COMMISSIONER OF WEALTH TAX vs. PRAMILABEN CHUNIBHAI

WTR/41/1982HC GujaratGJHC24011288198201 September 1998Author: HONOURABLE MR. JUSTICE R.K.ABICHANDANI,HONOURABLE MR. JUSTICE ANIL R. DAVE7 pages
AI SummaryRemanded

What were the facts?

The assessee owned a self-occupied property. For assessment years 1969-70 to 1973-74, the Wealth Tax Officer (WTO) assessed the property's value higher than declared by the assessee, but without referring the matter to the Departmental Valuation Officer (DVO) under Section 16A of the Wealth Tax Act, 1957. The Commissioner of Wealth Tax (CWT), finding the WTO's orders erroneous and prejudicial to revenue, initiated revision proceedings under Section 25(2). The CWT set aside the WTO's orders and directed fresh assessments with a reference to the DVO. The assessee appealed to the Income Tax Appellate Tribunal (ITAT), which cancelled the CWT's orders. The ITAT comprised an Accountant Member and a Judicial Member who gave separate, seemingly conflicting, orders. The Commissioner of Wealth Tax (Petitioner) has referred questions of law to the High Court.

What did the High Court hold?

The High Court noted that the Income Tax Appellate Tribunal (ITAT) had cancelled the Commissioner's order, but the Accountant Member and the Judicial Member had dictated separate orders with conflicting findings. The Accountant Member found that the valuation report was not wrong, the WTO should have accepted the returned figure, and the Commissioner's view on mandatory reference under Section 16A was incorrect. Conversely, the Judicial Member held that the case clearly fell under Section 16A(1)(b)(i) or 16A(1)(a), implying the WTO ought to have referred the valuation to the Valuation Officer. The High Court found it surprising that the Judicial Member concurred with the Accountant Member despite his preceding findings pointing to an opposite view. The Court emphasized that when members of a Bench differ, the procedure under Section 255(4) of the Income Tax Act (applied to Wealth Tax Act by Section 24(11)) must be followed, which involves referring the case to the President for hearing by other members if the members are equally divided. Since the ITAT had not followed this mandatory procedure and there was no properly constituted decision of the Tribunal, the High Court refrained from answering the reference questions. The reference was returned unanswered.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal has been justified in law in cancelling the order of the Commissioner of Wealth-tax made under Section 25(2) of the Wealth-tax Act, 1957? 2. Whether, on the facts and in the circumstances of the case, the conclusion of the Appellate Tribunal in cancelling the order of the Commissioner of Wealth Tax made under Section 25(2) of the Act, is sustainable in law and from the material on record? 3. Whether, the finding of the Appellate Tribunal that there was no factual information to show that the value of the property in question was much more than that returned by the assessee or at any rate estimated by the Wealth Tax Officer is correct in law and sustainable from the material on record? 4. Whether, on the basis of the correct valuation method, the value of property in question was at all property returned by the assessee at Rs. 1,48,800 in her returns of wealth of the assessment years 1969-70 and 1970-71 and at Rs. 1,75,300 in her returns of wealth for the assessment years 1971-72 to 1973-74 and, if not, what will be the correct valuation of the property in question on the basis of appropriate valuation method? Assessee's Contentions (as per Tribunal's findings): - The valuation report relied upon by the assessee, showing a value of Rs. 4,05,600, was not incorrect and used a scientific method. The WTO should have accepted the returned value, which was not unreasonable. - The Commissioner's view that the WTO was obliged to refer the matter to the DVO under Section 16A when not accepting the returned valuation was incorrect, as Section 16A uses the word "may". - The Judicial Member found that the case fell under Section 16A(1)(b)(i) for most years and Section 16A(1)(a) for one year, implying the WTO ought to have referred the valuation to the Valuation Officer. Revenue's Contentions (as per CWT's order and implied by questions): - The WTO's estimation of property value without reference to the DVO under Section 16A was erroneous. - The approved valuer's report showed a value of over Rs. 4,05,600, while the assessee returned a much lower value, and the WTO's adopted value was also higher than the returned value. - The WTO should have made a reference to the DVO under Section 16A.

Which sections of the Income-tax Act were involved?

Section 27(1),Section 25(2),Section 16A,Section 24(11),Section 255(4)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

WEALTH TAX REFERENCE No 41 of 1982

For Approval and Signature:

Hon'ble MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE A.R.DAVE ============================================================ 1. Whether Reporters of Local Papers may be allowed to see the judgements?

2.

To be referred to the Reporter or not?

3.

Whether Their Lordships wish to see the fair copy of the judgement?

4.

Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil

The order continues below.

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