2018 (2) TMI 736 - AT - Wealth-tax

Importance of Transparency in Wealth Tax Valuation: Assessments Must Follow Proper Procedures

Shri Ashwin C. Shah Versus ITO, Ward-2 Godhra

The judgment in this case involved appeals by the assessee challenging the valuation of properties for Wealth Tax Act purposes. The court emphasized the ... Determination of net-wealth for the purpose of Wealth Tax Act - Held that:- Sub-section 2 of section 50C provides a remedy to the assessee in case he has aggrieved with adoption of such sale consideration on the basis of deeming provision. He can file a reference to the AO and the AO shall send the reference to the DVO for determining fair market value of the property on the date of transfer. Thus, it cannot be taken as gospel truth. The assessee has to be given an opportunity to contest this rate. Similarly, report of the DVO is to be supplied to the assessee his comments are to be taken. Only thereafter net wealth could be determined. In the present cases, report of the DVO is still awaited. While dealing with the property no.4, Narol, Ahmedabad the ld.CIT(A) has observed that the AO is directed to adopt value of the property on receipt of report from the DVO if the valuation is more than the value of the property declared and accepted by the AO. Now, how this type of direction can be made without confronting the assessee with report of the DVO ?. We are of the view that ends of justice will be met, if we set aside order of the CWT(A) and restore all these issues to the file of AO. AO shall provide copies of DVO’s report in case those reports are being relied upon by him for determination of net wealth - Appeals of the assessee are allowed for statistical purpose. Issues:Determination of net-wealth for the purpose of Wealth Tax Act based on valuation methods, including indexation, approved valuer, and prevailing jantri rate. Charging of interest under section 17B of the Wealth Tax Act.Analysis:The judgment involves six appeals by the assessee against orders of the ld.CWT(A) regarding the determination of net-wealth under the Wealth Tax Act. The AO found the wealth of the assessee exceeding limits and issued notices. The assessee filed wealth-tax returns for different assessment years, disclosing properties and their net wealth. Disputes arose over the valuation of properties using different methods. The ld.CIT(A) partly allowed the appeal, focusing on the valuation of agricultural land and properties. The AO's valuation methods included indexation, approved valuer, and prevailing jantri rate. Discrepancies in valuation led to additions in taxable wealth over subsequent years.The ld.CIT(A) directed adjustments in the valuation of properties based on reports from the AVO and DVO. The assessee challenged the charging of interest under section 17B of the Wealth Tax Act. The AO's failure to follow proper valuation procedures and awaiting reports from the DVO raised concerns. The judgment emphasized the need for the assessee to contest valuation rates and have access to DVO reports for fair determination of net wealth. Setting aside the ld.CWT(A)'s order, the judgment restored the issues to the AO for proper valuation procedures, ensuring the assessee's right to challenge valuation methods and reports.The judgment highlighted the importance of providing the assessee with DVO reports for transparency in valuation. It criticized the AO's reliance on jantri rates without giving the assessee an opportunity to contest them. The direction to adopt values based on DVO reports without sharing them with the assessee was deemed unfair. The judgment emphasized adherence to Wealth Tax Act procedures for determining asset values and the assessee's right to contest valuation methods. Ultimately, all appeals by the assessee were allowed for statistical purposes, emphasizing the need for proper valuation procedures and transparency in wealth tax assessments.