the assessee conceded that the Tribunal had decided the issue against him in respect of the assessment years 1966-67 to 1969-70, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should make a reference to this Court of the question." 30.3 According to the learned departmental representative, there was no additional or new facts in respect of the appeals under consideration and that all the points, which were raised by the assessee's learned counsel in respect of these appeals, were raised by him earlier also and that the Tribunal had considered each one of the points raised by the assessee's learned counsel and the learned departmental representative relied heavily on the order of our learned brothers in respect of the assessment years 1966-67 to 1969-70, referred to above. 31. In the course of hearing it was noticed that different figures were being given at different times with regard to the area surrounding the Umed Bhavan Palace and it was not clear as to how the figure of 2507 bighas mentioned by the Commissioner had been worked out, and whether it included the land on which the buildings in question of Umed Bhavan Palace were built up or whether this area was in addition to the area covered by the buildings. Both the department as well as the assessee were required to throw light on this aspect of the matter. In response to the above query of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of Income-tax authorities. An assessment for a particular year is final and conclusive between the parties only in relation to the assessment for that year and the decisions given in an assessment for an earlier year are not binding either on the assessee or the department in a subsequent year. But this rule is subject to limitations, for there should be finality and certainty in all litigations including litigation arising out of the Income-tax Act and an earlier decision on the same question cannot be re-opened if that decision is not arbitrary or perverse, if it had been arrived at after due enquiry, if no fresh facts are placed before the Tribunal giving the later decision, and if the Tribunal giving the earlier decision has taken into consideration all material evidence. A Tribunal like the Appellate Tribunal should be extremely slow to depart from a finding given by an earlier Tribunal. There is also a further limitation, namely, that the effect of revising a decision in a subsequent year should not lead to injustice and the Court must always be anxious to avoid injustice to the assessee. For instance, if the Court is satisfied that by depriving the assessee of his r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, B and N started a new firm dealing in jute and at about the same time the assessee stopped his business. On the basis of the material then before it, the Tribunal did not accept the genuineness of the above gifts for the assessment years 1945-46 and 1946-47, and, ultimately, the Supreme Court refused to interfere with this finding---Mahabir Prasad Khemka v. CIT [1962] 44 ITR 405. In proceedings for the assessment years 1947-48 to 1951-52, considerable additional evidence was adduced, and the Tribunal, after taking into consideration the decision rendered in the earlier proceedings, came to the contrary conclusion and held that the gifts were genuine. On these facts, the Hon'ble Supreme Court had to consider if the Tribunal's aforesaid action was justified. They held : "... that the fact that in the earlier proceedings the Tribunal took a different view of the two gifts was not a conclusive circumstance : the decision of the Tribunal reached in those proceedings did not operate as res judicata. As seen earlier there was a great deal more evidence before the Tribunal." [Emphasis supplied] 32.6 The principle which, according to us, emerges from the review of the aforesaid decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders under section 25(2) his assumption of jurisdiction on the following grounds : " 1. That the assessee did not declare in his wealth-tax returns the value of land admeasuring 2507 bighas in the surroundings of Umed Bhavan. 2. That even though the assessee had filed two letters dated 25-9-1977 and 29-11-1977 during the assessment proceedings for the assessment year 1970-71, claiming exemption under section 5(1)(iii) in respect of the above land, the WTO failed to make enquiries whether the land was, in fact, exempt and discuss this matter in his assessment orders. 3. That in respect of the assessment years 1973-74, 1974-75, 1975-76 and 1976-77, although no such land was shown in the returns, yet in the annexure a note was given mentioning the sale of the said land and the receipt of advance of Rs. 2,40,000 in respect of the assessment years 1973-74 to 1975-76 and of Rs. 4,56,000 in respect of the assessment year 1976-77. The WTO, while completing the assessments, neither included the cash of Rs. 2,40,000 nor discussed in the assessment order, the claim of exemption under section 5(1)(iii). He, in fact, according to the Commissioner, made no enquiries on this point and did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined at pages 6 to 13 of the assessee's first paper book. The contents of this letter have been taken note of in detail by us above. The pith and substance of the arguments contained in that letter was that the entire Umed Bhavan Palace, enclosed in one compound, was one palace and was treated as such in the inventory and in the notification of the Central Government dated 14-5-1954 and that no demarcation line could be drawn for treating only one portion of the palace as official residence and the other portion of the palace as subject to the wealth-tax. The above submission of the assessee was made on 17-3-1969 and the same was accepted by the WTO, who passed the assessment order for the assessment year 1958-59 four days later on 21-3-1969. Reference to this position was made by the assesses in his letter dated 27-9-1977, while replying to the WTO. As noted above, the Commissioner refers to this letter in his order and it is, therefore, to be presumed that he is aware of the contents of this letter. As noted above, the assessee's submission to the WTO, as per this letter, was that ' entire Umed Bhavan including rari and compound is a personal property of the Maharao Sahib and is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter vide his letter dated 29-11-1977, extracts from which have been given by us above (copy of this letter has also been filed before us). In the aforesaid letter, the assessee had made it clear to the WTO that 594 bighas of Kherli Purohit, 559 bighas of Dostpura and 1050 bighas of Khand Caunri were ' part of Umed Bhavan Palace ' and were, therefore, not agricultural lands. The assessee had further clarified that 304 bighas out of 310 bighas situated in Lodhpura village were also ' part of Umed Bhavan Palace '. The aggregate of the above lands is 2507 bighas (594+559+ 1050+304). It is this figure, which is being mentioned by the learned Commissioner in his show cause notices to the assessee. It is, therefore, reasonable to believe that the learned Commissioner had examined the aforesaid letter of the assessee. The WTO had, as noted above, submitted a report to the IAC on the basis of the aforesaid reply given by the assessee, after verifying the correctness thereof and had, inter alia, made the following observations in his report dated 3-1-1978 : " The main chunk of lands measuring 2203 bighas is comprised in the official palace of His Highness ... They include the lands situat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was built on the lands, which were formerly part of Kherli Purohit, Dostpura and Khand Caunri villages and that those villages ' are now nowhere ' and that it was on this land that the palace was built and the villages had been removed. In fact, information on this point had been gathered by the WTO as early as in 1969 in the course of the assessment proceedings for the assessment year 1957-58, when he wrote to the Tehsildar, Kota, on 8-1-1969 asking the area of the land on which Umed Bhavan was situated. In his letter, the WTO had written, inter alia, as follows : " You may be aware, that there is a vast open land situated in the residential area surrounding the Umed Bhavan Palace which is enclosed by iron bars all around." [Emphasis supplied] The Tehsildar's reply, inter alia, was : " Area of this land is 2732 bighas. On 882 bighas out of it the building and groves are situated." [Emphasis supplied] On the face of the categorical report of the WTO dated 3-1-1978, and the above information gathered and placed on the wealth-tax record of 1957-58, it is not understood as to bow did the Commissioner take the stand that the assessee had ' failed to produce any evidence tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons, which are not clear to us, chose to ignore to take note of otherwise glaring facts, which are obtaining on the record of the WTO in respect of the assessment years under consideration, and has, without due consideration, applied the ratio of his combined order passed by him under section 25(2) in respect of the assessment years 1966-67 to 1969-70 in respect of the present years also. If the learned Commissioner had applied his mind objectively to the facts relevant for the present appeals, and had contrasted them with the facts, as found by the Tribunal vide its combined order dated 31-10-1980 for the assessment years 1966-67 to 1969-70, the following position would have been abundantly clear to him : 1. That whereas, in respect of the assessment years 1966-67 to 1969-70, the assessee had made no reference in his returns to the Umed Bhavan and the area of the land on which it was situated, specific mention thereof has been made by the assessee in the returns filed for the years under consideration. 2. That whereas, in the course of proceedings for the assessment years 1966-67 to 1969-70, the WTO had made no enquiries whatsoever with regard to the question of exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee should show in his balance sheet on account of the money held by him ' on account ' for and on behalf of the persons, with whom the agreement to sell had been entered into by the assessee. The non-inclusion of the aforesaid sums could not, therefore, be regarded as an error. Apart from it, the Commissioner could not have come to the above conclusion if he had taken note of Note No. 2 given by the assessee in Annexure G-2, the earlier part of which the Commissioner has noted in his orders. The said Note No. 2 made it clear that the accounts of the assessee were maintained on cash basis and, therefore, it was assured by the assessee that whenever the outstanding would be received by him, ' the same would be included accordingly '. The assessee's accounting system being cash, the amount, which he had already received by way of cash, had apparently been included by him in his wealth and, therefore, the averment of the learned Commissioner that the assessee had not included the cash in his wealth-tax return was based on mere surmises and conjectures, and ignored the declaration made by the assessee himself. The learned counsel for the assessee has vehemently denied the above allega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim. 3. That he did not include the sums of Rs. 2,40,000 in the wealth for the assessment years 1973-74 to 1975-76 and of Rs. 4,56,000 in the wealth of the assessment year 1976-77 and that the orders of the WTO were erroneous on account of the non-inclusion of the said sums in the assessee's wealth. The assumption of jurisdiction by the Commissioner, in the circumstances, cannot be sustained. Accordingly, for this defect itself, we quash his orders. 37.1 On merits also, we are unable to sustain the orders of the learned Commissioner. Clause (iii) of sub-section (1) of section 5 under which the assessee has claimed the exemption with regard to Umed Bhavan Palace and its entire compound reads as follows : " 5.(1) Subject to the provisions of sub-section (1A), wealth-tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee--- (i) and (ii) (iii) any one building in the occupation of a Ruler, being a building which immediately before the commencement of the Constitution (Twenty sixth Amendment) Act, 1971, was his official residence by virtue of a declaration by the Central Government u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... know, his choice fell on Umed Bhavan. The provisions of section 5(1)(iii), sub-clause (iii) of clause (1) of section 15 of the Part B States (Taxation Concessions) Order, the notification issued by the Government of India dated 22-5-1954, the letter of the Deputy Secretary, Ministry of Home Affairs, to the assessee dated 20-1-1958 and the assessee's reply thereto dated 23-1-1958, have, in our opinion, to be read together to ascertain the scope of exemption granted by clause (iii) of sub-section (1) of section 5. The words used in the Part B States (Taxation Concessions) Order, are ' Palaces of Rulers of Indian States '. The words used in clause (iii) of sub-section (1) of section 5, on the other hand, are ' building in the occupation of a Ruler '. Apparently, there is use of different words in the two Acts ; in the one, there is the use of the word ' Palace ' whereas, in the other, there is the use of the word ' building '. Prima facie, therefore, it may be urged that the two words ought to convey two different meanings. There might have been some force in the above contention, if both the sections did not contain the adjectival clauses which identified the ' building ' or the ' p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l residence of the Ruler of Kota, under notification No. SRO 1619 dated 22-5-1954 issued in pursuance of the provisions of item (iii) of paragraph 15, was the ' Palace ' of Umed Bhavan. What is this Palace was specified in item No. 2 of the inventory of the private properties of His Highness the Maharaja of Kota, as approved by the Ministry of States, vide their order dated 31-8-1950 (contained at pages 14 and 15 of the assessee's first paper book) and this specific action, as we have noted above, reads as follows : " Umed Bhavan including gardens, rari, buildings, comprising the entire compound. " That this specification is sacrosanct and beyond the pale of even the Rajasthan Land Reforms and Acquisition of Land Owners Estate Act, 1963, was made clear by the letter of the Additional Chief Secretary to the Government of Rajasthan, Jaipur, addressed to the Collector, District Kota dated 17-9-1966 placed at Sl. No. 21 of the assessee's first paper book, wherein the Additional Chief Secretary stated, inter alia, that " Having regard to the definition of the words ' estate ' and ' land ' as given in the Rajasthan Land Reforms and Acquisition of Land Owners Estate Act, ' Umed Bhavan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... private property as approved by the Secretary of the Government of India vide his letter dated 31-8-1950. According to this inventory, item No. 2 of the private property is Umed Bhavan including garden, rari, building, etc. The Commissioner has pointed out that it does not show that it also included 2507 bighas of open land and the assessee has failed to produce any evidence even in the list of private properties at Sl. No. 2 of the inventory that 2507 bighas of land was part and parcel of the official residence of the assessee. No evidence has been produced before us either to show that land admeasuring 2507 bighas of land was part and parcel of the official residence of the assessee before merger. In fact, as the documents before us do not show to what is the total area of the lands surrounding Umed Bhawan which the assessee is claiming exempt under section 5(1)(iii) of the Wealth-tax Act. In the absence of any evidence produced before the learned Commissioner or before us, we have no hesitation in holding that the assessee's claim that 2507 bighas of land were part and parcel of the official residence of the assessee is not proved." [Emphasis supplied] 37.5 The aforesaid impre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order, 1950. Umed Bhavan, in its entirety, was the official residence and inasmuch as the land of 2428 bighas is part and parcel of the said palace, it is, in our opinion, exempt under section 5(1)(iii) as it forms part of the palace. 37.7 In taking the above view, we are not, in any way, dissenting from the stand taken by our learned brothers. We are giving the above finding on the basis of the evidence which is now before us, and which, as we have pointed out above, is an additional evidence, which was either not produced before the authorities below or before the Tribunal, Jaipur Bench, during the course of the appellate proceedings for the assessment years 1966-67 to 1969-70, or to which attention of our learned brothers was not drawn and, therefore, the same were not considered by them, while deciding the aforesaid appeals for the assessment years 1966-67 to 1969-70. That the Tribunal can take a stand different from what the earlier Bench of the Tribunal has taken, provided it has additional evidence before it, is supported, as noted above, by the decision of the Hon'ble Supreme Court in the case of CIT v. Brijlal Lohia and Mahabir Prasad Khemka [1972] 84 ITR 273. We are inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicial to the interests of the revenue. The grounds on which the Commissioner held the said orders to be erroneous do not in fact obtain. The WTO had made the detailed enquiries with regard to what constituted Umed Bhavan Palace in the course of assessment proceedings under consideration ; the assessee had also placed full details in this regard on record, and the sums of money amounting to Rs. 2,40,000 and Rs. 4,56,000 were duly declared by the assessee as part of his assets on the basis of the cash system of accounting followed by him, even though in fact, they were not his assets. We, therefore, cannot sustain the Commissioner's orders and so quash them. 40. In the result, we allow the appeals and vacate the orders of the Commissioner. Per Shri S. S. Mehra, Judicial Member --- First of all, I express my regret that the matter could not claim my attention earlier, since I was frequently on long tours and some time on leave. 2. I have the benefit of having gone through the learned order proposed by my learned brother Shri Anand Prakash, the Hon'ble Accountant Member. However, I regret a lot that I failed to persuade myself to associate with the conclusion arrived at by my le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order. No convincing reasons could be advanced on behalf of the appellant as to why we should not follow the earlier consolidated order of the Tribunal. I am convinced that the facts and circumstances clearly warrant that there is no need to differ from the said findings of the Tribunal. So, respectfully following the said finding I am of the considered view that the assessee's instant appeals deserve dismissal and are hereby dismissed. 6. In the result, the assessee's appeals are dismissed. THIRD MEMBER ORDER Per Shri R.L. Segel, Judicial Member --- As there was ' difference of opinion between the learned members hearing these appeals, they had initially referred the following common question to the Hon'ble President, Tribunal, Bombay, for the opinion of the Third Member under section 255(4) of the Income-tax Act read with section 24(ii) of the Wealth-tax Act : " Whether, on the facts and in the circumstances of the case, the orders under section 25(2) of the Wealth-tax Act, 1957 passed by the Commissioner of Wealth-tax in the present case are assessable in law and on fact ?" 2. The President, Tribunal, Bombay, in turn had referred the said question to me for o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r alia, has held that the facts in the years under consideration were similar to those in the earlier years and so the earlier decision of the Tribunal dated 23-10-1980 squarely applied in the present case. The appeals of the assessee merited dismissal. 6. The position, being as stated hereinbefore, I, while hearing these appeals as Third Member, was of the prima facie view that though one of the points on which the learned Accountant Member and the learned Judicial Member have also differed was as to whether the facts in the years under consideration are similar to those in the assessment years 1966-67 to 1969-70, yet that difference between the learned Members had not been referred under section 24(ii) of the Wealth-tax Act read with section 255(4) of the Income-tax Act. I, therefore, after reviewing the case law on the subject, vide my order dated 26-8-1982, had submitted the case to the Hon'ble President, Tribunal, Bombay, for further directions in the matter by observing as under : " Since the Members hearing the appeal have not referred the difference of opinion between them, on the point as to whether the facts in the years under consideration are similar to those in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal proposition that the Third Member, to whom a case is referred on difference of opinion between the Members originally hearing it, is competent to decide only the point or points on which the Members of the Bench originally hearing the case had differed. He cannot himself formulate a new point on which he could record his decision. See in this connection, the decision of the Allahabad High Court in Jan Mohammed v. CIT [1953] 23 ITR 15 and of the Patna High Court in Hanutram Chandanmul v. CIT [1953] 23 ITR 505. This aspect has already been dealt with by me in my aforesaid earlier order dated 26-8-1982. But the said decisions have no application in the present case. The Third Member initially hearing the appeals noticed, as per his aforesaid order dated 26-8-1982, that there was difference of opinion between the Members originally hearing these appeals on the points now brought out in the aforesaid additional question No. 1 He in view of the ratio of the aforesaid decisions, was of prima facie view that he was precluded by law from deciding the said difference of opinion as now brought in the aforesaid additional question No. 1. Thereafter, the matter was placed before the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Indian Income-tax Act, 1922, which was published in the Gazette of India dated (sic) May 1954. 11. The Wealth-tax Act came into operation with effect from 1-4-1957. Naturally, that led to the consideration by the Government of India of the question of exemption from wealth-tax any one building in occupation of an erstwhile ruler-declared by the Central Government as his official residence under the notification of the type referred to in the preceding paragraph. On 20-1-1958, Mr. V. Vishwanathan of the Ministry of Home Affairs, Government of India, addressed a letter (at page 17 of the paper book) to the assessee with regard to the exemption to be available to him in this behalf. The relevant extract of the said letter reads as under : " As Your Highness may be aware, section 5(1)(iii) of the Wealth-tax Act, exempts from the wealth-tax any one building in the computation of a Ruler declared by the Central Government as his official residence under para 13 of the Merged States (Taxation Concessions) Order, 1949, or para 15 of the Part B States (Taxation Concessions) Order, 1950. The notifications regarding the official residence, which have been issued by the Central Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under reference. Under the definition of ' asset ' in Wealth-tax Act, 1957 assets include ' property of every description movable or immovable but does not include agricultural land '. According to this definition, only the agricultural land or the land which is used for any other purposes such as for forest, animals is not exempt from wealth-tax ......" The WTO in the said letter drew the attention of the assessee to the decision of the Gujarat High Court in the case of Rasiklal Chimanlal Nagri v. CWT [1965] 56 ITR 608 and went on to point out as under : " Your vast land surrounding the palace satisfies the conditions laid down in Nagri's case. The exemption granted to you under section 5(1)(iii) relates only to the palace and the land appurtenant thereto. There is no other Ruler in Rajasthan, who has claimed exemption from such a vast non-agricultural land of over 800 acres situated within the municipal limits or in the residential area as in your case. Hence, in your case, I intend, to treat a part of the said 800 acres as not agricultural urban land liable to wealth-tax. The area works out as under : Area of the total land (as shown in your letter) 880 acres Less : co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the land attached therewith for the assessment years 1958-59 to 1964-65 as brought out in the assessment orders for those years is as under : " Year of Observations by the WTO assessment 1958-59 Umed Bhavan Palace compound is exempt under section 5(1)(iii). 1959-60 -do- 1960-61 Umed Bhavan Palace and compound is exempt under section 5(1)(iii). Hence, they are not included. 1961-62 -do- 1962-63 Umed Bhavan Palace and compound is exempt under section 5(1)(iii) wrongly stated as section 5(1)(iv) in the assessment order ... Hence, they are not included. 1963-64 -do- 1964-65 While dealing with the exemption claimed by the assessee under section 5(1)(iv) regarding the Garh property, which was claimed to be in self-occupation, the WTO has observed as under : ' In respect of exemption under section 5(1)(iv), in my view, this exemption is not available to the assessee, as the exemption is provided in respect of a house belonging to and exclusively used by him for residential purposes. In fact, the assessee is a Ruler and has already got exemption under section 5(1)(iii) of the Wealth-tax Act, 1957, in respect of a building occupied by him. He is residing in this building an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a as left after excluding the land appurtenant to Umed Bhavan as are necessary for the reasonable use and enjoyment of the building will only be included in the net wealth but in no case, the inclusion should be more than 2507 bighas of land in view of the order of the Commissioner '. 19. I now come to the years under consideration, i.e., the assessment years 1970-71 to 1976-77. The position taken by the assessee in the wealth-tax returns filed by him for those years in Part IV thereof is as under : -------------------------------------------------------------------------------------------------------------------------------------------------- Year of Name of the Observation in Observation in assessment property Part IV regard- Part IV of exing the annexures emption claimed -------------------------------------------------------------------------------------------------------------------------------------------------- 1 2 3 4 -------------------------------------------------------------------------------------------------------------------------------------------------- 1970-71 Umed Bhavan, There is no claim regarding exemption Kota under section 5(1)(iii) either in P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on 1-4-1970 Rs. 47,42,550." -------------------------------------------------------------------------------------------------------------------------------------------------- 21. In the paper book filed by the assessee, there is a letter dated 27-9-1977 (at page 67 of the paper book) addressed by the assessee to the WTO on the subject ' in the matter of wealth-tax of Maharao Bhim Singhji Sahib of Kota-Assessment year 1970-71 ' reading as under : 2. As regards the point raised by your goodself that whether land comprising in the Umed Bhavan is agricultural land or urban land or abadi land. In this connection, we submit that entire Umed Bhavan including rari and compound is a personal property of the Maharao Sahib and is exempt from the purview of the wealth-tax under section 5(1)(iii) of the Wealth-tax Act, 1957. This point has already been clarified in the assessment relevant to the assessment year 1957-58. The land of Umed Bhavan compound is Abadi land and not agricultural land. In this connection we draw your kind attention towards the letter of Assistant Secretary, Government of Rajasthan No. FLG/17/Rev./A/65 dated 17-9-1966 in which they have clarified that the said l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Wealth-tax cases of H.H. Maharao Bhim Singhji Sahib of Kota-Asst. year 1970-71 and onwards-submission on the point of agricultural land---In continuation of your previous submissions and details which we have furnished from time to time we further submit as under : 1. Your goodself has observed that why the agricultural land of Kherli Purohit 594 bighas, Dostpura 559 bighas and Khand Caunri 1050 bighas was not shown in the return. In this connection, we would like to draw your kind attention to our letter dated 27-9-1977 in which we have submitted that these are not agricultural land. These lands comprise Umed Bhavan which is the official residence of ex-Ruler of Indian State Kota. In this connection as desired by your goodself we have filed the order of the Government of Rajasthan No. FLG/17/Rev/A/65 dated 17-9-1966 according to which aforesaid lands are not agricultural lands and are comprising in Umed Bhavan which is the personal property of Maharao Shri Bhim Singhji Sahib of Kota---the original order is ready for your kind perusal and verification. The entire Umed Bhavan is declared as official residence of ex-Ruler which is exempt under section 35(1)(iii) of the Wealth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of land only. The 150 bighas of Prahladpura land belongs to Raj Kumari Indra Kumariji of Rajgarh and 150 bighas to Raj Kumari Bhuvaneshwari Kumariji. Therefore, 300 bighas of land does not belong to Maharao Sahib but to other family members. (c) There was 585 bighas 6 biswas of agricultural land belonging to Maharao Sahib---Out of this, 563 bighas of land has already been sold to various parties and does not belong to the assessee on the relevant valuation date .... (d) As regards Ladpura land out of 310 bighas, 304 ... is comprising in Umed Bhavan compound .... agricultural land. Umed Bhavan is official residence of Ex. . . . hence, it is exempt under section 5(1)(iii) and ... at length as above. (e) As regards Rampura land, the land in possession of assessee is 500 bighas 10 biswas and not 530 . . . as shown by you. It seems there is some ... and correct land is 500 bighas and 10 biswas ... was included in the return. The necessary evidence of the above ... available with the assessee is ... We do hope your goodself would now be quite satisfied and will finalise the assessment and oblige." 22.2 On that very day, the assessee had addressed another letter dated 29-11- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oses of the aforesaid Act. Such a property cannot, therefore, be acquired. Eventually, the question of Compensation Commissioner giving answer or determining the status of such property also does not arise. It is not correct to say that Compensation Commissioner will have to declare as to whether a particular property is or is not specified as private property in the inventory. The land revenue was, therefore, incorrectly assessed on the land falling within the compound of Umed Bhavan, Kota. So far as the question of conversion of this land into ' abadi ' land is concerned, it appears from the perusal of the record that this land should not have been classified as agricultural land. It would not be in the fitness of things to issue an order converting this land into ' abadi ' land. The revenue record may, however, be corrected so that the correct nature of the land may be shown therein. You may now take necessary action in respect of correction of the record." 22.4 The paper, which I will like to mention next, is the letter No. B1/IT/ Agrl. Land/77-78/15900 dated 3-1-1978 addressed by the ITO, to the IAC Ajmer Range, Ajmer (at pages 9-11 of the paper book filed by the revenue) on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er alia, the value of the immovable (a) urban assets ' as value per last year ' minus the value of the immovable properties sold by the assessee in that year and (b) the agricultural land at Rs. 5,30,000. Thereafter, there is an observation by the WTO reading ' Umed Bhavan land claimed not being agricultural land '. There is, however, no discussion in the said assessment order or any of the assessment orders for the other years under consideration regarding the aforesaid exemption claimed by the assessee in each of the years under consideration under section 5(1)(iii) and brought out in paragraph 19 above. At the same time, the WTO has not included in the net wealth of the assessee in each of the years under consideration the market value of land attached to and surrounding Umed Bhavan Palace building. 24. Insofar as the other years under consideration are concerned, the WTO has computed the net wealth of the assessee in each of those years by including therein the market value of the immovable assets, namely, urban assets and the agricultural land ' as per the value of the last year ' minus the value of each those said assets, if any, sold in that year (assessment orders are at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ages 101-102 of the paper book) similar is in terms as the one for the assessment year 1973-74. 28. In respect of the assessment year 1976-77, however, the facts mentioned in the show cause notice were slightly different. The relevant extract reads as under : " A perusal of the records of proceedings was made. It is found that you owned 2507 bighas of land in the surroundings of Umed Bhavan at Kota. The value of the aforesaid land was not declared in the wealth-tax return filed by you on 30-9-1976. 2 The assessment for the assessment year 1976-77 was made by the WTO on 31-3-1978. The value of the aforesaid property could not be brought to charge because of failure on your part to declare the said asset in the return of wealth filed by you. You have, however, filed Annexure G-2 along with the return. In the annexure, you have shown the details of land comprising Umed Bhavan sold to the two co-operative societies. In the note annexed to the said annexure, it is mentioned that ' the land comprising of Umed Bhavan compound was sold to the co-operative societies as per sale agreement dated 18-8-1972. These deeds were presented for registration to the Sub-Registrar of Kota on 18-8- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 5(1)(iii) of Umed Bhavan and the adjoining lands forming part of its compound was dealt with in great detail and then exemption was granted to the assessee under section 5(1)(iii) of the Wealth-tax Act, 1957. 5. That, therefore, it was not correct to say that there was any failure on the part of the WTO to examine the issue in question and form his opinion about it. He had verified all the facts and had examined all the facts and had also gone through the past records and, therefore, the order passed by the WTO was not at all erroneous and prejudicial to the interests of the revenue. 6. That in the past the revenue had all along accepted that Umed Bhavan including rari and entire compound was entitled to exemption under section 5(1)(iii) of the Wealth-tax Act, 1957, and that, there was no basis for upsetting that finding. The WTO had given exemption to the assessee only after he had been fully satisfied with the explanation of the assessee. 7. That, therefore, it was not warranted to re-open the settled issue under the provisions of section 25(2) of the Wealth-tax Act, 1957, and that as such ' your honour would not have jurisdiction in this matter '." [Emphasis supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -3-1980 to the show-cause notices issued by the Commissioner under section 25(2) for the assessment years 1975-76 and 1976-77 is at pages 107 to 115 of the paper book filed by the assessee, as rightly stated by the learned Accountant Member in para 25.5. The submissions made therein by the assessee were similar to the ones made in reply to the show-cause notices in the assessment years 1970-71 to 1974-75. 33. The Commissioner after hearing the representative for the assessee and considering the replies filed by the assessee to the show-cause notices issued for the assessment years 1970-71 to 1974-75 passed a consolidated order dated 21-1-1980 to the following effect : " Facts of the case and arguments made challenging the validity of action under section 25(2) on behalf of the assessee are more or less the same as have been discussed in detail in my order dated 23-8-1979 passed under section 25(2) of the Wealth-tax Act in this very case for the assessment years 1966-67 to 1969-70 whereby I have set aside the said assessment orders to be made de novo. I need not repeat the contentions raised by the assessee and my observations thereon. For the same reasons as have been elaborate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out in details in para 8 above. The said preliminary objection, according to the departmental representative, was without substance. This aspect of the case has been discussed by me in para 9 above. Therein, the preliminary objection of the learned counsel for the assessee, Mr. C.S. Agarwal, has been for the reasons stated therein, not accepted. 37. The first point made out by the learned counsel, Mr. C.S. Agarwal thereafter was that the approach of the learned Judicial Member in his order was not correct, inasmuch as, there was no difference of opinion between the learned Members hearing the appeals in the matter of facts. In this connection, the learned counsel, Mr. C.S. Agarwal, took me through the order of the learned Accountant Member touching the facts of the case. He then took me through para 3 of the order of the learned Judicial Member wherein he has observed that ' the facts have by and large been properly incorporated in the impugned order and more fully by my learned brother '. Thereafter, the learned Judicial Member referred to the aforesaid consolidated order of the Commissioner dated 21-1-1980 for the assessment years 1970-71 to 1974-75, and the consolidated order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uding the compound, the WTO ought to have made enquiries whether the land surrounding Umed Bhavan Palace building was, in fact, exempt under section 5(1)(iii) and discussed the claim regarding the said exemption in the assessment orders that although no such land was shown as exempt in Part IV of the return yet in annexure thereto a note was given mentioning the sale of diverse portions of the said land, the receipt of the diverse amount of sale consideration ; the WTO while completing the assessments for those years neither included the said sale consideration in the net wealth of the assessee for the year concerned nor discussed in the assessment orders the claim of the assessee for exemption under section 5(1)(iii). He, in fact, according to the Commissioner, did not make an enquiry on this point and consider the claim of exemption at all. The said assumed jurisdiction, according to the learned counsel for the assessee, Mr. C.S. Agarwal, as rightly pointed out by the Accountant Member in paras 34.2, 34.3, 34.4, 34.5, 34.6 and 34.7 and also 35.1, 35.2, 35.3, 35.4 and 35.5 and 36, was not validly assumed by the Commissioner under section 25(2). The reasons given by him to assume j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel for the assessee, Mr. Agarwal, next urged that only small area which was appurtenant to the superstructures in Umed Bhavan along with those superstructures would alone constitute the Umed Bhavan Palace which was exempt under section 5(1)(iii). The entire Umed Bhavan Palace including the land surrounding it has since been held to be exempt under section 5(1)(iii) in the case of the assessee in his wealth-tax assessments from the assessment year 1957-58 and onwards. 41. The learned counsel for the assessee, Mr. C.S. Agarwal, next urged that in the light of the additional evidence now brought on record and detailed by the learned Accountant Member in paragraph 37.5 of the order of the learned Accountant Member, the earlier order of the Tribunal relied upon by the learned Judicial Member in his order cannot hold the field. The said additional evidence was never there either before the Commissioner when he passed the order under section 25(2) for the assessment years 1966-67 to 1969-70, nor before the Tribunal. The learned counsel for the assessee, Mr. C.S. Agarwal, next urged that the assessment orders for the years under consideration were passed by the WTO after due appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bservations in this behalf are as under : " 1. Re. : the letter of the WTO dated 8-1-1969 at page 1 of the paper book filed by the revenue addressed by him to the Tehsildar, Kota in the file of the assessee for the assessment year 1957-58, it was argued that the sale did not represent any new or additional evidence as sought to, be made out. The same did not form part of the records of the years under consideration but of the assessment year 1957-58 ; 2. The stand taken by the departmental representative at (1) above was also reiterated and canvassed regarding the letter of the Tehsildar No. 55 dated 23-1-1969 at page 2 of the paper book filed by the Revenue addressed to the WTO in reply to the aforesaid letter of the WTO ; 3. The stand as taken hereinbefore in (1) (2) was also reiterated by the departmental representative regarding the letter of the WTO No. B-1/WT/KU/2062 dated 1-2-1969 addressed to the assessee and the map of the Palace which was shown by the assessee to the WTO on 17-3-1969 in the course of the assessment proceedings for the assessment year 1957-58. The said letter and the map were according to the departmental representative never produced and shown by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 24-10-1976, referred to in para 22 above, the reply of the assessee dated 29-11-1977 to the letter of the ITO dated 24-10-1977 referred to in para 22.1 above and the report of the ITO to the IAC dated 3-1-1979 referred to in para 22.4 above relied upon by the learned Accountant Member are concerned, the departmental representative had argued that a perusal of these papers will show that the question involved for consideration in those papers was limited to the extent of agricultural land held by the assessee in the assessment year 1970-71 and onwards. These papers did not primarily raise the question of exemption under section 5(1)(iii) in respect of the land surrounding the Umed Bhavan Palace building. These papers had nothing to do with the exemption available to the assessee under section 5(1)(iii) in respect of the land surrounding the Umed Bhavan Palace building and the extent of the said exemption. The enquiry, as is clear from the said papers, pertained to the extent of the agricultural land holding with the assessee in the assessment year 1970-71 and onwards. In this connection also, the departmental representative drew my attention to the assessment order of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the assessment orders for the years under consideration regarding the exemption under section 5(1)(iii) referred to therein. The observations made by the Commissioner in para 13 of his consolidated order under section 25(2) for the assessment years 1966-67 to 1969-70 referred to in para 46 above squarely apply to these letters also. Present case is a case of ' no enquiry ' made by the WTO regarding the exemption claimed therein under section 5(1)(iii). Further, the point which is mainly highlighted therein is that the land surrounding Umed Bhavan Palace building was abadi land and not agricultural land. The exemption claimed was for Umed Bhavan/Umed Bhavan including compound and not the land surrounding it in the returns for the years under consideration. 49. The departmental representative further urged that in the Audit Note of the Accountant General, Rajasthan, there was no reference to Umed Bhavan Palace. The said Audit Note only pointed out the difference between the extent of the agricultural land actually held by the assessee and the agricultural land disclosed by him in his assessments from the assessment years 1965-66 and onwards. 50. The departmental representat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Palace. As such, the assessment orders passed by the WTO for the years under consideration were erroneous insofar as being prejudicial to the interests of the revenue, in view of the ratio of the decision of the Supreme Court in Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 and in Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323. 52. The departmental representative next challenged the correctness of the observations by the learned Accountant Member in his order holding that the Commissioner had not validly assumed the jurisdiction under section 25(2). According to him, the approach of the learned Accountant Member in this behalf is not correct. The learned Accountant Member for coming to the above conclusion, according to the departmental representative, in paragraphs 34.2, 34.3, 34.4, 34.5, 34.6, 34.7, 35.1, 35.2, 35.3, 35.4 and 35.5 has relied on the facts and circumstances and/or the evidence which was either not before the WTO and/or was irrelevant in the context of the question involved. The conclusion drawn by the learned Accountant Member in paragraph 36 was, according to the departmental representative, not correct. The conclusion by the learned Accountant Member in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not constitute ' evidence ' but merely record their opinion. 55. The departmental representative relied on the earlier order of the Tribunal in the case of the assessee referred to in para 3 above for the assessment years 1966-67 to 1969-70 as also various observations and findings therein. According to him, that decision represented the correct view in the matter and the observations of the learned Accountant Member to the contrary are not correct. 56. Insofar as paras 5 to 9 of the order of the learned Accountant Member is concerned, the same, according to the departmental representative, discusses the assessment of the assessee for the assessment year 1957-58. The records of the assessment of the assessee for that year were never looked into by the WTO while making assessments for the years under consideration. The Commissioner in his earlier order under section 25(2) for the assessment years 1966-67 to 1969-70, vide para 13, has squarely dealt with the said assessment of the assessee for the said assessment year 1957-58. 57. Coming to para 10 of the order of the learned Accountant Member, the departmental representative stated that the same deals with the assessments of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to say as they bring out the contents of the show-cause notices issued by the Commissioner under section 25(2), the replies of the assessee thereto and the extract of the orders passed by the Commissioner under section 25(2) for the years under consideration. 61. Coming to para 27 of the order of the learned Accountant Member, the departmental representative has urged that they only bring out the proceedings in the course of hearing of the appeals by the learned Accountant Member and the learned Judicial Member as also the arguments of the assessee and the departmental representative advanced before the Tribunal. 62. According to the departmental representative, para 28 of the order of the learned Accountant Member records the arguments advanced by the learned counsel for the assessee. So is the position regarding para 29 of the said order of the learned Accountant Member. Para 30 of the order of the learned Accountant Member, according to the departmental representative, records the arguments of the departmental representative advanced before the learned Accountant Member and the learned Judicial Member. 63. The departmental representative next took me through para 31 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d surrounding it was exempt under section 5(1)(iii). These conclusions of the learned Accountant Member, according to the departmental representative, as stated earlier, were not correct. The same stand has been taken by the departmental representative regarding the conclusions recorded by the learned Accountant Member in paras 38 and 39 of his order. According to the departmental representative, the assumptions made by the learned Accountant Member in the matter of additional evidence was not correct, nor was such additional evidence, if any, relevant for the issues involved before the Tribunal. The earlier decision of the Tribunal referred to above for the assessment years 1966-67 to 1969-70 in the case of the assessee was correct and had full application to the case of the assessee for the years under consideration. 66. In reply, the learned counsel for the assessee, Mr. C.S. Agarwal, has urged that the departmental representative was not correct in arguing that the order of the learned Judicial Member was a speaking order. The mistake, if any, in the earlier order of the Tribunal should not be perpetuated, when there is additional evidence on record, as brought out by the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Palace when the additional facts brought out by the assessee in replies to the show-cause notice were not discussed by the Commissioner in the impugned orders. In this connection, he referred to the decision of the Punjab Haryana High Court in CIT v. R.K. Metal Works [1978] 112 ITR 445. 70. Mr. C.S. Agarwal, the learned counsel for the assessee, once again took me through paras 1 to 39 of the order of the learned Accountant Member and urged that the order was complete, correct and in accordance with law. 71. I have given consideration to the above arguments. I have also very minutely and diligently gone through the orders of the learned Accountant Member and the learned Judicial Member. Section 5(1)(iii) as it stood on each of the valuation dates for the assessment years 1970-71 and 1971-72 is in the following terms : " (1) Wealth-tax shall not be payable by an assessee in respect of the following assets and such assets shall not be included in the net wealth of the assessee--- (iii) any one building in the occupation of a Ruler declared by the Central Government as his official residence under paragraph 13 of the Merged States (Taxation Concessions) Order, 1949, or parag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ph 13 of the Merged States (Taxation Concessions) Order, 1949, or paragraph 15 of the Part B States (Taxation Concessions) Order 1950." 74. Parties before me are at variance as to the exact impart of provisions of section 5(1)(iii) as it stood in the assessment years 1970-71 and 1971-72 and 1972-73 to 1976-77. According to the learned counsel for the assessee, the expression ' any one building ' in section 5(1)(iii) when read in the context of paragraph 15 of the Part B (Taxation Concessions) Order at page 16 of the paper book filed by the assessee was inter-changeable with the expression ' Palace ' appearing in the aforesaid Order. ' Umed Bhavan Palace ' in the case of the assessee, in view of the letters exchanged between V. Vishwanathan of the Government of India, Ministry of Home Affairs, New Delhi, dated 20-1-1958 and the reply of the assessee thereto dated 23-1-1958 at pages 17 and 18 of the paper book filed by the assessee, means the said palace including the compound. This conclusion is sought to be supported in the light of the existence of the adjective clause used in paragraph 15(1)(iii) of the Part B States (Taxation Concessions) Order, reading " declared by the Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive further urged that the reliance on the inventory of private property the letter of the Additional Chief Secretary of the Government of Rajasthan, Jaipur, and the requisitioning order by the Collector and District Magistrate, Kota relied upon by the learned counsel for the assessee is grossly misplaced. These documents have no relevance and bearing on the issue involved. 76. I, after deliberation, am inclined to agree with the revenue. Before I try to interpret the provisions of section 5(1)(iii) as it stood in each of the year under consideration will like to make it clear that insofar as the inventory of private property approved by the Government of India, Ministry of States dated 13-9-1950 at pages 14 and 15 of the paper book filed by the assessee is concerned, the same constitutes a part of the merger agreement. The said merger agreement between the Government of India and the assessee, an erstwhile ruler of one of the Indian States, being not law has no binding force on the Income-tax Department. The same cannot be enforced in a Court of Law or any Tribunal---see in this connection the decisions of the Allahabad High Court in Nawab of Rampur and H.H. Maharaja Vibhuti Nar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tates Act, otherwise not. The Additional Chief Secretary to the Government of Rajasthan has in the said letter informed the District Collector, Kota, that the said property of the assessee, namely, Umed Bhavan including gardens, rari, building, etc., comprising the entire compound could not be regarded as an 'Estate' and so could not be acquired under the aforesaid 1963 Act. I fail to see the relevance of this letter for the purposes of resolving the above controversy involved in the present case. The decision was rendered by the Chief Secretary in respect of Umed Bhavan including gardens, rari, building, etc., entered into the inventory of the private property of the assessee mentioned in the covenant entered into between him and the Government of India. Further, the decision of the Government is with reference to the aforesaid 1963 Act wherein the said Umed Bhavan including gardens, rari, building, etc., was considered to be abadi land and not agricultural land. This has nothing to do with the present controversy before me. The said decision was rendered in entirely different setting. 79. Coming to the requisitioning order dated 16/20-9-1976 issued by the Collector, Kota, under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' building ' (there cannot be any doubt in this behalf) means a building by itself or buildings in a cluster together with the land appurtenant thereto for due and proper enjoyment of the building. The said expression ' building ' in section 5(1)(iii) as it stood in the assessment years 1972-73 to 1976-77, in view of what I have stated hereinbefore, cannot embrace a vast land surrounding it as is the position taken by the learned counsel for the assessee. It will be difficult to accept the stand of the learned counsel, Mr. C.S. Agarwal, in this connection, I would, therefore, interpret the words ' any one building ' in section 5(1)(iii) as it stood in assessment years 1972-73 to 1976-77 in the context in which it appears there to mean the Umed Bhavan Palace Building(s) together with the land appurtenant there to have due and proper enjoyment thereof and not the entire land surrounding the same. 81. Coming to section 5(1)(iii) as it stood in assessment years 1970-71 and 1971-72, the adjective part of section 5(1)(iii) after the words any building in occupation of a Ruler therein' reads ' declared by the Central Government as his official residence under paragraph 13 of the Merged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption under section 5(1)(iii) is available in respect of one and only one building in the occupation of a ruler. 82. It may be added over here that though the covenant between the assessee and the Government of India read with the list of private property of the assessee speaks of ' Umed Bhavan including gardens, rari, building comprising the compound ', it is worthwhile to note that in the notification issued in pursuance of the provision of item (iii) of para 15 of the Part B States (Taxation Concessions) Order, the residence declared as official residence of the assessee as Indian State Ruler, inter alia, mentioned ' Umed Bhavan ' Palace. As stated above, the inventory of the private property of the assessee being a part of the aforesaid covenant entered into between him and the Government of India the merger agreement was not law and, therefore, cannot be enforced in a Court of Law or in any Tribunal. As far as the letter of the Additional Chief Secretary to the Government of Rajasthan addressed to the Collector of Kota is concerned, the same has no relevance in the present case as has been brought out by me in paragraph 78 above. So is the position regarding requisitioning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... my above discussion is that the expression ' any one building in the occupation of a Ruler ' in section 5(1)(iii) vis-a-vis the assessee in respect of which he is entitled to exemption thereunder, in each of the years under consideration is Umed Bhavan Palace building or buildings in a cluster and the land appurtenant thereto necessary for the proper use and enjoyment of the said building or buildings in a cluster and nothing beyond that. 85. I now address myself on the arguments advanced by the parties before me regarding the correctness of the stand taken by the learned Accountant Member in respect of so-called additional evidence which was, according to him, there on record of the years under consideration and was not there in the earlier years, i.e., the assessment years 1966-67 to 1969-70 which had come up for consideration before the Tribunal on the earlier occasion. The said additional evidence is detailed in para 37.5 of the order of the learned Accountant Member. The records of each of the years under consideration, I, after deliberation hold, are the records of each of those years as they stood at the relevant time before the WTO. Taking the letter of the WTO, dated 8- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those years. He (the WTO), as is clear from his report to the IAC and the observations in the wealth-tax assessment order for the assessment year 1970-71, has come to the conclusion that the agricultural land shown by the assessee for each of the assessment years 1970-71 and onwards was correct and that the land surrounding the Umed Bhavan Palace building was not agricultural land but abadi land, when he observed in that assessment order ' Umed Bhavan land claimed not being agricultural land '. Maybe that in the two replies of the assessee, dated 29-11-1977, there was a reference to his assertion that the Umed Bhavan Palace building together with the land surrounding it, has been held and/or was exempt under section 5(1)(iii), the WTO neither in the assessment order for the assessment year 1970-71 nor for any of the subsequent year, it appears, has applied his mind to that aspect of the case raised before him. I say so because there is of discussion in the assessment order in this behalf, when the WTO has otherwise dealt with the other claim of the assessee in those replies that the lands surrounding the Umed Bhavan Palace building was abadi land and not agricultural land vide asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agarwal. 90. This takes me to section 25(2) which reads as under : " Without prejudice to the provisions contained in sub-section (1), the Commissioner may call for and examine the record of any proceeding under this head, and if he considers that any order passed therein by a WTO is erroneous insofar as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard, and after making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment or cancelling it and directing a fresh assessment." As is clear from the provisions of section 25(2), the order to be passed is a quasi-judicial one. It is well established that in exercising the said power, the Commissioner must bring there an unbiased mind and consider impartially the objection raised by the aggrieved parties and decide the dispute according to the procedure consistent with the principle of natural justice. In the exercise of that power, he cannot permit his judgment to be influenced by matter not disclosed to the assessee nor by the dictates of ano ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the IAC dated 3-1-1978. Another point which was made out by the learned counsel, Mr. C.S. Agarwal, was that the Commissioner must have noticed that the assessee in Part IV of his return read with the relevant annexure had claimed exemption under section 5(1)(iii) with regard to Umed Bhavan including the compound on the ground that it was the official residence of the assessee. 92. The Commissioner in the face of the aforesaid evidence on record could not, according to Mr. C.S. Agarwal, the learned counsel for the assessee, have come to the prima facie opinion that : (i) the assessee had not declared in the wealth-tax return, the extent of the Umed Bhavan and the compound attached therewith and the size of that compound ; and (ii) the WTO had failed to make enquiry whether the land in question surrounding Umed Bhavan was exempt under section 5(1)(iii). The said returns read with the material referred to in paragraph 37.5 of the order of the learned Accountant Member, as also the assessment of the assessee for the assessment year 1957-58 clearly established that there was no failure on the part of the assessee in making requisite declaration in the return with regard to Ume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the exemption claimed by the assessee in Part IV of each those returns read with the relevant annexure thereto was in respect of ' Umed Bhavan, Kota '. From the annexures and Part IV to the wealth-tax returns of the assessee for the assessment years 1973-74 to 1976-77, it appears that the assessee claimed that the house ' Umed Bhavan Kota ' including the compound, which, according to the learned counsel for the assessee, encompasses the entire land surrounding Umed Bhavan Palace building, was claimed to be exempt under section 5(1)(iii). It further appears from the reply of the assessee dated 27-9-1977 at page 67 of the paper book filed by the assessee, the letter of the WTO dated 24-10-1977 at pages 4 and 5 of the paper book filed by the revenue and the two replies of the assessee to the WTO dated 29-11-1977, the one at pages 6 to 8 of the paper book filed by the revenue and the other at pages 68 and 69 of the paper book filed by the assessee, read with Audit Note of the Accountant General dated 5-3-1976 at page 3 of the paper book filed by the revenue and letter of the WTO with annexures to the IAC at pages 9 to 11 of the paper book filed by the revenue, that the WTO had raised t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this point." 97. In the other reply of the assessee dated 29-11-1977 at pages 5 to 8 of the paper book filed by the revenue, the assessee after referring to diverse agricultural land and the extent of the so-called difference in the area thereof shown in the return for the assessment year 1970-71 and onwards and the area stated in the Audit Note dated 5-3-1976 at page 3 of the paper book filed by the revenue, the assessee at page 8 has stated that " Umed Bhavan is official residence of Ex-Ruler ... Hence, it is exempt under section 5(1)(iii) ...." 98. In the report by the WTO to the IAC dated 3-1-1978, the WTO after considering the aforesaid Audit Note and the reply of the assessee has stated in that letter that " thus in my opinion there is no difference of land shown by the assessee ". 99. As is clear from the assessment order of the assessee for the assessment year 1970-71, the said correspondence was duly considered only regarding the case of the assessee that the land surrounding Umed Bhavan building was abadi land and not agricultural land. That is why the WTO in the assessment of the assessee for the assessment year 1970-71 has stated that the land surrounding the Ume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al (Jaipur Bench, Jaipur) in WT Appeal Nos. 347 to 350 (Jp.) of 1979. The effect of these two orders read together with the wealth-tax assessment orders passed by the WTO for those years was that the assessment for the assessment years 1966-67 to 1969-70 were set aside being erroneous and prejudicial to the interests of the revenue with a direction to the WTO to make assessment orders afresh for those years in accordance with law and that the land admeasuring 2507 bighas surrounding the Umed Bhavan Palace building was not available for exemption for the purposes of assessment under the Act. This in turn means that the value of immovable assets taken under item 1 for the assessment year 1970-71 at Rs. 8,66,200 no longer held good. The same is the position regarding the computation of the net wealth of the assessee in the matter of immovable assets for each of the other years under consideration, i.e., assessment years 1971-72 to 1976-77. 101. Position being as stated hereinbefore, the WTO has adopted the value of the immovable property for each of the assessment years 1970-71 to 1976-77 ' as per last year ' and not with reference to the past records of the assessee. The disclosure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by me earlier, there is no mention in the assessment orders passed by the WTO that he considered land surrounding Umed Bhavan Palace building to be exempt under section 5(1)(iii). The Tribunal has already held that for the assessment years 1966-67 to 1969-70, there was nothing on record of those years that the WTO had taken any such decision as contended by the assessee before us for those years. Para 13 of the order of Commissioner under section 25(2) for those assessment years hold good. 102. I may add over here that the reliance by the assessee on the letter of the WTO, dated 24-11-1978 and the reply of the assessee together with the annexures as also the letter of the ITO dated 8-6-1979 addressed to the assessee and the reply of the assessee thereto dated 12-6-1979 in misplaced because these papers came into existence after assessment orders for the years under consideration, i.e., assessment years 1970-71 to 1976-77 were made in January and March 1978. As such, this correspondence, relied upon by the assessee, was never considered by the WTO before making those assessments. These have to be ignored as rightly argued by the departmental representative. 103. Reference by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment years 1973-74 to 1976-77 exemption under section 5(1)(iii) was claimed in respect of Umed Bhavan, Kota, including the compound. No such claim was made in Part IV of the wealth-tax returns for the assessment years 1966-67 to 1969-70. 2. In the wealth-tax proceedings for the assessment year 1970-71, the assessee, while replying the WTO as to whether the land surrounding Umed Bhavan Palace building should be treated as agricultural land or abadi land or urban land, as stated, as is clear from his letter dated 27-9-1977, that the entire Umed Bhavan including rari and compound was the personal property of the assessee and was exempt under section 5(1)(iii) and the said point had already been clarified/finalised in the assessment year 1957-58. 3. The assessee in his replies dated 29-9-1977 with reference to the letter of the WTO dated 24-10-1977, which is to be read in conjunction with the Audit Note dated 5-3-1976 by the Accountant General, had taken the stand that the land surrounding Umed Bhavan Building was not agricultural land but abadi land as decided by the Government of Rajasthan in the letter dated 17-9-1966. That said land of Umed Bhavan Palace, which was the offic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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