LADY RANU MOOKHERJEE VS COMMISSIONER OF WEALTH TAX
1993 P T D 652
[198 I T R 418]
[Calcutta High Court (India)]
Before Ajit K. Sengupta and Shyamal Kumar Sen, JJ
LADY RANU MOOKHERJEE
(Executrix to the estate of Late Sir Biren Mookherjee)
versus
COMMISSIONER OF WEALTH TAX
Matter (Wealth tax) No. 2651 of 1987, decided on 04/02/1991.
Wealth tax---
----Assessment---Revision of---Specific direction given by Commissioner under section 25(1) of the Indian Wealth Tax Act, 1957----Direction not carried out by Wealth Tax Officer----Assessment not a proper one but not a nullity--- Appellate Authority justified in setting aside assessment----Wealth Tax Officer directed to act according to orders of Commissioner and Tribunal--Indian Wealth Tax Act, 1957.
When a specific direction of the superior authority is not carried out, whatever the reason might be, the assessment made in pursuance thereof cannot be said to be a proper. assessment but it cannot be said to be a nullity, inasmuch as the appellate authority has the power and jurisdiction to set aside the assessment for compliance with directions given earlier so that no injustice is caused to the assessee.
The original assessment of the assessee was made by the Wealth Tax Officer in which he determined the value of the house property at figures higher than those returned by the assessee for the four assessment years under appeal. In doing so, he took support from the report given by the Departmental Valuation Officer. The assessee preferred a petition under section 25(1) of the Wealth Tax Act, 1957, before the Commissioner, of Wealth Tax and objected to the valuation made by the Wealth Tax Officer. The Commissioner of Wealth Tax set aside the assessments and directed the Wealth Tax Officer to make fresh assessments after obtaining a fresh report from the Departmental Valuation Officer. Since the valuation report was not, received by him and since the assessments were going to be barred by limitation, the Wealth Tar Officer completed the assessments without obtaining the Departmental Valuation Officer's report. He determined the value as per the earlier report of the Departmental valuer. On appeal to the Commissioner of Wealth Tax (Appeals), it was contended that the assessments were ultra vires as the Wealth Tax Officer did not follow the directions of the Commissioner of Wealth Tax. The Commissioner of Wealth Tax (Appeals) held that, on facts of the case, non-compliance constituted a mere irregularity and did not make the assessments invalid. The Tribunal upheld the Order of the Commissioner of Wealth Tax (Appeals) on this issue. On a reference:
Held that the Tribunal, in having set aside the assessments for determining the question of valuation in the light of the observations made in its Order, had acted properly on the facts and circumstances of the case. The assessments made were not proper assessments but they could not be said to be a nullities. In this case, the principle of natural justice having been violated, the Assessing Officer should be directed to act in conformity with the direction of the Commissioner of Wealth Tax as well as the direction given by the Tribunal in its appellate order.
Surrendra Overseas Ltd. v. CIT (1979) 120 ITR 872 (Cal). ref.
Manas Banerjee for the Assessee.
Sunil Mitra for the Commissioner.
JUDGMENT
AJIT K. SENGUPTA, J.----The judgment and order, dated January 30, 1991, is recalled and the matter is heard afresh.
In this reference under section 27(1) of the Wealth Tax Act, 1957, for the assessment years 1972-73 to 1975-76, the following question of law has been referred to this Court
"Whether, on the facts and in the circumstances of the case, should not have the Tribunal held that the fresh assessment made by the Wealth Tax Officer is ultra vires the Wealth Tax Act, 1957 ?"
Shortly stated, the facts leading to this reference are that the original assessment was made by the Wealth Tax Officer in which he determined the value of the house property at 7-Harrington Street, at figures higher than those returned by the assessee for the four assessment years under appeal. In doing so, he took support from the report given by the Departmental Valuation Officer. The assessee preferred a petition under section 25(1) of the Wealth Tax Act before the Commissioner of Wealth Tax and objected to the valuation made by the Wealth Tax Officer. The Commissioner of Wealth Tax, after considering the facts and circumstances of the case, deemed it proper to set aside the assessments and directed the Wealth Tax Officer to make fresh assessments after obtaining a fresh report from the Departmental Valuation Officer.
While making the assessments under section 25(1)/16(3) of the Act, the Wealth Tax Officer made a reference to the Superintending Engineer (Valuation) by his order, dated March 8, 1984, in respect of the valuation of the disputed house property. Since the valuation report was not received by him and since the assessments were going to be barred by limitation, the Wealth Tax Officer completed the assessments without obtaining the Departmental Valuation Officer's report. He, however, determined the value of the house property at 7, Harrington Street, Calcutta, as per the earlier report of the Departmental Valuation Officer at about Rs. 22.90 lakhs, Rs.26.69 lakhs, Rs. 30.41 lakhs and Rs.37.41 lakhs, respectively,, for the four assessment years under, reference.
The assessee appealed to the Commissioner of Wealth Tax (Appeals) and contended that the assessments were ultra vires the Wealth Tax Act, inasmuch as the Wealth Tax Officer, while making the reassessments, did not follow the clear direction of the Commissioner of Wealth Tax to determine the value of the aforesaid property after obtaining a fresh report from the Departmental Valuation Officer. The Commissioner of Wealth Tax (Appeals) did not agree with contention raised by the assessee: He observed that the assessments made by the Wealth Tax Officer were set aside by the appellate authorities or by the Commissioner of Wealth Tax. It merely meant that the assessments made earlier ceased to exist; and, therefore, the Wealth Tax Officer would make fresh assessments in accordance with law. He further observed that non-compliance with the direction of the Commissioner of Wealth Tax under section 25(1) of the Act was for reasons beyond the control of the Wealth Tax Officer, and therefore, such non-compliance constituted a mere irregularity but did not make the assessments invalid. Having observed thus, the Commissioner of Wealth Tax (Appeals) confirmed the action of the Wealth Tax Officer.
On appeal before the Tribunal, the assessee contended at the very outset that the reassessments made by the Wealth Tax Officer were invalid inasmuch as the specific direction of the Commissioner of Wealth-tax was not followed by the Wealth Tax Officer while making the reassessments.
The Departmental representative, on the other hand, strongly supported the orders of the lower authorities and contended that the Wealth Tax Officer tried to obtain afresh report from the Departmental Valuation Officer in accordance with the direction of the Commissioner of Wealth Tax. He pointed out that since the assessments were getting barred by limitation, the Wealth Tax Officer had no alternative but to complete the assessments on the basis of the earlier report of the Departmental Valuation Officer. He submitted that there was; no illegality in the reassessments so made by the Wealth Tax Officer and, therefore, the Commissioner of Wealth Tax (Appeals) was justified in rejecting the legal ground raised by the assessee before him.
The Tribunal, however, held that although the Wealth Tax Officer was bound to carry out the direction of the Commissioner of Wealth Tax, yet since, in the instant case, the reassessment proceeding was going to be barred by limitation, the Wealth Tax Officer had no other alternative but to complete the assessments without following the specific direction given by the Commissioner of Wealth Tax. The Tribunal was of the opinion that the Wealth Tax Officer made efforts to comply with the directions given by the Commissioner of Wealth Tax. The mere fact that the Wealth Tax Officer could not follow the direction while making such reassessment could not be a sound reason for coming to the conclusion that the reassessments so made by the Wealth Tax Officer were illegal. The Tribunal, therefore, upheld the order of the Commissioner of Wealth Tax (Appeals) on this issue.
At the hearing before us, the same contentions which were -urged before the lows: authorities had been reiterated.
Judicial propriety, requires that the Assessing Officer, while making the reassessment in pursuance of the direction of the Commissioner of Wealth Tax, must comply with such directions specifically given by the superior authority. In this case, the specific direction was that, in making the reassessment, the report of the Valuation Officer must be considered inasmuch as the valuation of the property was in dispute. Although the Tribunal has said that the Wealth Tax Officer made efforts to get the valuation report, nothing has been brought on record to justify such a conclusion. Even assuming that the Wealth Tax Officer made efforts for complying with the directions of the Commissioner of Wealth Tax while making the reassessment, when he found that no such report was available, he could not have stuck to the valuation originally made by him. He ought to have given an opportunity to the assessee to place such materials as the assessee might have produced to show the justification of the claim made in the return in respect of the valuation of the house property in question. The Commissioner of Wealth Tax (Appeals) as well as the Tribunal, felt that although the Assessing Officer ought to have complied with the directions of the Commissioner of Wealth Tax, yet because of the limitation, the assessment had to be completed.
Our attention has been drawn to a decision of this Court in the case of Surrendra Overseas Ltd. v. CIT (1979] 120 ITR 872, where this Court held that the power and jurisdiction of the Income-tax Officer to make a further enquiry while making a fresh assessment will be governed by and should strictly conform to the order of the Appellate Assistant Commissioner. But, in that case, it was not held that the order passed by the Income-tax Officer ignoring the direction of the Appellate Assistant Commissioner was invalid. It is true that inasmuch as the. Wealth Tax Officer failed to carry out the direction of the Commissioner of Wealth Tax (Appeals), the valuation of the house property was not properly determined. However, it would appear from the order of the Tribunal that a contention was raised by the assessee that the provisions of section 7 (4) of the Act would apply to the facts of the instant case. But this point was not urged before the lower authority and, accordingly, the Tribunal referred the point to the Wealth Tax Officer for his examination as to the applicability of the provisions of section 7 (4) of the Act to the case of the assessee and dispose of the point in accordance with the provisions of the relevant section. The question of valuation of the property in question is connected with the question as to how such valuation should be made. Section 4 prescribes a particular method to be followed, for the purpose of valuing the property; if not, the valuation has to be determined either on the basis of the valuation of a registered valuer or, if that valuation is not accepted, by referring the matter to the Valuation Officer under section 16-A of the Act.
In our view, the Tribunal having set aside the assessment for determining the question of valuation in the light of the observations made in its order acted properly on the facts and circumstances of the case. In our view, when a specific direction of the superior authority is not carried out, whatever the reason might be, the assessment made in pursuance thereof cannot be said to be a proper assessment but it cannot be said to be a nullity, inasmuch as the appellate authority has the power and jurisdiction to set aside the assessment for compliance with the direction given earlier so that no injustice is caused to the assessee. Since the Wealth Tax Officer, in this case, without giving any opportunity to the assessee, estimated the valuation, the assessment suffered from infirmity and, accordingly, it was the duty of the Tribunal to refer the matter to the Wealth Tax Officer with a direction to complete the assessment afresh which, in fact, has been done. We, however, express our grave disapproval of the manner in which the Assessing Officer sat over the order of the Commissioner of Wealth Tax and completed the assessment just before the period of limitation was to expire.
We are, therefore, of the view that, m this case, the principle of natural justice having been violated, the Assessing Officer should be directed to act in conformity with the direction of the Commissioner of Wealth Tax as well as the direction given by the Tribunal in its appellate order.
For the reasons aforesaid, we answer the question in this reference in the negative.
There will be no order as to costs.
SHYAMAL KUMAR SEN, J.--I agree.
M.BA./2040/T Question answered.