TMI Blog2001 (11) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The facts concerning these grounds may be summarized us below: 5.1 The assessee, Late Shri Padampat Singhania was the owner of 'Jaipur House' at Jaipur. After his death, his Legal Heir, Dr. Gaur Hari Singhania, represented him as Legal Heir in the wealth-tax proceedings. In the assessment year 1987-88, Dr. Gaur Hari Singhania, the Legal Heir, filed return of wealth-tax on 16-7-1997, declaring total net wealth at Rs.2,62,180. The return, however, did not include the value of Jaipur House. The assessment was completed under section 16(3) at Rs.3,00,700 vide Assessment Order dated 30-9-1988, under section 16(3) of Wealth-tax Act, 1957. 5.2 The Assessing Officer received information that in the wealth-tax return of the family members, the value of Jaipur House was not disclosed. Hence, notice was sent to the family members of J.K. Family to ascertain the ownership of the said house. Consequent to this query, the assessee suo motu, filed revised return of wealth-tax on 26-3-1998, wherein property in question i.e., 'Jaipur House' was also included in the net wealth of the assessee. This return was treated as non-est because proceedings for assessment year 1987-88 had already been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. The learned CWT (A) after considering these submissions held that since Notification of J.D.A. became effective only from 25-6-1996, it was not applicable to assessment year 1987-88. 5.6 In the context of above background, we proceed to take up the issue involved in these grounds of appeal. 6. The contention of the learned counsel for the assessee was that Schedule III which came into force w.e.f. 1-4-1989 was also applicable to assessment year 1987-88 in view of the decision of Hon'ble Supreme Court of India in the case of Shravan Kumar Swarup Sons wherein the Hon'ble Supreme Court of India held that Rule 1-BB partakes the character of rule of evidence, and is a rule of procedural law and not a part of substantive law and is applicable to all pending proceedings on the date on which this rule came into force. According to Shri R.R. Jain, the learned counsel for the assessee, in the case of CIT v. Subhash Vohra [1997] 225 ITR 727, Hon'ble Punjab Haryana High Court has held that Circular No. 455 dated 16th May, 1986, issued by C.B.D.T. directing the competent authority to draw proceedings in cases where the apparent consideration of property was less than Rs.5 lakhs was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment has not disputed this aspect. [Before the learned CIT (Appeals), this fact was asserted, but without disputing these details, he held that since J.D.A. Notification comes with effect from the date of its issue, it is not applicable for the valuation of property as on 31-3-1987 - page 4 of the order of CIT (Appeals)]. II. Undisputed Legal Provisions: 10.3 (1) Section 7 of Wealth-tax Act which lays down the manner in which the value of assets has to be determined provides as follows: "7. (1) Subject to the provisions of sub-section (2), the value of any asset, other than cash, for the purposes of this Act shall be its value as on the valuation date determined in the manner laid down in Schedule III. (2) The value of a house belonging to the assessee and exclusively used by him for residential purposes throughout the period of twelve months immediately preceding the valuation date, may, at the option of the assessee, be taken to be the value determined in the manner laid down in Schedule III as on the valuation date next following the date on which he became the owner of the house or the valuation date relevant to the assessment year commencing on the 1-4-1971, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aggregate area; or (C) ** and in any case referred to in clause (a) or clause (b) or clause (c), the value of the property shall be determined in the manner laid down in rule 20." Rule 20 lays down as follows:- "20(1) The value of any asset, other than cash, being an asset which is not covered by rules 3 to 19, for the purposes of this Act, shall be estimated to be the price which in the opinion of the Assessing Officer, it would fetch if sold in the open market on the valuation date. (2) Notwithstanding anything contained in sub-rule (1), where the valuation of any asset referred to in that sub-rule is referred by the Assessing Officer to the Valuation Officer under section 16A, the value of such asset shall be estimated to be the price which, in the opinion of the Valuation Officer, it would fetch if sold in the open market on the valuation date. (3) Where the value of any asset cannot be estimated under this rule because it is not saleable in the open market, the value shall be determined in accordance with such guidelines or principles as may be specified by the Board from time to time by general or special order." 11. The Disputed Issue: The real controversy r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipur House has been rightly done under Rule 8(b) read with Rule 20(2) of the Wealth-tax Rules contained in Schedule-III of the Wealth-tax Act." 12. For deciding the above controversy, we have to examine and decide the nature and scope of Schedule III first and, thereafter, the nature, scope and applicability of J.D.A. Regulations. 12.1 So far as Schedule III is concerned, it is part of procedural law. In the case of Sharvan Kumar Swarup Sons, Schedule III was not involved, but a similar provision contained in Rule 1 BB came for consideration before the Hon'ble Court and after considering its scope, the Hon'ble Supreme Court held that such a procedural law shall apply to "all proceedings pending at its enactment". While holding so, their Lordships observed that the basis of distinction between statute affecting rights and those affecting procedure merely, is well recognized. There-after, following words of Lord Justice Mellish in Republic of Costa Rica v. Erlanger [1876] 3 Ch. D. 62 (CA) at 69, were quoted:- "No suitor has any vested interest in the course of procedure, nor any right to complain, if during the litigation the procedure is changed, provided, of course, that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tters which were pending on April, 1, 1989, therefore, have to be covered by the said rule. There is another reason for taking this view i.e. If there are two provisions, the interpretation which is beneficial to the assessee has to be taken in accordance with law. The decision in CWT v. Sharvan Kumar Swarup Sons [1994] 210 ITR 886 (SC), since the provisions for determining the market value have been considered to be procedural law and applicable to all the pending cases in which no right can be vested in respect of the procedure, the procedure as prescribed by Schedule III of the Act has to be applied." 12.5 In the case of Maharaja Dharmendra Prasad Singh v. State of U.P. AIR 1973 All. 174 (V 60 C 59), the Hon'ble Allahabad High Court has held that no person has a vested right in procedure. A change in law of procedure operates retrospectively and unlike the law relating to vested rights, it is not prospective. In that case, in view of amendment introduced by Act 37 of 1958 by deletion of sections 332,332A and 332B of Zamindari Abolition and Land Reforms Act (I of 1980) was held to be a procedural matter. The argument that the suit filed would be governed by the procedure, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply, but where the construction has not started at all, then the new regulations shall apply vide Regulation. 13.3 So far as the plot in question is concerned, no construction has so far been made, as per Undisputed Facts, on 9.5 per cent of the land, which is still open land (unbuilt area). Thus, the regulation will apply to that land, and to that extent, the regulations are retrospective in nature. They have been made applicable to all land which still remains unbuilt, as is the one held by the assessee. The assessee cannot be allowed to contend that he has acquired vested right to build according to the old regulations. 13.4 Besides the above, the phraseology, "for the time being in force" is significant. If the interpretation placed by the Assessing Authority were to be correct, the legislature would have used the words, "Under any law in force on the valuation date" instead of the words "Under any law for the time being in force". If the intention of the legislature was to apply the proviso only on the basis of the regulations in force on the valuation date, there was no logic in using the words "for the time being in force" and not the words "as in force on the valuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, "rules at present in force" instead of the phraseology "rules for the time being in force." The phraseology "rules for the time being in force" would necessarily mean rules in force from time to time and not rules in force only at a fixed point of time in 1959 as tried to be suggested by learned counsel for the respondent workman." This is a clear authority for the view that the building regulations applicable would be those in force "at the time the question comes up for the consideration". In the case of an assessment the question comes up for consideration at the time when the assessment comes to be made. In view of this clear authority the building regulations of 1996 will amply in every case where the assessment is made at any time after the enforcement of the regulations. 13.7 In view of the above, there remains no doubt that the J.D.A. Regulations are covered within the ambit of and are part of the 'Laws for the time being in force". Further, since the Rules of Schedule III are to be made operative retrospectively and apply to all pending matters, the J.D.A. regulations which are to be treated as part of Rule 6, and which are to be read with Explanation to Rule 6 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urable to the assessee in matters of taxation has to be preferred." 16. It may be pointed out that at any rate, the construction placed by us on the applicability of Schedule HI and J.D.A. Regulations, appears to be more sound and logical, because if Schedule III can apply to an assessment year prior to its enactment, there is no reason why the building regulations subsequently made cannot apply likewise. It is also a fair approach in consonance with the settled cannons of natural justice because when at the time of assessment, the assessee is already prohibited from building on 95 per cent of the open land he should fairly get compensated for the likely consequential determination of market value of the land through reduction in his Wealth-tax liability. 17. Thus, from this point of view also, the correct view would be that the building regulations of 1996 will apply, even though they were not in force on the valuation date but came in force before the date of actual assessment. 17.1 In our view, therefore, the learned CWT (A) was not justified in taking the view that the J.D.A. Regulations prescribing the minimum and maximum built up area will not apply to assessment year 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tains to assessment year 1987-88 and the Assessing Officer was initiating action after 10 years. Hence, the alleged report of Economic Times dated 4-10-1997 stating the value of the property at Rs.70 crores could not be relied upon. It may further be pointed out that there are certain norms and procedure for valuing the property and the news items do not come under any norms. In this revised return, the assessee had made the valuation on the basis of the report of approved valuer. Hence for making reference to the D.V.0., the Assessing Officer was required to make further probe into the matter by taking examples of adjoining lands and valuation thereof in the period relevant to assessment year 1987-88. Hence the plea of the learned Counsel for the assessee carries much force. Since the Assessing Officer has not made reference to any material, result of inquiry or example, nor has recorded reasons or satisfactions for making the reference his action in making reference to the Valuation Officer without such material cannot be legally upheld. 20. In view of the above, we are of the considered opinion that the Assessing Officer has not made reference to the Valuation Officer in accor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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