TaxTMI 
TaxTMI 
1983 (11) TMI 149
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....ed to the valuation of the interest in the firm these appeals were heard together. The notices to the respondents as well as to the valuation officer were sent by registered post and the acknowledgement of their notices are on record. Despite the notices being served on the respondents and the Valuation Officer, they did not make their appearnces, but the records of the Valuation Officer had been made available by the Departmental Representative Shri Srivastava. These appeals are being disposed of by considering carefully the arguments of the Departmental Representative, assessment records, the records of the Valuation Officer and also the paper book as filed by the respondents. 2. The facts of the case are being briefly brought out below. The firm M/s. Jaimal Singh & Sons has four partners Shri Jai Singh, Shri Jaimal Singh, Shri Ajit Singh and Smt. Dhanraj Kaur, sharing the profit of the firm in the ratios of 20%, 50%, 15% and 15% respectively. The said firm was constituted by a deed dated 1.7.1970. The firm had constructed a cinema building during the financial year 1976-77 on a land, which is being owned by one of the partners, Shri Jai singh. The said cinema building call....
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....st index, height etc. have been mentioned as taken into consideration. Notice u/s 16A(4) was issued on 31.1.1985 and the assessees' objections received by his office on 16.2.1985 are mentioned as considered. The rates, values, plus the adjustments fittings etc. for the two valuation dates as on 31.3.1982 and 31.3.1983, as per the Valuation Officer's report dated 28.6.1985 are reproduced below :-- 31st March, 1982 31st March, 1983 Area Rate Amt. Rate Amt. (in sq.m.) Main Auditorium 555/27 626 2,84,999 712 3,24,152 Double storeyed side verandah 174/75 689 1,20,403 783 1,36,829 Foyer ground floor 126/67 719 91,076 818 1,03,616 Front verandahs at 120/40 658 79,223 749 90,180 first & second floors Balcony 115/39 250 28,848 300 34,617 Platform, panelling etc. 20,231 24,062 Less : ACC roofing 40,137 45,510 etc. ---------------- ---------------- Net reproduction cost 5,84,643 6,67,946 Add : for services @ @ 18% on 18% on Rs. 5,64,412 1,01,594 6,43,884 1,15,899 : Builders' efforts 2% 13,725 15,677 ---------------- ---------------- 6,99,962 8,99,522 Less : Depreciation 69,997 8,99,522X 97,148 6,99,962 X 90/100 X 5/50 90/100X 5/50 ....
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....858 ----------------- ----------------- 50% share to Jaimal Singh 3,20,200 4,01,900 7. The Chief Engineer from the office of the Chief Engineer (Valuation) vide his communication No. CE(V)/D/85-86 Reports (Review)/VO(Bhopal)/1624 dated 10.2.1986 on the subject of valuation of the cinema building, stated that valuation report is erroneous and not in the interest of revenue and therefore not acceptable for implementation. He further observed that land being owned by one of the partners, viz. Shri Jai Singh having 20% share of the profits, this factor should have been given serious consideration. He made further observation that some parts of the building like canteen and another structure have been left out by the Valuation Officer as belonging to the father of Shri Jai Singh without mentioning his name. He then stated that V.O.'s report is clumsily prepared and is vague about the interrelationship of the partners. He then directed that their relationship be clearly indicated, as to who is whose father, on 1976, which of the partners had their own source of income independent of HOF and if so their I.T. permanent a/c No. He then added that it appears to be a role played by t....
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....Delhi, to assess the electrical fixtures plant and machinery. This order is issued under rule 3(A) of the W.T. Rules (1957). " 8. The ITO, A-Ward, Itarsi vide his letter dated 25-9-1986, 7.10.1986 and 17.12.1986 to the E.E. (Valuation), Bhopal, reminded him that the revised valuation report had not been received. The revised valuation report dated 22.12.1986 was received by the ITO, A-Ward, Itarsi on 24-12-1986. As per this report, the valuation of half share in the cinema building--Alka Talkies for the valuation dates 31-3-1982, 31.3.1983 has been specified, as Rs. 4,51,800 and Rs. 5,09,200 respectively. 9. In this report in para 5, the land area has been mentioned as 16,720 sq.ft. The said property is stated to have been inspected on 25-10-1986. The constructed plinth area is mentioned as given below : Main Auditorium hall 455.44 sq.m. (Average height 32 feet) Double storeyed side verandah 173.98 sq.m. Front portion-three storeyed 247.17 sq.m. Balcony 115.43 sq.m. The types of construction etc., are as was in the earlier reports except that the height of the roof in auditorium hall has been taken at 32 feet, while in the earlier two reports, the height has....
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....,200 11. The WTO completed his assessment of these three assessments adopting share of value of the cinema building based on V.O.'s report dated 22.12.1986. The assessee was aggrieved and in their appeal to the AAC, raised the contention that the revised order of the V.O. was illegal, but the returned value should be accepted. The AAC had issued the notice to the V.O. and the V.O. Bhopal submitted in his letter of reply dated 20.10.1987 to the AAC, the reasons which called for the first revision, the second revision and the report dated 22.12.1986. He gave the reasons for revision as mistakes. He also gave the areas as taken in first and second reports as also in the final report. He also stated that the rates adopted in the final report as proper. The comparative areas as adopted initially and finally are reproduced below for facility : Initial report Final report (sq.m) (sq.m) Auditorium hall 455.27 455.44 Side verandah 174.75 173.98 Front portion 126.67 + 120.40 247.07 247.17 Balcony 115.39 115.45 Wooden pannelling 150.32 150.37 False ceiling 415.76 415.92 Collapsible steel shuttering Not accounted 30.87 12. The AAC analysed the reports of valuat....
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....ence he may rely upon. Sec. 16A(5) provides that the V.O. after considering the objections of the assessee along with the evidence relied upon, giving the assessee a personal hearing to the assessee, shall by an order in writing, estimate the value of the property and then send the order to the W.T.O. Sec. 16A(6) provides that the W.T.O. on receipt of the V.O.'s report on the property, adopt it and complete the assessment. 14.2 From what has been observed in para 14.1 above, it is clear that the V.O. once he serves his report on estimation of the value of the property on the WTO, he becomes functus officio as far as the valuation of the property is concerned. The V.O. has not been provided with any powers of cancelling/recalling his estimation. 14.3 Sec. 35 of the W.T. Act allows for rectification of any mistake apparent from a the record. Sec. 35(1)(aaa) and sub-sec. (6A) provide for the power to the V.O. for amendment of the order passed u/s 16A(5) and in case the amendment results in enhancement of the value of the property, he shall send a copy of such amendment to the WTO, who shall amend the assessment on that basis. 14.4 Thus as per provisions of sec. 35(1)(aaa) and....
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....d 3.2.1986 revision of the initial report and the report dated 23.12.1986 the final revision of the earlier two reports. 14.7 The initial report dated 28.6.1985 determining the value of the property Alka Talkies' belonging to the firm M/s. Jaimal Singh & Sons, was ordered by the V.O. Bhopal to whom the reference was made by the WTO on 31.1.1984 and there is absolutely no dispute that he had the proper jurisdiction under the Act, to determine the fair market value of the property. In this report he had allowed deduction of (a) 10% for joint ownership ; (b) 10% for video piracy and (c) 10% for the value determined by the profit capitalisation method exceeded by 10%. In this report the land has been mentioned as belonging to one of the partners and not to the firm. The Superintending Engineer (Valuation) sitting at Jaipur, issued his office order dated 9.8.1985 of setting aside for rectification the valuation made on 28.6.1985. He further directed Shri N.S.Raheja (V.O. Bhopal), Indore, which direction is reproduced below :-- " He is directed to deduct erroneous ad hoc deductions allowed under column 19 and issue a revised 16A(5) after giving necessary opportunity to the asses....
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....thorities. This section allows the Board to issue such orders, instructions and directions for the proper administration of the Act but does not permit issuing of any order, instruction or direction to any W.T. authority to make a particular assessment of to dispose a particular case in a particular manner. Thus it is an obvious fact that the Act does not provide any authority under the Act, to issue any directions in the manner of making of any assessment in a particular case. Therefore, it can be concluded that the V.O.'s order dated 3.2.1986 made as per the directions of the Superintending Engineer is obviously not an order envisaged u/s 16A(5) read with sec. 35(1)(aaa) and 35(6A) and, therefore, is an illegal one. Since the WTO did not act on this report of the V.O., this observation is effective to in the context of legality only. 14.10 The second in sequence is the Chief Engineer (Valuation) observation and direction dated 10.2.1986. We have reproduced in para 7, the contents of the directions of the Chief Engineer. 'Our observations made in paras 14, 14.3 to 14.9' 'would equally apply to the directions of the Chief Engineer dated 10.2.1986, especially to its invalidity an....