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TaxTMI 
TaxTMI 
TaxTMI 
1988 (12) TMI 164
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....or the existence of circumstances under section 16A of the WT Act. In the instant case, there is no valid reference under section 16A to the district Valuation Officer and, therefore, his reports are invalid reports as held by us earlier and, therefore, the reports of the District Valuation Officer have to be ignored. For arriving at this decision we are supported by the Andhra Pradesh High Court decision in the case of G. M. Omer Khan v. District Valuation Officer 1977 Tax LR 582, At this stage we have to consider the request on behalf of the Revenue that the matter may be restored to the file of the WTO for making a fresh reference to the appropriate Valuation Officer under section 16A of the Wealth-tax Act. We, however, see no substance in this request inasmuch as in our opinion, a report from a Valuation Officer is not a sine qua non for a wealth-tax assessment. As may be seen from the language of section 16A of the WT Act, the WTO may make a reference to a Valuation Officer in certain circumstances. In legal parlance "may" always includes "may not". It is entirely discretionary for the WTO either to make a reference or not to make a reference. In the instant case, he might hav....
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....; by assessee BY WTO appellate authority ----------------------------------------------------------------------------- 1 2 3 4 5 ----------------------------------------------------------------------------- Rs. Rs. ....
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....al since the District Valuation Officer could not come into the picture as he had no jurisdiction because of the undisputed facts that the value of the shares of each of the co-owners in the properties (subject matter of valuation by the District Valuation Officer) as returned by the assessee is less than Rs. 2 lakhs except in the case of one property, viz., Engineering Center, where the returned valuation is more than Rs. 2 lakhs but less than Rs. 5 lakhs. He relied upon the figures as are mentioned in the Annexure attached with the order of the learned first appellate authority. To support his above contention, he relied on section 16A of the Act, which deals with the topic 'reference to Valuation Officer' and further pressed into service rule 3A -Wealth-tax Rules, 1957 -, which deals with the topic 'jurisdiction of Valuation Officers'. Specifically pointing out sub-rule (2) of rule 3A, he contended that District Valuation Officers, Valuation Officers and Assistant Valuation Officers have to perform the functions of a Valuation Officer in respect of such areas and in relation to such classes of assets as the Board may direct. Sub-rule (3) of rule 3A was relied upon for the propos....
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.... District Valuation Officer/Valuation Officer and Assistant Valuation Officer is determinable in relation to the valuation of the asset as returned by the assessee and belonging to the assessee. He particularly laid emphasis on the words 'any rights in buildings or lands' in rule 3A (3). He contended that although section 16A of the Act in terms does not speak of hierarchy of Valuation Officers, under section 2(r) Valuation Officer means a person appointed as a Valuation Officer, under section 12A and includes a Regional Valuation Officer, a District Valuation Officer and an Assistant Valuation Officer. His stand is that reference under section 16A has to be vis-a-vis 'any rights in building or land', and 'belonging to the assessee' and that being the asset, which is a subject matter of reference, the reference must be made to the correct Valuation Officer within the framework of rule 3A and once it is not so, the Valuation Officer being a statutory authority under section 12A of the Act, with powers exercisable under statute and has also to give a report, under section 16A of the Act, any lack of jurisdiction in him goes to the root of the matter and makes the reference and the re....
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....operties constitute 'association of persons' and under rule 2, interest of a member is to be worked out accordingly. Strong reliance was placed on section 4(b) of the Wealth-tax Act, 1957 and section 26 of the Income-tax Act, 1961 to bring home the point that the co-owners in fact and in law are 'associates' and inter se they constitute 'association of persons' despite the fact that their shares be determinate and income assessable on those basis co-owners - Smt. Prem Lata Agarwal v. CWT [1983] 142 ITR 586 at page 590 (All.) was pressed into as service for this proposition. The learned departmental representative further contended that in view of the ratio 145 ITR 485, of the decision of the Supreme Court in the case of Juggilal Kamlapat Bankers v. WTO [1984] reference under section 16A is relatable to valuation of the asset as a whole, i.e., all the immovable properties because to work out the valuation of assessee's right therein, the property as a whole has to be valued, hence the District Valuation Officer's report is legal and valid. He placed strong reliance on section 2(r) of the Act, which defines the 'Valuation Officer'. Proviso (s) to rule 3A were also pressed into servi....
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....155 ITR 166, a decision of the Supreme Court was pressed into service for this proposition. There Lordships held in that case that illegality of search does not vitiate the evidence collected during such illegal search. His contention was that the District Valuation Officer's report should be considered as a piece of evidence on merits, if the findings of the ITAT were to be that the said report was not legal and valid. Proceeding further, the learned departmental representative contended that the ITAT is duty bound to rectify its error vis-a-vis its findings in the order of the ITAT for earlier years and for the purpose reliance was placed on the case of Kapurchand Shrimal v. CIT [1981] 131 ITR 451 at page 460 (SC). He submitted that since the assessee had appeared before the Wealth-tax Officer, the District Valuation Officer as also the learned first appellate authority and not having made any grievance about the jurisdiction of the District Valuation Officer, it was not open to him to contend for the first time before the Income-tax Appellate Tribunal, making a grievance of lack of jurisdiction of District Valuation Officer. Also that it was a case of contributory negligence an....
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....nce is that the revenue is satisfied and not aggrieved, hence this litigation is of academic nature. Shri Thakar as such prayed that the earlier years' order be followed and matter of valuation be referred to the learned lower authorities with the directions to put the valuation in tune with the assessee's registered valuer's report. 5. We have heard the parties at length. We have also perused afresh our order dated 30th November, 1981 as well as the orders of the learned lower authorities along with paper books of the parties. We have addressed ourselves to the following facets of the case : (a) Whether the assessee with the co-owners constitute an association of persons; (b) Whether procedural sections/rules should be interpreted to further the working of the Act rather than impeding; (c) Whether the order of the ITAT for the earlier years should be followed or not; (d) Whether the question of jurisdiction can be raised at the stage of the ITAT for the first time; (e) Whether District Valuation Officer's report should be considered or not; (f) Whether District Valuation Officer/District Valuation Officer under section 16A of the Act is valid; (g) Whether valuation by the ....
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....s - deals with the topic 'jurisdiction of Valuation Officers' and it reads as under : "3A. (1) Regional Valuation Officers shall exercise, within such areas as the Board may direct, general supervision over the work of District Valuation Officers, Valuation Officers and Assistant Valuation Officers. (2) District Valuation Officers, Valuation Officers and Assistant Valuation Officers shall perform the function of a Valuation Officer in respect of such areas and in relation to such classes of assets as the Board may direct. (3) Where under any directions issued under sub-rule (2), the functions of a Valuation Officer in relation to any class of assets, being buildings or lands or any rights in buildings or lands, in respect of any area have been assigned to a District Valuation Officer, Valuation Officer and an Assistant Valuation Officer, such functions shall be performed by the District Valuation Officer, the Valuation Officer or, as the case may be, the Assistant Valuation Officer as provided hereunder : (i) if the value of the asset as declared in the return made by the assessee under section 14 or section 15 exceeds Rs. 10 lakhs or if the asset is not disclosed or the value ....
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....s not declared in such return or no such return had been made, the value of the asset, in the opinion of the District Valuation Officer, does not exceed the said amount.' 7. From the above rule, it follows that - (i) if the value of the asset as declared in the return made by the assessee exceeds Rs. 10 lakhs, the valuation and the resultant report is to be made by the District Valuation Officer; (ii) but if the value of the asset as declared in the return made by the assessee exceeds Rs. 2 lakhs but does not exceed Rs. 10 lakhs, then the functions have to be performed by the Valuation Officer; and lastly (iii) if the value of the asset as declared in the return by the assessee does not exceed Rs. 2 lakhs, the functioning is restricted to Assistant Valuation Officer. The above is subject to two provisos as under : (i) District Valuation Officer if he considers it necessary or expedient so to do for the purpose of proper and efficient management of the work of valuation, he may himself perform functions in relation to any asset where the value of the asset as declared in the return made by the assessee exceeds Rs. 2 lakhs but does not exceed Rs. 10 lakhs; (ii) The Valuation O....
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....refore hold, that on these facts, the District Valuation Officer justifiably considered it necessary and expedient to perform the functions himself. In view of the above discussion, reference to the Valuation Officer under section 16A and the resultant report by the District Valuation Officer have to be held as valid and in accordance with law. Before we conclude this issue, we may make a mention to the Board's circular. Instruction No. 808, i.e., circular of the Central Board of Direct Taxes dated 2nd December, 1974 is to the following effect : 'Sub-rule (3) of rule 3A lays down monetary limits for valuation of properties to be done by the District Valuation Officer, Valuation Officers, Assistant Valuation Officers. 2. An assessee may have only a share in a large property and, therefore, the value of the asset as declared by him represents only a share of the value of the property as a whole. Under rule 3A, however, if the value of assessee's share in such properties does not exceed Rs. 2 lakhs, though the value of the property as a whole is much higher, the Wealth-tax Officer will have to refer the question of valuation of this property to the Assistant Valuation Officer. The....
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....ns of the Wealth-tax Act, 1957, we have entertained this ground, although this was not raised specifically in so many words before the lower authorities. In the case of Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232, the Supreme Court held that the Tribunal has the jurisdiction to allow any new question to be raised for the first time in appeal before it and should allow such a question to be raised if it is a question which can be decided on the facts already on record. The next issue is about the stand of the assessee about the assessee constituting an association of persons with the other co-owners. The learned authorised representative of the assessee had relied on the following observations taken from the celebrated author Salmond on Jurisprudence : '(46) Sole ownership and co-ownership - As a general rule a thing is owned by one person only at a time, but duplicate ownership is perfectly possible. Two or more persons may at the same time have ownership of the same thing vested in them. This may happen in several distinct ways, but the simplest and most obvious case is that of co-ownership. Partners, for example, are co-owners of the chattels which constitute their stock-in....
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....by two or more persons and their respective shares are definite and ascertainable, such persons shall not in respect of such property be assessed as an association of persons, but the share of each such person in the income from the property as computed in accordance with sections 22 to 25 shall be included in his total income. Explanation : For the purposes of this section, in applying the provisions of sub-section (2) of section 23 for computing the share of each such person as is referred to in this section, such share shall be computed, as if each such person is individually entitled to the relief provided in that sub-section.' The above section provides that where the shares of the co-owners are definite and ascertainable, the assessee shall not in respect of such property be assessed as an association of persons. On the facts and in the circumstances of the case, with which we are seized, the assessee's share in the property is defined and ascertainable, hence her status remains that of an individual and she along with other co-owners cannot be said to form an association of persons. We hold accordingly. 11. Lastly, the earlier order of the Income-tax Appellate Tribunal, N....