Wealth tax---

----Reassessment---commissioner to disclose material facts necessary for assessment---Finding that assessee has given details regarding residential property and particulars regarding shares owned by him at the time of original assessment---Duty of Wealth Tax Officer to determine value of house and shares---Reassessment on ground that house and shares had been undervalued---Not valid---Indian Wealth Tax Act,1957, S.17.

The assessee was the owner of a residential property, He also owned some shares. The assessment to wealth tax was made for the assessment years 1972-73 and 1973-74. The Wealth Tax Officer determined the value of the said property in the original assessment at Rs.2,22,048 on the basis of the registered valuer's report. Subsequent to the completion of the original assessment for the assessment year 1972-73,the Wealth Tax Officer referredthe matter to the Departmental Valuation Officer under section 16A of the Wealth Tax Act,1957, who determined the property's value at Rs.4,65,000, The Wealth Tax Officer held that the assessee had not disclosed the full and true materials for making a proper assessment. He was also prima facie of the opinion that the assessee had not returned the correct value of the shares held by him in a company. The Wealth Tax Officer completed the reassessment. The Appellate Assistant Commissioner found that the assessee at the time of original assessment filed a plan of the house. Full details regarding the site had been given. He also found that as regards the valuation of shares, the assessee had furnished full particulars at the time of original assessment and after taking into account the particulars, the value of the shares was fixed at Rs.35,000. He, therefore, held that the reassessment proceedings initiated by the Wealth Tax Officer for both the assessment years under section 17(1)(a) of the Act were not valid. This was confirmed by the Tribunal. On reference:

Held, that both the Appellate Assistant Commissioner and the Tribunal had given a finding of fact that the assessee had produced all relevant particulars for the purpose of a proper assessment at the time of original assessment and the assessee could not be stated to be guilty of producing inadequate particulars or untrue particulars at the time of original assessment. The assessee had produced the site plan along with the return at the time of original assessment showing the area as 39,200 sq. ft. When relevant particulars were available before the Wealth Tax Officer, it was the duty of the Wealth Tax Officer to find out the exact area and on that basis to determine the value of the property. The assessee had furnished full and true particulars regarding the valuation of the property and that value returned by the assessee was also supported by the report of the registered valuer, The assessee had not omitted to disclose full and true particulars at the tithe of the original assessment. In so far as the valuation of shares was concerned, the finding of the Tribunal was that there was a full discussion as regards the valuation of the shares at the time- of original assessment and after that, the Wealth Tax Officer determined the value of the shares at Rs.35,000 for both the assessment years. Therefore it could not be stated that the assessee had failed to disclose relevant particulars for the valuation of the shares at the time of original assessment. The reassessment proceedings were not valid.

C. V. Rajan for the Commissioner.

Balaji for K Ramagopal and S. S. Sundararaman for the Assessee.

JUDGMENT

N. V. BALASUBRAMANIAN, J.---The assessee is the owner of the property at No.3.A. V. Palaniswamy Naidu Street, Comimbatore. The property is a residential bungalow. We are concerned with two assessment years, viz., 1972-73 and 1973-74. The original assessment under the Wealth Tax Act for the assessment year 1972-73 was made on October 28, 1972, on a net wealth of Rs.4,40,700. For the assessment year 1973-74, the original assessment was made on January 29, 1974, on a net wealth of Rs.5,56,500. The Wealth Tax Officer determined the value of the said property in the original assessment at Rs.2,22,048 on the basis of the registered valuer's report. Subsequent to the completion of the original assessment for the assessment year 1972-73, the Wealth Tax Officer referred the matter to the Departmental Valuation Officer under section 16A of the Act to determine the value of the property who determined the property's value at Rs.4,65,000. According to the Departmental Valuation Officer, the area of the property was 90 cents and on that basis, the value of the property was determined at Rs.4;65,000. The Wealth Tax Officer on the basis of the report of the Department Valuation Officer found that the area of the house as found by the Departmental Valuation Officer was 90. cents, and held that the assessee had not disclosed the full and true materials for making a proper assessment. He was also prima facie of the opinion that the assessee had not returned the correct value of the shares held by him in a company called Ajanta Textiles Ltd., which value was shown as Rs.35,000, at Rs.5 per share. But the Wealth Tax Officer was of the view that the value of the shares was at Rs.10 per share as quoted on the Madras Stock Exchange and if that value was taken into account, there was an under assessment in the wealth tax assessment proceedings for both the assessment years and issued a notice of reassessment to the assessee. The Wealth Tax Officer ultimately completed the reassessment as there was no response to the notice from the assessee, and brought to tax the difference in value.

The assessee, challenging the order of the Wealth Tax Officer, filed appeals before the Appellate Commissioner. The Appellate Assistant Commissioner found that the assessee at the time of original assessment filed a plan of the house wherein the assessee mentioned that the area of the site was 39,200 sq. ft and if that formula is taken into account the area of the property as mentioned by the assessee in the original assessment would come to 91 cents. The Appellant Assessment Commissioner also found that the assessee obtained the property on a partition in the joint family and in the partition the area of the site was mentioned as 81 cents and so the assessee repeat the same at the time filling of the return during the course of original assessment. He also found that as regards the valuation of the shares was fixed at Rs. 35,000. He therefore held that the reassessment proceeding initiated by the Wealth Tax Officer for both the officer had no jurisdiction to reopen the assessment years under section 17(a) of the act were not valid and the officer had no jurisdiction to reopen the assessment under the section 17 (b) of the Act. As regards the application of section 17 (1) (b) of the Act the Appellate Tribunal Assessment Commissioner found that the proceedings under the section 174(1)(b) of the Act were time-barred and therefore the provision of section 17(1) (b) have no application to the facts of the case. In this view of the matter he allowed the preferred by the assessee.

The Department carried the matter on appeal before the Appellate Tribunal. The Appellate Tribunal confirmed the findings of the Appellate Assistant Commissioner and the Appellate Tribunal found that the assessee cannot be stated to have omitted to disclose true and full material facts necessary for making a proper assessment before the Wealth Tax Officer at the time of original assessment. The Tribunal also held that the provisions of section 17(1)(a) have no application and the provisions of section 17(1)(b) was not applied. The Tribunal also recorded a finding that the Wealth Tax Officer made a reference to the Departmental Valuation Officer after the original assessment was completed and under the provisions of section 16A of the Act, the Wealth Tax Officer is not empowered to make a reference to the Valuation Officer after the completion of the assessment. The Tribunal held that the assessee cannot be said to have furnished inadequate particulars and further, the assessee had no knowledge about the area of the property and it cannot be stated that the assessee omitted to produce material particulars. Challenging the order of the Appellate Tribunal the Department sought for a reference and the following question of law have been referred by the Tribunal for our consideration:

"(1) Whether on the facts and in the circumstances of the case, the

Appellate Tribunal was right in upholding the cancellation by the Appellate Assistant Commissioner of the reassessment made under section 17(1)(a) of the Wealth Tax Act, 1957, for the assessment years 1972-73 and 1973-74?

(2) Whether the Appellate Tribunal had valid and relevant materials to hold that the assessee could not be said to have knowingly omitted or failed to disclose the correct area of the site in which the building is situate and that, therefore, the provisions of section 17(1)(a) would not give powers to the Wealth Tax Officer to reopen the assessment?

(3) Whether, the Appellate Tribunal's finding that the report under section 16A of the Wealth Tax Act submitted by the Valuation Officer was in an invalid reference and that, therefore, the said report could not be made the basis for reopening the assessment under section 17(1)(a) of the Wealth Tax Act; 1957, was based on proper materials of the case?"

Mr. C. V. Rajan, learned counsel for the Revenue, submitted that the Tribunal was not correct in holding that the reassessment was invalid as the assessee had failed to disclose the relevant material particulars at the time of original assessment. Learned counsel for the assessee, on the other hand, supported the order of the Appellate Tribunal.

We have carefully considered the submissions of learned counsel. We are of the view, both the Appellate Assistant Commissioner and the Appellate Tribunal have given a finding of fact that the assessee had produced all relevant particulars for the purpose of a proper assessment at the time of original assessment and the assessee cannot be stated to be guilty of producing inadequate particulars or untrue particulars at the time of original assessment. The assessee had produced the site plan alongwith the return at the time of original assessment, showing the area as 39,200 sq. ft. When relevant particulars were available before the Wealth Tax Officer, it is the duty of the Wealth Tax Officer to find out the exact area and on that basis to determine the value of the property. The assessee had furnished full and true particulars regarding the valuation of the property and that value returned by the assessee was also supported by the report of the registered valuer. We are, therefore, of the opinion that it cannot be stated that the assessee had omitted to disclose full and true particulars at the time of original assessment.

In so far as the valuation, of shares is concerned, the finding of the Appellate Tribunal is that there was a full discussion as regards the valuation of the shares at the time of original assessment and after that, the Wealth Tax Officer determined the value of the shares at Rs.35,000 for both the assessment years. Therefore, it cannot be stated that the assessee had failed to disclose relevant particulars for the valuation of the shares at the time of original assessment. As already held, when the relevant particulars regarding the shares were before the Assessing Officer, it is the duty of the Assessing Officer to find out the value of shares. We cannot put the blame on the assessee for the lapse of the Assessing Officer in not determing the value of the shares. Therefore, we are of the opinion that the assessee had disclosed full and true particulars regarding the valuation of both the items of the properties at the time of original assessment and on that basis only the original assessment was completed. We are, therefore, of the opinion that the Tribunal committed no error in holding the assessment proceedings initiated for both years were not valid and the Wealth Tax Officer had no jurisdiction to make reassessment under section 17(1)(a) of the Act. Admittedly, it is not a case falling under section 17(1)(b) of the Act as the proceedings under section 17(1)(b) have become fine-barred at the time of initiation of proceedings, and therefore, only on the basis of section 17(1)(a) of the Act, the question of validity of reassessment has to be determined. We hold that the provisions of section 17(l)(a) are also not applicable to the facts of the case and the Tribunal was correct in holding that the Wealth Tax Officer lacked the jurisdiction to make the reassessment in the instant case.

Though the Tribunal had made an observation regarding the action of the Assessing Officer in obtaining the valuation report from the departmental Valuation Officer invoking his powers under section 16A of the Act, we are of the opinion that the report will be relevant only if the reassessment proceedings were taken under section 17(l)(b) of the Act. Since the proceedings were initiated under section 17(1)(a) of the Act, it is unnecessary for us to express any opinion on the correctness of the view of the Appellate Tribunal as to whether the powers under section 16A of the Act were properly invoked by the Assessing Officer.

Accordingly, we answer the questions of law referred to us as under:

Question Nos. l and 2.

They are answered in the affirmative against the Department and in favour of the assessee.

Third question:

We are of the opinion, it is not necessary for us to render any answer to this question as the reopening of the assessment was made under section 17(1)(a) and since the powers under section 17(1)(b) were not invoked, it is not necessary to render any answer to the question whether the report under section 16A can be the basis for reopening the assessment under section 17(1)(a) of the Act. Hence, we are not answering the third question.

The assessee is entitled to costs of Rs.750.

M.B.A./4240/FC Reference answered.