Wealth tax---

----Reassessment---Reference to Valuation Officer under S. 16-A cannot be made for initiating reassessment proceedings---Wealth Tax Act, 1957, Ss. 16-A, 17(1)(b).

During the pendency of the return and assessment proceedings, the Wealth Tax Officer can form an opinion for making a reference to the Valuation Officer under section 16-A of the Wealth Tax Act, 1957, but after the assessment is completed, the Wealth Tax Officer becomes functus officio. Reference to the Valuation Officer under section 16-A after the assessment is completed is not possible for initiating reassessment proceedings.

CWT v. Smt. Gulnar Marfatia (1986) 159 ITR 311 (Raj.); Uma Debi Jhawar v. WTO (1982) 136 ITR 662 (Cal.); Sint. Bella Cajeton Travasso v. WTO (Third) (1987) 166 ITR 49 (Bom.) and K.M. Ramdas Prabhu v. WTO (First) (1987) 166 ITR 706 (Kar.) fol.

Brig. B. Lall v. WTO (1981) 127 ITR 308 (Raj.) ref.

G.S. Bapna for Commissioner.

JUDGMENT

V.K. SINGHAL, J.---The Income-tax Appellate Tribunal has referred the following question of law arising out of its order dated 7th February, 1981, for the assessment years 1970-71 and 1971-72:

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the order of the Appellate Assistant Commissioner quashing the reassessment proceedings under section 17(1)(b) of the Wealth Tax Act, 1957, for the assessment year under consideration?"

The brief facts of the case are that the original assessments for the assessment years 1970-71 and 1971-72 were made by the Wealth Tax Officer on 23rd September, 1970, and 13th December, 1971 respectively. Subsequently, on 7th November, 1974, the Wealth Tax Officer made a reference under section 16-A of the Wealth Tax Act, 1957, to the Valuation Officer requesting him to estimate the fair market value of the land and building situate at Moti Doongri Road, Navijiwan Upwan, as on Dewali 1971, 1972, 1973, and also as on Dewali 1969. He was also informed that the assessee had filed the returns for wealth tax purposes for the assessment years 1972-73 and 1973-74 showing the valuation of the land and building at Rs.2,42,685 and Rs.3,12,217, respectively. It was also mentioned that the valuation as on Dewali 1959 is also required for action under section 17(1)(b) of the. Wealth Tax Act which will get barred by limitation on 31st March, 1975.

The Valuation Officer submitted his report on 22nd March, 1975, and on that very date, notices were issued to the assessee for both the years namely, 1970-71 and 1971-72. Reassessment proceedings under section 17(1)(b) of the Wealth Tax Act were started. The reassessment orders were framed on 17th February, 1979. Against these orders, appeals were preferred to the Appellate Assistant Commissioner where it was contended that the provisions of section 16-A could have been invoked only during the pendency of the assessment proceedings and there was no warrant for the Wealth Tax Officer to make the reference under section 16-A after the assessments were completed. The Appellate Assistant Commissioner, accepted the plea and the appeals were allowed.

Against the order of the Appellate Assistant Commissioner, the Revenue preferred appeals to the Income-tax Appellate - Tribunal and the Tribunal came to the conclusion that the Wealth-tax Officer having made the reference to the Valuation Cell after completing the assessments for the years under appeal, in view of the decision of this Court in the case of Brig. B. Lall v. WTO (1981) 127 ITR 308, the assessment proceedings are null and void.

The submission of learned counsel for the Revenue is that it was only on the basis of the returns for the subsequent years which were received by the Wealth Tax Officer, that the action under section 16-A was taken. It is further submitted that even a mistake which has been committed could not give any benefit to the assessee not to pay the due taxes.

We have considered the matter. During the pendency of the return and assessment proceedings, the Wealth Tax Officer could have formed an opinion for making a reference under section 16-A but after the assessment is completed, the Wealth Tax Officer becomes functus officio. The reference under section 16?-A is not possible for initiating the reassessment proceedings. This Court has already considered this matter in the case of CWT v. Gulnar Marfatia (1986) 159 ITR 311, wherein it was held that section 16-A permits the Wealth Tax Officer to make a reference to the valuation cell for the purpose of making an assessment and if no proceedings were pending before the Wealth Tax Officer then no reference can be made to the District Valuation Officer and he has no power to follow a reverse process. Reference to the valuation cell cannot be followed by reassessment proceedings.

In view of the decision of this Court which is also the view taken by the Calcutta High Court in Uma Debi Jhawar v. WTO (1982) 136 ITR 662, the Bombay High Court in Sint. Bella Cajeton Travasso v. WTO (Third) (1987) 166 ITR 49 and the Karnataka High Court in K.M. Ramdas Prabhu v. WTO (first) (1987) 166 ITR 706, we are of the view that the Income-tax Appellate Tribunal was justified in upholding the order of the Appellate Assistant Commissioner quashing the reassessment proceedings under section 17(1)(b) of the Wealth Tax Act, 1957, for the assessment years under consideration.

M.B.A./244/T.F.????????????????????????????????????????????????????????????????????? Order accordingly.