1989 (6) TMI 21 - HC - Wealth-tax

Court quashes Wealth-tax Act notice for improper property valuation - Section 25(2) violated

Subhakaran Rajgharia Versus Commissioner Of Wealth-Tax

The court allowed the writ petition, quashing the notice under section 25(2) of the Wealth-tax Act for assessment years 1966-67 to 1971-72. It found the ... Reference To Valuation Officer, Revision, Wealth Tax Issues:Challenge to notice under section 25(2) of the Wealth-tax Act, 1957 by the Commissioner of Wealth-tax. Valuation of immovable property not in conformity with provisions of section 7 of the Wealth-tax Act. Validity of Valuation Officer's report under section 16A. Judicial interpretation of sections 16A and 25(2) of the Wealth-tax Act.Analysis:The petitioner sought relief through a writ of mandamus to cancel a notice under section 25(2) of the Wealth-tax Act, 1957, for assessment years 1966-67 to 1971-72. The petitioner argued that as of March 1, 1965, they were no longer the trustee of the trust properties, and hence not assessable under the Act. The petitioner contested the valuation made by the Wealth-tax Officer, claiming it was not erroneous or prejudicial to Revenue interests. The petitioner challenged the notice on grounds of legality and jurisdiction, emphasizing the valuation's conformity with established methods.The petitioner's advocate contended that the valuation of the immovable property at issue was not in line with section 7 of the Wealth-tax Act. Reference was made to the definition of Valuation Officer under section 2(r) and the powers granted to Wealth-tax Officers under section 16A to refer asset valuation. The advocate argued that the Valuation Officer's report relied upon by the Commissioner was unwarranted, citing legal precedents like Smt. Uma Debt Jhawar v. WTO and interpreting the provisions of section 16A.Legal interpretations of sections 16A and 25(2) of the Wealth-tax Act were presented through judicial decisions. The court referenced cases like Satyendra Chunder Ghose v. WTO and Tulsidas Kilachand v. D. R. Chawla to analyze the scope of Wealth-tax Officers' powers in referring asset valuations. The court emphasized that the Valuation Officer's reports should align with the provisions of section 12A and 16A while assessments are pending, and any report beyond this scope cannot be considered valid.In the final analysis, the court found that the steps taken by the respondents in issuing the impugned notice were not supported by the law. The writ petition was allowed, and the rule was made absolute, quashing the notice dated September 20, 1977, and proceedings under section 25(2) of the Wealth-tax Act. The court made no order for costs, concluding the judgment.