2002 (6) TMI 16 - HC - Wealth-tax

Commissioner's authority to set aside assessments upheld under Wealth-tax Act

The court upheld the Commissioner of Wealth-tax's authority to set aside assessments for recomputation under section 25(2) of the Wealth-tax Act. Relying ... '(i) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in setting aside the order of the Commissioner of Wealth-tax under section 25(2) of the Wealth-tax Act, 1957? - (ii) Whether, the finding of the Appellate Tribunal that the Commissioner of Wealth-tax had exceeded his jurisdiction and his order cannot be sustained is correct in law?' - we are of the same view that the Commissioner of Wealth-tax was justified in setting aside the assessment made by the Wealth-tax Officer and in directing the Wealth-tax Officer to recompute the correct net wealth and tax after considering the valuation made by the Departmental Valuer. - In view of the above, our answer to both the questions referred to us is in the negative, i.e., in favour of the Revenue and against the assessee. Issues:1. Setting aside the order of the Commissioner of Wealth-tax under section 25(2) of the Wealth-tax Act, 1957.2. Whether the Commissioner of Wealth-tax exceeded his jurisdiction and his order cannot be sustained.Analysis:1. The respondent-assessee, a partner in a firm, had a 40% share in a commercial-cum-office building. The Wealth-tax Officer initially adopted the value determined by the assessee's valuer. Subsequently, the Departmental Valuer valued the property at a higher amount. The Commissioner of Wealth-tax found the assessments prejudicial to the Revenue due to the undervaluation. Under section 25(2) of the Wealth-tax Act, the Commissioner set aside the assessments for recomputation. The Tribunal overturned this decision, leading to the reference. The court considered the Supreme Court's interpretation in a similar income tax case and held that the Commissioner can examine additional records beyond those considered by the Wealth-tax Officer. The court agreed with the Madras High Court's decision that the Commissioner was justified in setting aside the assessment for a correct valuation by the Departmental Valuer.2. The court noted that the Commissioner's action was valid under section 25(2) of the Wealth-tax Act, as supported by the Supreme Court's interpretation in a related income tax case. The Madras High Court's decision in a similar case further reinforced the validity of the Commissioner's decision. Consequently, the court ruled in favor of the Revenue, upholding the Commissioner's authority to set aside the assessment and direct a reassessment based on the correct valuation by the Departmental Valuer. The court answered both questions in the negative, supporting the Revenue's position and concluding the reference.