TMI Blog1993 (8) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... -80 and 1980-81 were made under section 16(3) of the Wealth-tax Act, 1957 on 6-10-1984. 3. As regards assessment years 1973-74 and 1974-75 the first objection taken by the assessee is against the reopening of the assessment proceedings by the Assessing Officer under section 17(1)(a) of the Wealth-tax Act, 1957. The brief facts of the case are that the assessee was an individual/citizen of India. Valuation date was 30th June every year. The original assessments for the assessment years 1973-74 and 1974-75 were completed on 30-3-1979 under section 16(1) of the Wealth-tax Act. Subsequently, the assessment proceedings for the two assessment years were reopened under section 17 of the Wealth-tax Act, by issuing a notice dated 22-2-1982 which was duly served upon the assessee on 3-3-1982. In response to the said notice, the assessee filed a return of net wealth showing the same amount of net wealth marking the return as "Under protest". Notice under section 16(2) and 16(4) of the Wealth-tax Act, were complied with. Reopening of the assessment proceedings was challenged stating that the notice issued by the Assessing Officer did not specifically mention as to whether the reopening was u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook a view that the disclosure by the assessee was not a true disclosure. Even if while making the original assessment, facts were disclosed fully, admittedly it was not a true disclosure. The WTO, therefore, acted under a genuine belief that in the return of net wealth the assessee had not disclosed the true value of the property which had resulted in escapement of net wealth. He, therefore, rejected the objection raised by the assessee's Authorised Representative. 6. Being aggrieved, the assessee is in appeal before the Tribunal. Shri S. P. Choudhury, learned counsel of the assessee while objecting to the orders of the Deputy Commissioner (Appeals) reiterated the facts of the case. It was submitted that the returns of net wealth for the assessment years 1973-74 and 1974-75 were submitted by the assessee on 20-7-1974 and 16-8-1974 respectively. The assessee correctly disclosed his net wealth and all the facts relate thereto. Valuation of the house property of M/s. Durga Trading Corporation where the assessee was a partner was also shown on the basis of Valuation Report of an Authorised Valuer. Therefore, the reopening of the assessment proceedings under section 17(1)(a) of the W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears on 20-7-1974 and 16-8-1974. The assessments were made under section 16(1) of the Wealth-tax Act, on 30-3-1979. The assessee had 12.5 per cent interest in the partnership firm M/s. Durga Trading Corporation. The said firm had both movable and immovable properties. Subsequently, after the completion of the assessments, the WTO found on perusal of the records that the interest of the assessee in the aforesaid firm was much higher than what was disclosed by the assessee in his wealth-tax returns. It is not disputed that the basis of the assessee for showing his interest in the aforesaid firm was as per valuation made by an Authorised Valuer in the year 1963. It may be mentioned and useful to reproduce the reasons for reopening the assessment proceedings under section 17(1)(a) of the Wealth-tax Act, 1957 recorded by the for the two assessment years as below: "On perusal of records it appears that the shares of partnership interest of the assessee in the value of House Property owned by the firm M/s. Durga Trading Corpn. (in which the assessee is a partner) is of a much higher amount than that disclosed by the assessee in his wealth-tax returns. I have reason to believe that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han what was disclosed in his return of net wealth as per the records has not been controverted by the assessee. On going through section 17(1) of the Wealth-tax Act, 1957, we find that the Assessing Officer must have "reason to believe that the net wealth chargeable to tax has escaped assessment" etc.. and the words "reasons to believe" comprehend some material or materials and not mere suspicion, imagination etc. There has also to be a nexus between such material and formation of belief of escapement of wealth. The Assessing Officer also should properly apply his mind to such material and he must draw an inference based on reason, that the wealth has escaped assessment. The belief must be an honest and reasonable belief on the basis of reasonable ground. While forming such belief the Assessing Officer should consider all facts cumulatively. Reliance may be placed on the decision of the Supreme Court in the case of Sheo Nath Singh v. AAC [1971] 82 ITR 147 and in the case of Ramniwas Kanailal v. S.P. Shende, ITO [1965] 56 ITR 659 (Bom.). The reason for reopening must have a direct nexus and live link between the material coming to the notice of the WTO and the formation of belief a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner (Appeals) is perfectly justified in upholding the reopening of the assessment proceedings by the Assessing Officer. We, therefore, do not find any merit in the appeal filed by the assessee on this point. 10. The next objection common to all the assessment years is against the valuation of the interest of the assessee in the partnership firm M/s. Durga Trading Corporation. The Assessing Officer valued the interest of the assessee in the aforesaid firm by applying rule 2 of the Wealth-tax Rules, 1957. The assessee had 12.5 per cent shares in the aforesaid firm. It appears that the aforesaid firm had immovable properties wherefrom rental income was derived. The Assessing Officer under rule 2 of the Wealth-tax Rules valued the assessee's interest by taking 12 times of the net rental income plus other assets of the firm as per the Balance Sheet as reduced by land and building, Income-tax liabilities and partner's capital. The share of the assessee was then ascertained. 11. Being aggrieved, the assessee came up in appeal before the Deputy Commissioner (Appeals). It was submitted that while arriving at the net rent of the immovable properties, the WTO did not take the Mun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partnership firm should be examined in the light of the recent decision of the Jurisdictional High Court. For the above purposes, all the assessment orders were set aside. 13. The assessee is in appeal before the Tribunal against the aforesaid directions by the Deputy Commissioner (Appeals). We have heard Shri S. P. Choudhury, the learned counsel of the assessee who reiterated the facts of the case. The learned counsel has not disputed that the properties both immovable and movable of M/s. Durga Trading Corporation in which the assessee had 12.5% interest required proper valuation as per the relevant rule of the Wealth-tax Rules. However, the learned counsel has submitted that the Deputy Commissioner (Appeals) has no powers to direct the Assessing Officer to refer the immovable properties for the purpose of valuation to the Departmental Valuation Cell in view of the decision of the Madhya Pradesh High Court (Indore Bench) in the case of M. V. Kibe v. CWT [1987] 168 ITR 82. 14. The arguments advanced by the learned counsel of the assessee are opposed by the learned Departmental Representative Shri R.P. Rajesh, who supports the order of the Deputy Commissioner (Appeals). Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 23 of the Wealth-tax Act, 1957, it may be stated that in deciding the appeal, the appellate authority may pass such orders as he may think fit. He has plenary powers in disposing of an appeal. The scope of his powers is coterminous with that of the Assessing Officer vide the decision of the Gujarat High Court in the case of Shrenik Kasturbhai v. CWT [1974] 95 ITR 326. The Supreme Court also held that the appellate proceeding constitutes a continuation of the assessment proceedings vide CWT v. Vimlaben Vadilal Mehta [1984] 145 ITR 11. The jurisdiction of the appellate authorities ranges over the whole assessment. He can do what the Assessing Officer can do and he can also direct him to do what he has failed to do vide the decision in the case of Guduthur Bros. v. ITO [1960] 40 ITR 298 (SC). The appellate authority has thejurisdiction as well as the duty to correct all the errors in the proceedings, in appeal. He has to issue, if necessary, appropriate directions to the authority against whose decision the appeal is preferred to dispose of the whole or any part of the matter afresh, unless forbidden by the statute vide Kapurchand Shrimal v. CIT [1981] 131 ITR 451 (SC). In view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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