TaxTMI 
TaxTMI 
2001 (2) TMI 22
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.... to the assessment years 1980-81 to 1986-87 in connection with the proceedings under the Wealth-tax Act, 1957. The respondents assessee in each case during the relevant assessment period was one of the five partners of a firm, Ashoka Palace Hotel, Banswara. Returns for all the assessment years were filed by the assessee in both the cases on March 10, 1989, and the assessment was completed under section 16(1) of the Act without requiring the presence of the assessee by accepting the returns submitted by the assessee and computation of wealth-tax payable under the Act was made on that basis. In the returns, the net wealth of the assessee included the share of the assessee in the value of a building known as Ashoka Palace Hotel which was the property of the partnership firm as per his share in the partnership firm for each assessment year. It appears that before the returns were filed, the Wealth-tax Officer has made a reference to the Departmental Valuation Officer under section 16A for determining the value of Ashoka Palace Hotel as property of the firm for the assessment years 1980-81 to 1984-85 on December 2, 1983, and for the assessment years 1985-86 and 1986-87 on July 23, 19....
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....p; 3,15,200 1981-82 1,21,150 3,62,400 1982-83 1,31,454 3,88,400 1983-84 1,72,457 4,69,000 1984-85 1,91,509 &nbs....
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.... be considered as material on record of the assessee's wealth-tax file. All the objections were overruled by the Commissioner and the Wealth-tax Officer was directed to pass fresh assessment orders after setting aside the orders made under section 16(1). On appeal before the Tribunal, the Tribunal held that the orders of the Wealth-tax Officer passed under section 16(1) were not orders but only intimations under section 16(1)(a) of the Act and, therefore, the provisions of section 25 would not apply thereto. Secondly, reference having been made only in the name of Ashoka Palace Hotel which was a firm, and the firm being not an assessable entity under the Act no reference could have been made under section 16A and the question of considering such valuation reports by the Wealth-tax Officer in the case did not arise. Therefore, the orders under section 16(1)(a) were not erroneous. So far as the contention of the assessee as to the effect of the notice under section 17(1) on the existence of assessment orders under section 16(1) was concerned, it did not find favour with the Tribunal also. Under the aforesaid circumstances, the following two questions of law have been refe....
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....in response to any notice under sub-section (2) of section 14, or fails to comply with the terms of any notice issued under sub-section (2) or sub-section (4), the Assessing Officer, after taking into account all relevant material which he has gathered shall estimate the net wealth to the best of his judgment and determine the amount of wealth-tax payable by the person or the amount refundable to him on the basis of such assessment." Regular assessment under section 2(ob) has been defined to mean assessment under section 16. This definition is without distinction whether it is under sub-section (1) or sub-section (3). We are unable to find any basis on which the order under section 16(1) cannot be considered to be an order which would be outside the purview of the Commissioner of Wealth-tax under section 25 of the Wealth-tax Act. Whether assessment is made under sub-section (1) of section 16 by accepting the correctness of the information furnished by the assessee without calling upon the assessee or after calling upon the assessee framing of assessment takes place under sub-section (3) of that section on the basis of the result of hearing it does not make any difference so f....
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....rs impermissible. The objection relating to the assessment of wealth of any individual or Hindu undivided family or a company, as the case may be, under the provisions of the Wealth-tax Act as well as about the evidentiary value of the report of the Departmental Valuation Officer even in case the reference to such officer under section 16A is found to be outside its purview, for the purpose of evaluating the correctness of the returned value of any asset does not lose its evidentiary value as an expert opinion. The provisions of the Wealth-tax Act reveal that section 3 of the Act which is the charging section levies wealth-tax on the "net wealth" on the corresponding valuation date only in the case of an individual, a Hindu undivided family and a company. The firm is not an assessable entity recognised independent of its partners in the scheme of the Wealth-tax Act as is the case under the Income-tax Act. None the less, while computing the net wealth of an assessee, who is a partner in a firm, clause (b) of sub-section (1) of section 4 envisages in no uncertain terms that where the assessee is a partner in a firm or member of association of persons, the value of his interest in the....
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....ordingly." A perusal of the aforesaid rule shows that the value of interest in the assets of partnership or association of persons is not to be made on the basis of any asset to be taken individually, but the net wealth of the firm in the first instance has to be computed as on the valuation date and then the notional share of a partner as on the relevant valuation date has to be ascertained as per the terms of the partnership, and the share so ascertained alone forms part of the assessment of net wealth of such person as per his status as a taxable entity under the Wealth-tax Act. Therefore, the share of a partner of the firm is, such sum as computed in accordance with the above rule alone, which can find place in the determination of his net wealth, and not the separate value of each and every asset of the firm can travel to the assessment of wealth of a partner. Though in computing the net wealth of the firm for the purpose of determining the share thereof allocable to any partner, the valuation of assets of the firm may also have to be made and in determining its valuation for computing the net wealth of the firm in the first instance the evidence relating to the value of an....