Wealth tax---

---- Valuation of property---Reference by Assessing Officer to Valuation officer under S. 16-A of Wealth Tax Act and -S.55-A of Income Tax Act-- Proceedings against a firm in which assessee is a partner pending under S.148 of Income Tax Act---Action of reference to Valuation Officer justified---No legal infirmity---Indian Wealth Tax Act, 1957, S.16-A-- Indian Income Tax Act, 1961, S.55-A.

Held, that the reference to the Valuation Officer made by the Assessing Officer to determine capital gains liability under section 45 of the Income Tax Act, 1961, and the gift-tax liability under section 4(1)(a) of the Gift Tax Act, 1958, did not suffer from any legal infirmity. Section 16-A of the Wealth Tax Act, 1957 and section 55-A of the Income Tax Act, 1961, applied for determination of fair market value of property.

Jain (V.K.) v. WTO (1992) 193 ITR 89 (All.) and Laxmi Devi Jain v..WTO (1992) 193 ITR 154 (All.) ref.

Prabhakar Mehrotra for Petitioners.

Bharatji Agarwal for Respondents. .

JUDGMENT

When this writ petition was taken up an application for adjournment of the writ petition was made by Sri Shambhu Chopra on the plea that one of counsel for the petitioners, namely, Sri P.N. Bathan, has gone to the United States of America. However, as the petitioners have engaged and are represented by two counsels even if one of them is not available having gone abroad, that cannot be a valid ground for adjournment of the case as the other counsel for the petitioners is here and can well-argue the petition. That being so, the application for adjournment is turned down.

Sri Prabhakar Mehrotra appears for the petitioners and Sri Bharati Agarwal appears for the Revenue and they are heard.

By this petition, the petitioners seek quashing of the reference made by respondent No. l for the valuation of Properties Nos. 17/9 and 17/9-A, the Mall, Kanpur, and also pray that the respondents be restrained from making any valuation on the basis of the reference made by respondent No. 1, vide this order, dated February 2, 1995 and July 10, 1995.

Counter-affidavit has been filed denying the averments made in the petition. No. rejoinder affidavit has been filed. After hearing learned counsel appearing for the parties this petition is finally disposed of.

The only contention raised by learned counsel appearing for the petitioners is that the valuation of the petitioner's properties which have been done under impugned order, dated February 2, 1996, and July 10, 1995, respectively, is contrary to the specific provisions of section 16-A of the Wealth Tax Act (hereinafter referred to as "the Act"). It is submitted that where under the provisions of this Act read with the rule made under this Act any proceeding including an assessment proceeding in respect of any assessment year commencing `from the date of coming into force of this section is pending, then only section 16-A of the Act be invoked and the authorities may direct for valuing of the property but neither any assessment proceeding is pending nor any other proceedings are pending, despite that proceedings for valuing of the petitioners' property have commenced which is prejudicial to the petitioners and, therefore, the said proceedings be quashed. While filing the counter-affidavit controverting the submissions of learned counsel appearing for the petitioner it is submitted that one of the five partner, Sri Terrance De Noronha, was a partner in Garg Noronhas against which proceedings under section 148 of the Income Tax Act were pending. In such circumstances, it is contended that it is wrong to suggest that no assessment or reassessment proceedings, are pending and in contravention of the provisions of section 16-A of the Wealth Tax Act or those of section 55-A of the Income Tax Act proceedings for valuing the petitioners' property have commenced. Dealing with the point in issue elaborately it is contended 'in para. 15 of the counter-affidavit giving adequate reply to the petitioners' submissions that section 16-A of the Act applies with full force and the Assessing Officer can make reference to the Valuation Officer regarding the petitioners' property and section 16-A of the Act also provides for fair market value of the assets.

For an appraisal of the case in a nutshell it is necessary to reproduce the reply submitted by the respondents in their counter-affidavit, vide para.15:

"The action of the respondents is not arbitrary in making the reference under section 16-A(1) of the Wealth Tax Act, section 55-A of the Income Tax Act for the purpose of valuation of the Properties Nos.17/9 and 17/9-A, Kurewan the Mall; Kanpur. The reference is perfectly legal and valid. Assertion of the petitioner that no assessment or reassessment proceeding under the Income-tax Act, Wealth Tax Act or Gift-tax Act was pending against the petitioners as such the reference proceedings was bad in law, is wholly misconceived. As already stated in opening paragraphs of this counter-affidavit, the valuation reference was made by respondent No. l with a view to determine the capital gains liability as provided under section 45 read with section 9(1)(i) of the Income-tax Act read with rule 10 of the rules framed thereunder and to determine the liability of the deemed gift as per section 4(1)(a) of the Gift-tax Act. Respondent No.1 in his reference letter to the Valuation Officer, dated February 2, 1995, has also recorded reasons for such reference, as the property was located in the prime are of Kanpur which carries much higher market value of the land than that declared by the assessee, it is being referred to you for valuation purpose. The letter of reference dated February 2 1995, has already been annexed along with this counter-affidavit. It may be submitted that one of the five partners, Shri Terrance De Noronha was a partner in Garg. Noronha against which proceeding under section 148 of the Income Tax Act; was pending."

Thus, the action taken by the respondents does not suffer from any legal infirmity warranting interference in writ jurisdiction under Article 226 of the Constitution of India.

Further, on the facts as emerging and referred to above, the decisions referred to by learned counsel appearing for the petitioners, V.K. Jain v. WTO (1992) 193 ITR 89 (All.) and Laxmi Devi Jain v. WTO (1992) 193 ITR 154 (All.), (do not apply) to the facts of the instant case; and therefore, are of no avail to the petitioners.

Thus, in our considered opinion, this petition lacks merit and it 'is accordingly dismissed. The stay order dated October 17, 1995, is hereby vacated.

M.B.A./1699/FCPetition dismissed.