TaxTMI 
TaxTMI 
1981 (8) TMI 105
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....taken at Rs. 3,24,000 for each of the assessment years under consideration. Later on, it came to the notice of the WTO that the aforesaid property had been valued by the Land and Buildings Tax Department of the Rajasthan Govt. at Rs. 3,87,500 for the asst. yr. 1973-74 and subsequent years. In consequence of this information, which came into the WTO's possession after the completion of the assessments under s. 16 of the Act, he came to the conclusion that the net wealth of the assessee for the relevant years had been under assessed. He accordingly initiated proceedings under s. 17(1)(b) of the Act. 3. On re-assessment, the WTO valued the aforesaid property at Rs. 5,09,000 on the basis of the valuation report of the Valuation Officer. He a....
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.... the Land and Buildings Tax Department without applying his mind to the question whether the value of the said house property as estimated by that Department really represented the fair market value of the house property on the relevant valuation dates. He urged that a bald information of the nature contained in the order of the Land and Buildings Tax Department of the State Govt. could not provide a nexus for coming to the conclusion that the value of the said house property had not been correctly estimated in the assessment under s. 16 of the Act. 6. The ld. counsel further pointed out that whereas the fair market value of a house property for the purposes of Wealth-tax had to be determined in accordance with the provisions of s. 7(4) ....
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....on several grounds. Firstly, he contended that the valuation reports relied upon by the WTO were a nullity as the reports had been obtained at a time when no assessment proceedings were pending in the case of the assessee. In view of this position, he contended that, by virtue of the decision in Brig. B. Lal & Ors. vs. WTO (1980) 15 CTR (Raj) 180 : (1981) 127 ITR 308 (Raj), the report of the Valuation Officer had to be regarded as honest in law and had in consequence thereof to be totally ignored. Secondly, he urged that the Valuation Officer had also made an error in valuing the relevant house property as he had not complied with the provisions of s. 7(4) of the Act and Rule 1BB of the WT Rules. According to him, a valuation of the propert....
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....visages that the WTO must first have information in his possession, and then in consequence of such information he must have reason to believe that net wealth chargeable to tax has escaped assessment. The believe entertained by the WTO must not be arbitrary or irrational. It must be reasonable or in other words, it must be based on reasons which are relevant and material. If there is no rational and intelligible nexus between the reasons and the belief, so that, on such reasons no one properly instructed on facts and law could reasonably entertain the belief. The conclusion would be inescapable that the WTO could not have reason to believe that any part of the net wealth of the assessee had escaped assessment. 10. Now, in the present cas....
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....s. 17(1)(b) of the Act only if the WTO had applied his mind to the question whether the said valuation had been made at least broadly in accordance with the said or similar principles and provisions and such valuation was considered by him to be in accordance therewith. As there is no evidence on record to show the basis of the said valuation or that the WTO had tried to ascertain and analyse the basis of the said valuation, we have no hesitation in holding that the information in the possession of the WTO could not have led to a rational and reasonable belief that any part of the net wealth of the assessee chargeable to tax had escaped assessment. We accordingly hold that the basic pre-conditions for reopening an assessment under s. 17(1)(....