TaxTMI 
TaxTMI 
2016 (4) TMI 333
X X X X Extracts X X X X
X X X X Extracts X X X X
....he registered valuer's report being valuation date 31.3.2008) although the assessee had made suitable adjustment for the increase in value of metals. A search was conducted on 20th January, 2012 and 27th January, 2012 at the residential premises of the assessee and lockers were opened subsequently. Registered valuers of the department inventorised the jewellery found at the residence and in the lockers and estimated the market value of the jewellery on the date of search, which was higher than the value of the jewellery declared by the assessee for valuation date 31.3.2012 in accordance with Rule 18(2)(ii) of Schedule III of Wealth Tax Act, 1957 read with section 7(1) of the Wealth Tax Act, 1957 and Circular No.646 dated 15th March, 1993 issued by the CBDT. However, the Assessing Officer, while completing the assessment, valued the jewellery on the valuation date 31.3.2012 by increasing the same by 6% in accordance with the valuation made by the departmental valuers at the time of the search. Accordingly, an addition of Rs. 15,96,147/- was made by the AO. 3. Aggrieved, the assessee went into appeal. The Ld. CWT(A) was of the opinion that 'net wealth' is to be valued ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... asset on the valuation date has to be determined in the manner laid down in Schedule III. Valuation of jewellery is to be made as per rules 18 and 19 contained in Part G of this Schedule. For values of jewellery exceeding Rs. 5 lakhs the assessees are required to obtain a report of a registered valuer in the prescribed form and furnish the same along with his return of net wealth. 2. It has been represented that the requirement of obtaining a report of a registered valuer every year in cases where the value of jewellery exceeds rupees five lakhs is causing uncalled for hardship to the assessees. 3. The matter has been considered by the Board. It has been decided that the report of the registered valuer obtained for one assessment year also be used in subsequent four assessment years subject to the following adjustments, namely:- (a) Where the jewellery includes gold or silver or any alloy containing gold or silver, the value of such gold or silver or such alloy as on the valuation date relevant to the concerned subsequent assessment year shall be substituted for the value of such gold or silver or alloy on the valuation date relevant to the first assessm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eciation for the change in value of stones. We hold accordingly. 10. As far as the issue of the binding nature of the circulars is concerned, the Ld. CWT(A) has held that as per the judgment of the Hon'ble High Court of Delhi in the case of CIT vs Nagesh Knitwears (P) Ltd. (supra), circulars issued by the CBDT cannot override the provisions of the Act. On a careful reading of the judgement (supra), we find that the Ld. CWT(A) has misinterpreted the ratio laid down in the aforesaid judgment. Paras 15 & 16 of the judgment are relevant to the issue at hand and are as under:- "15. Reading of these two paragraphs elucidates that circulars can be issued by the Board and sometimes grant benefit beyond the statutory enactment. Revenue will be bound by the said circular, but this does not mean that if the circular is contrary to the Act, Revenue cannot file an appeal or challenge the same. Paragraph 8 in the case of Ratan Melting & Wire Industries (supra) clarifies that Revenue cannot be denied the right to challenge a decision on interpretation or question of law, even if there is a beneficial circular in favour of the assessee on the said aspect. The High Court or the Supr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n seek to mitigate the rigour of a particular provision for the benefit of the assessee in certain specified circumstances. So long as the circular is in force, it aids the uniform and proper administration and application of the provisions of the Act. 13. The Hon'ble Supreme Court in KP. Varghese v. ITO (1981) 131 ITR 597 (SC) has observed (at page 613) that it is now well settled at a result of two decisions of this court, one in Navnit Lal C. Javeri v. K.K. Sen 56 ITR 198 (SC) and the other in Ellerman Lines Ltd. v. CIT 82 ITR 913 (SC) that circulars issued by the CBDT under section 119 of the Act are binding on all officers and persons employed in the execution of the Act even if they deviate from the provisions of the Act. 14. It was held by the Hon'ble Bombay High Court in the case of Tata Iron & Steel Co. Ltd. vs N.C. Upadhyaya 96 ITR 1 (Bom), that circulars issued by the Central Board of Direct Taxes would be binding on the Income Tax Officers and must be given effect to by the Court Also the Hon'ble Bombay High Court, in Dattatraya Gopal Shette v. CIT 150 ITR 460 (Bom) observed that it is now well-settled that even if the contents of a circular may amount....