COMMISSIONER OF WEALTH TAX Vs. K L VARADARAJU

JUDGEMENT

(1.) THE ass3essee is the owner of the property at No. 3, A.V. Palaniswamy Naidu Street, Coirnbatore. THE property is a residential bungalow. We are concerned with t%c assessment years viz., 1972-73 and 1973-74. THE original assessment under the WT Act for the asst. yr. 1972-73 was made on 28th Oct., 1972 on a net wealth of Rs. 4,40,700. For the asst. yr. 1973-74, the original assessment was made on 29th Jan., 1974 on a net wealth of Rs. 5,56,500. THE WTO determino the value of the said property in the original assessment at Rs. 2,22,048 on the basis of the registered valuer's report. Subsequent to the completion of the original assessment for the asst. yr. 1972-73, the WTO referred the matter to the Departmental Valuation Officer under s. 16A of the Act to determine the value of the property who determined the property's value at Rs. 4,65,000. According to the Departmental Valuation Officer, the area of the property was 90 cents and on that basis, the value of the property was determined at Rs. 4,65,000. THE WTO on the basis of the report of the Departmental Valuation Officer found that the area of the house as found by the Departmental Valuation Officer was 90 cents, and held that the assessee had not disclosed the full and true materials for making a proper assessment. He was also prima facie of the opinion that the assessee had not returned the correct value of the shares held by him in a company called, Mls Ajanta Textiles Ltd. which value was shown as Rs. 35,000, at Rs. 5 per share. But, the WTO was of the view that the value of the shares was at Rs. 10 per share as quoted in the Madras Stock Exchange and if that value was taken into account, there was an underassessment in the wealth-tax assessment proceedings for both the assessment years and issued a notice of reassessment to the assessee. THE WTO ultimately completed the reassessment as there was no response to the notice from the assessee, and brought to tax the difference in value.

(2.) THE assessee, challenging the order of the WTO filed appeals before the AAC. THE AAC found that the assessee at the time of original assessment filed a plan of the house wherein the assessee mentioned that the area of the site was 39,200 sq. ft. According to the AAC, one cent is equal to 435.6 sq. ft. and if that formula is taken into account, the area of the property as mentioned by the assessee in the original assessment would come to 91 cents. THE AAC also found that the assessee obtained the property by a partition in the joint family and in the partition, the area of the site was mentioned as 81 cents and so, the assessee repeated the same at the time of filing of the return during the course of original assessment. He also found that as regards the valuation of shares, the assessee had furnished full particulars at the time of original assessment and after taking into account the particulars, the value of the shares was fixed at Rs. 35,000. He therefore, held that the reassessment proceedings initiated by the WTO for both the assessment years under s. 17(1)(a) of the Act were not valid and the officer has no jurisdiction to reopen the assessment under s. 17(10) of the Act. As regards the application of s. 17(1)(b) of the Act the AAC found that the proceedings under s. 17(1)(b) of the Act, were time-barred and therefore, the provisions of s. 17(1)(b) have no application to the facts of the case. In this view of the matter, he allowed the appeals preferred by the assessee.

(3.) THOUGH the Tribunal had made an observation regarding the action of the AO in obtaining the valuation, report from the Departmental Valuation Officer invoking his powers under s. 16A of the Act, we are of the opinion that the report will be relevant only if the reassessment proceedings were taken under s. 17(10) of the Act. Since the proceedings were initiated under s. 17(1)(a) of the Act, it is unnecessary for us to express any opinion on the correctness of the view of the Tribunal as to whether the powers under s. 16A of the Act were properly invoked by the AO.