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TMI Blog1991 (4) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 21-12-1983 with a direction to refer the valuation of the three immovable properties mentioned below to the departmental valuation officer as per the provisions of section 16A of the Wealth-tax Act :-- 1. Land at Ambathur, 2. Pallikarnai property, and 3. Greenways Road property. The assessee besides having movable properties had also got immovable properties both agricultural and non-agricultural in nature. The important point that is to be kept in mind is that apart from the three properties with regard to which a reference under section 16A of the Wealth-tax Act is directed to be made by the Commissioner (Appeals), the assessee had other movable and immovable properties also as part of its assets for the assessment years 1973-74 and 1978-79. References to the Valuation Cell, Madras, were made to value the above properties by the Wealth-tax Officer on 21-10-1986 and again on 12-8-1987. A preliminary valuation report was prepared by the Valuation Cell under section 16A(4) with regard to the Ambathur property as well as Pallikarnai property on 17-3-1988. With reference to Greenways Road property the Valuation Cell had prepared a preliminary report under section 16A( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; Rs. Rs. Rs. ----------------------------------------------------------------------------------- 1 2 3 4 ----------------------------------------------------------------------------------- Ambathur Property 1973-74 2,50,000 8.65 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; Report dt. dt. 17-4-1988 11-3-1988 1973-74 5,00,000 7,00 18,07,500 18,07,500 1978-79 5,40,000 5.74 58,37,300 58,37,300 1982-83 Claimed as 5.11 73,44,500 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te made by the valuation officer under section 16A(5). It was further contended that the jurisdiction of the Wealth-tax Officer is ousted once a reference is made under section 16A(1). It was also contended that if the valuation officer failed to make a report within the time limit prescribed under law, the department has to face the consequences. It was further contended that since the valuation reports for these properties were not secured within 31-3-1988, the Wealth-tax Officer lost jurisdiction to make the assessments for 1973-74 and 1978-79. It was further argued that assuming without admitting the Wealth-tax Officer had jurisdiction to make assessments in respect of the remaining properties he will have to go by the returned values of the properties which were the subject-matter of reference with reference to which a valuation report was not received. It is further argued that time limits are built into the Act so as to provide a safeguard to the assessee to avoid long drawn out proceedings. Therefore it would not be proper to merely set aside the assessments instead of cancelling the assessments. Therefore it is ultimately requested of the learned Commissioner (Appeals) tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uation officer under section 16A(5). Any assessment made without incorporating the values found in the final report under section 16A(5) would not be a mere irregularity but a nullity in law. It was also argued that time limits built into the Wealth-tax Act are for the purpose of protecting the assessee from log drawn process of litigation. These time limits prescribed by section 17A(3) should not be allowed to be set at naught by the appellate authority exercising his powers under section 23(5) of the Wealth-tax Act. It was also contended that if the Wealth-tax Officer having conscious of the legal position and also about the invalidity of the assessment, if any made, without waiting for the final report of the Valuation Cell, under section 16A(5), deliberately flouts and consciously disregards the provisions of law, should he be given second innings to legalise his action, asks the learned counsel. He submitted that from the peculiar facts and circumstances of this case the assessments for all these assessment years deserve to be cancelled instead of being merely set aside. The learned departmental representative argued that simply because a reference is made to the Valuation Cel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to take advantage of the delayed final reports under section 16A(5) of the impugned properties. The learned departmental representative also relied on the following decisions :-- 1. Ganga Properties v. ITO [1979] 118 ITR 447 (Cal.), 2. Pradeep Narang v. IAC [1991] 36 ITD 325 (Delhi), and 3. Union of India v. Harbhajan Singh Dhillon [1972] 83 ITR 582 (SC). In reply the learned counsel for the assessee Shri Prasad contended that a wealth-tax assessment should necessarily be a single, integrated, whole assessment. It is the net wealth of the assessee as a whole which has to be brought to tax had not assets of the assessee separately. The analogy drawn between the reference made to the valuation officer on the one hand and a petition made before the Settlement Commission under section 22F on the other is improper. In the case of a reference to the Settlement Commission the petition would be filed by the assessee and the Assessing Officer may not be knowing about the proceedings pending before the Settlement Commission. That is the reason why he is at liberty to complete the assessment. However, in this case the Assessing Officer himself referred the question of valuation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opt the valuation suggested by the Valuation Cell with regard to the properties for which a reference was made to the Valuation Cell and for which a final valuation report under section 16A(5) was received from the Valuation Cell. That means with regard to other properties the value of which was not referred to the Valuation Cell the Assessing Officer had complete authority to make an assessment. It is argued by Shri Prasad that if the Assessing Officer wants to complete the assessment even after referring the question of valuation of the impugned properties to the Valuation Officer he can do so provided he adopts the returned value of those properties in his assessment. He argued that section 16A(4) gives power to the Valuation Cell only to signify the tentative figure of valuation which it sought to put on each of the three impugned properties. It is only a preliminary step for inviting the objections of the assessee on the question of valuation of the impugned properties. The report submitted under section 16A(5) is the final report and the values disclosed therein should have been adopted by the Wealth-tax Officer while making the assessment under the mandatory provisions of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer could do and can also direct the latter to do what the latter failed to do. It is no doubt true that under section 16A(6) the Assessing Officer has to implement the value suggested by the valuation officer over the impugned properties. In this case the Assessing Officer failed to do that duty. The question is whether the appellate authority had the power to direct the Assessing Officer to do his duty under section 16A(6). In our opinion the first appellate authority is competent to direct the Assessing Officer to do his duty under law. 6. The matter can be viewed from another angle. If the final reports under section 16A(6) of the impugned properties are considered to be subsequent events, which took place after the assessments the question would be whether the appellate authority while passing the impugned orders is entitled to take cognizance of the subsequent events and in the light of such subsequent events can he pass his impugned orders. In Hasmat Rai v. Raghunath Prasad AIR 1981 SC 1711 at 1716-17 it is held that during the progress and passage of proceeding from the taxing authority to appellate authority or authorities if subsequent events occur, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought to have waited till the receipt of the final report under section 16A(5) and ought to have implemented the values noted therein in his assessment orders under section 16A(6) he failed to do so and the appellate authority directed him to do what he failed to do originally by his impugned order. The question was whether the impugned orders of the first appellate authority are correct. According to the ratio of the Karnataka High Court the direction of the first appellate authority appears to be correct under law since it is agreed on both sides that 16A is only a procedural section. In Pradeep Narang's case the Delhi Bench 'B' of the Tribunal took the view that the failure to make a reference under section 16A of the Wealth-tax Act when the conditions laid down therein for its invocation is held to be only a procedural irregularity which can be rectified on direction from the appellate authority. In the case before the Tribunal (Delhi Bench 'B') all the conditions for invoking section 16A were existing. Still reference was not made to the valuation officer. When the matter was carried in first appeal, the Commissioner (Appeals) set aside the assessment order with a direction t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment can be rectified or reopened. In any view of the matter the effect of the impunged order passed by the Commissioner (Appeals) is only to correct the error committed by the Assessing Officer. Instead of correcting the error by the Assessing Officer himself there was a direction by the appellate authority to correct the error. In our view the Calcutta High Court decision supports the case of the Revenue in that regard. In view of what we held the argument of the learned counsel for the assessee that as soon as the reference is made under section 16A(1) the Wealth-tax Officer loses his jurisdiction to frame the assessment cannot be accepted as correct. Utmost it can be said in conformity with what we have held in the previous paras that the assessment framed in violation of section 16A(5) and (6) can be held to be voidable orders of rectifiable orders which the first appellate authority has every right to set aside or correct as the case may be. The argument of Shri Prasad, the learned counsel for the assessee that a wealth-tax assessment should necessarily be a single integrated and whole assessment and it is the net wealth of the assessee and not the assets separately which a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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