COMMISSIONER OF WEALTH TAX VS ANOKHA SINGH
2001 P T D 1970
[246 I T R 26]
[Delhi High Court (India)]
Before Arijit Pasayat, C. J. and D. K. Jain, J
COMMISSIONER OF WEALTH TAX
Versus
ANOKHA SINGH
Wealth Tax Reference No. 41 of 1980, decided on 07/07/2000.
Wealth tax‑‑‑
‑‑‑‑Revision‑‑‑Powers of CWT ‑‑‑Assessment order completed without inquiry‑‑‑Order is erroneous and prejudicial to revenue‑-‑CWT can revise such an order‑‑‑Indian Wealth Tax Act, 1957, S.25.
Where the assessment is completed without any enquiry whatsoever, the order of assessment is erroneous and prejudicial to the interests of the Revenue. While exercising powers to revise such assessment, the Commissioner may make further enquiry before cancelling the original order and he can rely on the result of such enquiry.
For the assessment year 1976‑77, the assessment records of the assessee were inspected by the audit party after completion of the regular assessment. An objection was raised that the fair market value of the property on the relevant valuation date worked out at Rs. 20,26,371 as against Rs. 7,44,400 returned by the assessee and accepted by the Assessing Officer. On receipt of such audit objections, the valuation of the property with referred to the Valuation Officer who determined the fair market value of the property on the relevant date at Rs. 14,18,000. On the basis of the aforesaid material, the Commissioner initiated proceedings under section 25(2) of the Act and finally directed the Wealth Tax Officer to take the fair market value of the assessee's property in New Delhi, at Rs.14,18,000 as against Rs. 7,44,400. The Tribunal held that the Commissioner of Wealth Tax did not have jurisdiction to make the order. On a reference:
Held, that the order of the Commissioner of Wealth Tax was valid.
CWT v. Nageswara Rao (A.) (1998) 231 ITR 215 (AP); CWT v. Ramnarayan Bhojnagarwala 1,1992) 194 ITR 489 (Cal.); Ganga Properties v. ITO (1979) 118 ITR 447 (Cal.); Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC); Rampyari Devi Saraogi v. CIT (1968) 67 ITR 84 (SC) and Tara Devi Aggarwal (Sint.) v. CIT (1973) 88 ITR 323 (SC) ref.
R.C. Pandey with Ms. Prem Lata Barisal for the Commissioner.
Nemo for the Assessee.
JUDGMENT
ARIJIT PASAYAT, C.J.‑‑‑Accepting the pray for reference made under section 27(l) of the Wealth Tax Act, 19'77 (for short "the Act"), the Income‑tax Appellate Tribunal, Delhi Bench C (for short "the Tribunal"), has referred the following question for the opinion of this Court:
"Whether on the facts and in the circumstances of the case, the Tribunal was justified and correct in law in holding that the order of the Commissioner of Wealth Tax passed under section 25(2) was without jurisdiction and invalid?"
The factual position in a nut‑shell is as follows:
For the assessment year 1976‑77, the Commissioner of Wealth Tax (in short "the Commissioner"), initiated proceedings under section 25(2) of the Act and finally directed the Wealth Tax Officer to take the fair market value of the‑assessee's property at No. 36. Motia Khan Dump Scheme, Rani Jhansi Road, New Delhi, at Rs. 14,18,000 as against Rs. 7,44,400 for the assessment year 1976‑77. The basis for taking action under section 25 of the Act was that the assessment records of the assessee were inspected by the audit party after completion of the regular assessment. An objection was raised that the fair market value of the property on the relevant valuation date works out at Rs. 20,26,371 as against Rs.7,44,400, returned by the assessee and accepted by the Assessing Officer. On receipt of such audit objections, the valuation of the property was referred to the Valuation Officer who determined the fair market value of the property on the relevant date at Rs. 14, 18,000. On the basis of the aforesaid material, the Commissioner initiated proceedings under section 25(2) of the Act and made the order as aforesaid. The said order was assailed before the Tribunal. It was the assessee's stand that any, material coming into existence subsequent to the assessment, cannot form part of the record for the purpose of invoking power under section 25(21 of the Act. This plea found acceptance by the Tribunal. On being moved by the Revenue for reference, the aforesaid question has been referred.
There is no appearance on behalf of the assessee in spite of service of notice. We have heard learned counsel for the Revenue.
It is submitted that the approach of the Tribunal is erroneous inasmuch as it has misconstrued the scope and ambit of section 25(2). The language of the said provision trade it clear that the conclusions arrived at by the authority, whose order is sought to be revised is (a) erroneous, and (b) prejudicial to the interest of the Revenue. The records of the proceedings before the lower authorities have to be called for to find out whether the order of the authority concerned is erroneous and prejudicial to the interests of the Revenue. The twin conditions stated above are satisfied and, therefore, the Commissioner's order was legal and proper and the Tribunal was not justified in interfering with the same.
We find that the Tribunal based its conclusions primarily on the basis of a decision of the Calcutta High Court in Ganga Properties v. ITO (1979) 118 ITR 447. The aforesaid decision was by a learned single Judge. A Division Bench of the same High Court took a contrary view in CWT v. Ramnarayan Bhojnagarwala (1992).194 ITR 489. In that case it was observed that where the assessment is completed without any enquiry whatsoever, the order of assessment is erroneous and prejudicial to the interests of the Revenue. While exercising powers to revise such assessment, the 'Commissioner may make further enquiry before cancelling the original order and he can rely on the result of such enquiry. The Commissioner, tray in a given case terns an order as erroneous on? the ground that in the circumstances of the case further enquiry was necessary to be done before accepting the figures indicated by the assessee in the return. The apex Court in Rampyari Devi Saraogi v. CIT (1968) 67 ITR 84, observed that where the Commissioner, who exercises jurisdiction, inter alia, on the ground that the enquiry as, made had revealed that the assessee neither resided nor carried on any business from the address declared in the return, can record the order as erroneous on, the ground that further enquiry was contemplated. If the Assessing Officer's order contains some apparent error of reasoning or of law or fact, or where it is a stereotyped order which simply accepts what the assessee has stated in his return and fails to make enquiries which are called for in the circumstances, the Commissioner may term such an order erroneous (see Sint. Tara Devi Aggarwal v. CIT (1973) 88 ITR 323 (SC). In CWT v. A..Nageswara Rao (1998) 231 ITR 215, similar was the 'view expressed by the Andhra Pradesh High Court. The position has been recently dealt with by. the apex Court in Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83. It was observed thus (page 88):
"The phrase 'prejudicial to the interests of the Revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example; when an Income‑tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income‑tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income‑tax Officer is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the Revenue."
On a comparison of the provisions contained in section 263 of the Income?-tax Act, 1961 (which was the provision dealt with in the afore‑mentioned decisions) with those contained in section 25(2) of the Act, it is clear that the provisions are identical. It is to be noted that Explanati6n 2 has been added by the Finance Act, 1983, with effect from April 1, 1976 (sic). Explanation (b) to subsection (2) of section 25 of the Act reads as under:
"Explanation.‑‑‑For the removal of doubts, it is, hereby declared that, for the purposes of this subsection.‑‑‑...
(b)??????? 'record' shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner:..."
Though the Explanation does not in terms apply to the assessment year in question, but as a general principle, where the Commissioner finds that further enquiry was necessary to be conducted in he facts of a particular case, proceedings under section 25(2) can be initiated if the assessment, according to the Commissioner, is erroneous and prejudicial to the interests of the Revenue. That being the position, our answer to, the question referred is in ‑the negative, i.e., in favour of the Revenue and against the assessee.
M.B.A./496/FC ????????????????????????????????????????????????????????????????????????????????? Reference answered.