SMT. MEHERBANOO G. WADIWALLA VS WEALTH TAX OFFICER
1992 P T D 1544
[Gujarat High Court (India)]
[1959 ITR 578]
Before M.B. Shah and V.H. Bhairavia, JJ
Smt. MEHERBANOO G. WADIWALLA
versus
WEALTH TAX OFFICER
Special Civil Application No.1299 of 1987, decided on 22/01/1992.
Wealth tax---
----Reassessment---Failure to disclose material facts necessary for assessment---Valuation of agricultural lands by approved valuer ---Assessment based on valuation ---Reassessement on the ground that agricultural lands had been undervalued---Not valid.
In the wealth tax returns submitted by the petitioner and the assessment orders, the Wealth-tax Officer had considered the valuation report submitted by the approved valuer for agricultural lands. Notice for reassessment under section 17(1) of the Wealth Tax Act, 1957, was issued on the ground that there had been under-valuation of the agricultural lands. On a writ petition challenging the notice;
Held, that the valuation report by which agricultural lands held by the petitioner were valued at Rs.13,31,030 was considered by the Wealth-tax officer for different assessment years. Thereafter, the assessment orders had been passed. The Appellate Assistant Commissioner had also considered the valuation report. Therefore, there was no reason for the Wealth Tax Officer to believe that net wealth had escaped assessment because of failure on the part of the petitioner to disclose fully and truly all material facts necessary for assessment of net wealth. Hence, the impugned notices issued by the Wealth Tax Officer were not valid. They were liable to be quashed.
J.P. Shah for Petitioner.
M.J. Thakore, instructed by R.P. Bhatt and Co. for Respondent.
JUDGMENT
M.B. SHAH, J.--The petitioner has challenged the notices, exhibits "M.1 and M.2", dated February 20, 1987, issued by the Wealth Tax Officer under section 17 of the Wealth Tax Act, 1957 (hereinafter referred to as the "Act"), on the basis that the value of the agricultural lands is taken at Rs.4,85,000 for the assessment year 1978-79 and at Rs. 5,82,000 for the assessment year 1979-80 against Rs.13,21,000 as valued by the approved valuer. Hence, the same has escaped assessment.
Learned counsel for the petitioner vehemently submitted that issuance of notice in the present case under section 17(1) of the Act is nothing but abuse of power by the concerned officer. For this purpose, he relied upon the fact that, in the wealth tax returns submitted by the petitioner and the assessment orders for the aforesaid two assessment years, the Wealth Tax Officer has considered the valuation report submitted by the agricultural approved valuer and, after taking into consideration the said report, appropriate assessment orders have been passed under section 16(3) of the Act. He further submitted that not only this, but against the order passed by the Wealth Tax Officer, the petitioner had preferred an appeal before the Appellate Assistant Commissioner of Income-tax and that appeal was allowed by order dated April 18, 1985, for the assessment year 1979-80.
Considering the facts mentioned herein below, it is apparent that the notice issued under section 17 of the Act is on the face of it illegal. It is an admitted fact that the deceased. H.H. Wadiwalla, was a wealth tax assessee. He died on November 4, 1974, leaving a will by which the petitioner who is his daughter-in-law became his legal heir. She filed returns for the assessment years including assessment years 1978-79 and 1979-80. The deceased Wadiwalla was a tenant of a portion of the land, which is known as Suez Farm up to March 31, 1968. Thereafter, the Ahmedabad Municipal Corporation terminated the lease. Still, however, the petitioner continued in possession of the property and the possession was considered to be adverse possession. For that purpose, the petitioner has relied upon the judgment and order passed by this Court in first Appeals Nos.310, 311 and others of 1973 decided on July 12, 1976.
On the basis of the return submitted by the petitioner for the assessment year 1978-79, the Wealth Tax Officer, Circle IV, Ward-E, Ahmedabad, passed an order (Exh. "B-I") under section 16(3) of the Act on March 28, 1983. With regard to the valuation of the agricultural lands, he specifically observed that as per the valuation report dated November 17, 1974, it is valued at Rs.13,31,030 and against that the petitioner has valued it only at Rs.3,66,732. The relevant part of the said order is as under.
"H.H. Wadiwalla died on November 4, 1974, but his estate was pending execution because probate was not received from the Court. The assessee holds agricultural land in Odhav and at Behrampura, Suez Farm, and building, bank balances, etc. It was noticed that the valuation of the total land for the assessment year 1979-80 belonging to the assessee is Rs. 13,31,030 as against Rs. 3,66,732 as shown by the assessee, as per the valuation report dated November 17, 1974. In this year also, the assessee has shown the same value. It was contended by the assessee that the value of landed property at Suez Farm has been shown at Rs.18,000 because the Hon'ble Gujarat High Court had declared the possession of the assessee as adverse possession. In support of this, the assessee produced the order of the Hon'ble Gujarat High Court."
Thereafter, the Wealth Tax Officer valued the other land at Rs.4,85,000 and valued the sewage farm land at Rs. 18,000.
Similarly, for the assessment year 1979-80, the Wealth Tax Officer, Circle IV, Ward-E, Ahmedabad, passed another order (Exh. 112) on March 30, 1984. Here again, the valuation report was taken into consideration. The relevant discussion in as under.
"Now, the departmental valuer has valued the land at Rs. 13,31,030 for the past years. There is no reason as to why a lower value should be adopted. However, my predecessor, for the assessment year 1978-79, has valued the land at Rs. 4,85,000 and Suez Farm land at Rs. 18,000. Now, there was substantial rise in the value of land in the assessment year 1979-80 as compared to earlier years. The value of agricultural land at Odhav is taken at Rs. 5,82,000 being a 20% increase in price of land in Ahmedabad."
Finally he valued the Odhav land at Rs.5,82,000 and Suez Farm land at Rs.18,000.
Against that order, the petitioner preferred an appeal before the Appellate Assistant Commissioner of Income-tax. That appeal was allowed by the order (Exh. "D") dated April 18, 1985. With regard to the valuation of the sewage farm land, the Appellate Assistant Commissioner arrived at the conclusion that it was not an asset of the assessee because the petitioner was in adverse possession of the lands and that his interest in the lands was precarious. The relevant discussion is as under:
"The third ground relates to the valuation of Suez Farm lands at Rs.80,000. The appellant had shown the value of these lands at `Nil' for this year as in all the preceding years because the appellant was in adverse possession of these lands and, therefore his interest in these lands was precarious. It was not his asset. For the reasons given in my appeal order dated March 4, 1985. in Appeal No.IV-E/25/84-85, I hold that Suez Farm lands did not constitute the appellant's asset. The addition of Rs. 80,000 is deleted."
Further, it should be noted that, even for the assessment year 1976-77, the same is the position and the Appellate Assistant Commissioner of Income-?tax, Ahmedabad, allowed the appeal riled by the petitioner by the order (Exh. "G") dated March 4, 1985. He has also not accepted the valuation report by holding that the appellant's interest in the Suez Farm land was precarious and he had no legally enforceable interest and therefore, it was not an asset of the appellant within the meaning of the Wealth Tax Act.
Despite the aforesaid orders, surprisingly and without there being any basis, the Wealth Tax Officer has issued the impugned notices under section 17 of the Act on February 20, 1987. By no stretch of imagination; can it be stated that net wealth chargeable to tax has escaped assessment. There is no basis for reopening the assessment. The valuation report by which agricultural lands held by the petitioner were valued at Rs.13,31,030 was considered by the Wealth Tax Officer for different assessment years.
The Appellate Assistant Commissioner of Income-tax has also considered the same. Thereafter, the wealth tax assessment orders were passed. Therefore, for the Wealth-tax Officer, there was no reason to believe that net wealth chargeable to tax has escaped assessment because of failure on the part of the petitioner to disclose fully and truly all material facts necessary for assessment of net wealth. Hence, the impugned notices issued by the Wealth-tax Officer are absolutely baseless.
In the result, the petition is allowed. The impugned notices (Exhs. "M-1" and "M-2") dated February 20, 1987, issued by the Wealth-tax Officer, Cricle IV, Ward-I5, Ahmedabad, are quashed and set aside. The respondent is restrained from taking any further action in pursuance of the said notices. Rule made absolute with costs.
M.B.A./1651/T ?????????????????????????????????????????????????????????????????????????????????? Petition allowed.