TMI Blog1987 (5) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... ee preferred an appeal before the Appellate Assistant Commissioner who proceeded to determine the value of the said premises in two separate units, one being vacant land of about 55 cottahs and the other being land of about 20 cottahs with structures. The said units were valued separately and the total value of the said premises was estimated at Rs. 39,31,825. Both the assessee and the Revenue came up on appeal from the order of the Appellate Assistant Commissioner before the Income-tax Appellate Tribunal. The Tribunal reduced the value of the vacant land held to be 50 cottahs to Rs. 25 lakhs and estimated the value of the other unit consisting of 25 cottahs of land and structures at the same figure as determined by the Appellate Assistant Commissioner, viz., Rs. 6,31,825. The value of the said premises was, therefore, determined by the Tribunal at Rs. 31,31,825. The contention of the assessee that rule 1BB of the Wealth-tax Rules should have been applied in making the valuation was not accepted by the Tribunal which held that it was unnecessary to examine the applicability of the said rule 1BB to the facts. It is on record that the Revenue made an application under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Commissioner who directed the Wealth-tax Officer to value the assessee's share in the said premises applying rule I BB on such basis. Being aggrieved, the Revenue preferred appeals from the said three appellate orders of the Appellate Assistant Commissioner to the Income-tax Appellate Tribunal. It was contended on behalf of the Revenue before the Tribunal, inter alia, that the Appellate Assistant Commissioner did not give any opportunity to the District Valuation Officer to make representation as required under section 23(3A) of the Wealth-tax Act. The Tribunal held that such opportunity was required to be given only when there had been a reference to the District Valuation Officer under section 16A of the Wealth-tax Act. As in the relevant assessment years there was no reference for valuation to the District Valuation Officer under section 16A of the Act, section 23(3A) of the Act was not attracted. It was next contended on behalf of the Revenue that rule 1BB of the Wealth-tax Rules could not be applied for valuing the said premises as valuation had already been done by the District Valuation Officer in the earlier assessment year 1977-78 and such valuation had been follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars 1978-79, 1979-80 and 1980-81. On applications by the assessee under section 27(1) of the Wealth-tax Act, 1957, the Tribunal has referred the following questions as questions of law arising out of its order for the opinion of this court : "1. Whether, on the facts and in the circumstances of the case, the Tribunal acted legally in setting aside the order of the Appellate Assistant Commissioner and directing that the valuation of the properties at 8l, Middleton Row and 1/1, Camac Street, Calcutta, to be taken as was he) I by the Tribunal for the assessment year 1977-78 ? 2 . Whether, on the facts and in the circumstances of the case, the Tribunal misdirected itself in law in not applying rule 1BB of the Wealth-tax Rules, 1957, which became operative from April 1, 1979, in respect of premises at No. 8/1, Middleton Row, Calcutta, for the assessment years 1978-79, 1979-80 and 1980-81 ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal misdirected itself in law in holding that rule I BB of the Wealth-tax Rules, 1957, has not been rightly applied by the Appellate Assistant Commissioner in determining the valuation of premises at No. 8/1, Middleton ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer under section 16A, whereas in the earlier assessment year 1977-78, there was such a reference. It was submitted that the assessee was entitled, to call upon the authorities concerned to estimate the value of said premises in accordance with law under section 7(1) of the Wealth-tax Act which would necessitate the application of rule 1BB. In support of his contentions, learned advocate for the assessee cited the following decisions: (a) Standard Mills Co. Ltd. v. CWT [1967] 63 ITR 470 (SC). This decision was cited for the observations of the Supreme Court on the scheme of the Wealth-tax Act which are noted hereafter as follows (pp. 473, 476): " By section 3, the wealth-tax is charged for every financial year commencing on and from the first day of April, 1957, on the net wealth or the corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in the Schedule.... Section 7 falls in Chapter II which deals with the charge, of wealth-tax and assets subject to such charge : it is intended to provide a machinery for the determination of the value of assets. " (b) S. Mubarik Shah Naqshbandi v. CIT [1977] 110 ITR 217 (J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the said rule affected substantive rights of the assessee and, therefore, could not be deemed to be a procedural rule and would not have any retrospective effect. In the instant case, the valuation date in at least two of the assessment years involved was prior to April 1, 1979, when the said rule 1BB came into force, and, therefore, the said rule would have no application in respect of the two assessment years involved, viz., 1978-79 and 1979-80. Learned advocate for the Revenue further submitted that once valuation of a particular asset was made for assessment of wealth-tax, the same should not be disturbed for at least two succeeding assessment years unless there were special reasons justifying a revision of the valuation. This was provided by the circular issued by the Central Board of Direct Taxes dated September 28, 1967, which, however, was withdrawn on and from April 5, 1974, by subsequent circulars of the Board. Learned advocate for the Revenue contended further that in the instant case, the assessee was not entitled to contend that the earlier valuation of the said premises should be revised without furnishing any evidence. It was contended that yearly valuati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for every assessment year commencing on and from the first day of April, 1957, a tax (hereinafter referred to as wealth-tax) in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in the Schedule. Section 7. (1) Subject to any rules made in this behalf, the value of any asset, other than cash, for the purposes of this Act, shall be estimated to be the price which in the opinion of the Wealth-tax Officer it would fetch if sold in the open market on the valuation date.... (3) Notwithstanding anything contained in sub-section (1), where the valuation of any asset is referred by the Wealth-tax 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, or, in the case of an asset being a house referred to in subsection (4), the valuation date referred to in that sub-section. " It is a matter of record that in the earlier assessment year 1977-78, the valuation of the said premises had been referred by the Wealth-tax Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule 1D was not directly in issue as it was held that in any event rule 1D was not applicable in respect of shares of an investment company, the valuation of which was a matter of controversy in the said case. Therefore, the observation regarding the retrospective operation of the said rule may be considered to be in the nature of obiter. We note that the said rule ID and rule 1BB lay down methods for determination of valuation and do not affect in any manner either the charging of tax or rates of tax to be imposed. In Ajit Kumar Palit, AIR 1961 Cal 560, a Full Bench of this court laid down the principle that where law relating to procedure is amended, the same would operate retrospectively in proceedings initiated under the earlier law. We are also unable to accept the contention of the Revenue that the valuation of the said premises, as it was estimated in the assessment year 1977-78, should not be disturbed in the succeeding assessment years without special reasons or further evidence. It is settled law that the principle of res judicata does not apply in revenue matters. In any event, it appears to us that in the subsequent assessment years, there being no reference under sect ..... 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