1989 (2) TMI 100 - HC - Wealth-tax

Invalidation of Wealth-tax Act assessments for unauthorized valuation report

Commissioner Of Wealth-Tax Versus Ravi Cheloor

Commissioner Of Wealth-Tax Versus Ravi Cheloor - [1989] 178 ITR 640, 78 CTR 153, 47 TAXMANN 61 Issues involved: Validity of reopening assessment u/s 17(1)(b) of the Wealth-tax Act based on unauthorized valuation report obtained through unauthorised reference u/s 16A of the Act.Summary:The High Court of Kerala considered a case where the Wealth-tax Officer reopened assessments for the years 1972-73 and 1973-74 based on a valuation report obtained through an unauthorized reference to the Valuation Officer under section 16A of the Wealth-tax Act. The main asset in question was a cinema theatre, and the successor Wealth-tax Officer doubted the valuation, leading to the reassessment under section 17(1)(b) of the Act. The Appellate Assistant Commissioner initially held the reassessments to be illegal, a decision upheld by the Income-tax Appellate Tribunal.Upon review, the High Court found that the reference to the Valuation Officer was unauthorized and lacked jurisdiction since the assessments had already been completed before the reference was made. The Court emphasized that section 16A of the Wealth-tax Act allows valuation references only during pending assessment proceedings. Relying on precedents from various High Courts, the Court concluded that the unauthorized valuation report tainted the reassessment proceedings.In light of the above, the High Court ruled against the Revenue, holding the reassessment invalid and in favor of the assessee. The judgment will be forwarded to the Income-tax Appellate Tribunal, Cochin Bench, as per legal requirements.