COMMISSIONER OF WEALTH-TAX vs. HUF OF KARTIKEYA V SARABHAI

WTR/1/1984HC GujaratGJHC24012149198406 February 1997Author: HONOURABLE MR. JUSTICE R.K.ABICHANDANI,HONOURABLE MR. JUSTICE R.BALIA2 pages
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What were the facts?

The Income Tax Appellate Tribunal (ITAT) referred a question of law to the High Court of Gujarat concerning an order passed by the Commissioner of Wealth Tax (CWT) under Section 25(2) of the Wealth Tax Act, 1957. The assessee is the HUF of Kartikeya V Sarabhai. The ITAT had previously decided a similar case, WTA No. 227/AHD/80, on March 19, 1981, finding the CWT's order liable to be set aside. This current reference was based on identical facts and issues. The High Court had also dealt with a reference (Reference No. 37/82) arising from the earlier ITAT decision, which was disposed of on the same day.

What did the High Court hold?

The High Court held that the Tribunal was correct in law in concluding that the order passed by the Commissioner of Wealth Tax under Section 25(2) of the Wealth Tax Act, 1957, was liable to be set aside. The reasoning was based on the High Court's own decision in CWT Vs. Amichand C. Shah (H.U.F.), reported in 218 ITR 659. In that precedent, the Court upheld the Tribunal's finding that a valuation report not forming part of the WTO's record could not be used by the Commissioner to invoke jurisdiction under Section 25(2). Consequently, the question referred to the High Court was answered in the affirmative, in favour of the assessee and against the revenue. The reference was disposed of accordingly, with no order as to costs.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that the order passed by the Commissioner of Wealth Tax, under Section 25(2) of the Wealth Tax Act, 1957 was liable to be set aside? Assessee's contention (implied by the Tribunal's finding and the High Court's decision): The Commissioner of Wealth Tax erred in invoking Section 25(2) of the Wealth Tax Act, 1957, because the valuation report considered by him was not part of the record before the Wealth Tax Officer (WTO). Therefore, the Commissioner lacked the necessary jurisdiction to pass the order. Revenue's contention: Not recorded in the judgment. The judgment states the Tribunal followed its previous decision and the High Court's precedent.

Which sections of the Income-tax Act were involved?

Section 25(2),Section 27(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

WEALTH TAX REFERENCE No 1 of 1984

For Approval and Signature:

Hon'ble MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE R.BALIA. ============================================================ 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 Judge?

-

The order continues below.

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