COMMISSIONER OF WEALTH TAX Vs. GULNAR MARFATIA
HIGH COURT OF RAJASTHAN (FROM: JAIPUR)
COMMISSIONER OF WEALTH-TAX
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G.M. Lodha, J. -
(1.)THIS wealth-tax reference application has been made under Section 27(3) of the Wealth-tax Act. It arises out of the order of the Tribunal, Jaipur Bench, Jaipur, in Wealth-tax Appeal No. 128/JB/1980. The Revenue preferred reference application under Section 27(1) of the Wealth-tax Act, which was rejected by the Tribunal on May 25, 1981.
(2.)THE brief facts of the case as alleged by the Revenue are that the assessee is a partner in the firm, M/s. New Majestic Talkies, Ajmer. During the course of the assessment proceedings for the assessment year 1976-77, the question of valuation of the property belonging to the firm was referred to the Valuation Officer. THE Wealth-tax Officer on the basis of the proceedings valued the property as on June 30, 1973. THE assessee's interest in the firm along with his other assets were found to exceed the chargeable limit.
The assessee filed a return on May 16, 1978. The assessee's interest in the firm was computed by the Wealth-tax Officer by order annexure 1.
The assessee filed an appeal before the Appellate Assistant Commissioner, who justified the action of the Wealth-tax Officer.
The assessee as well as the Department both filed appeals before the the Tribunal. The Tribunal observed that there were no proceedings pending with the Wealth-tax Officer, when he made the reference to the Valuation Officer and, therefore, relying upon the judgment of the Calcutta High Court in the case of S.C. Ghose v. WTO  126 ITR 102, held that a reference could be made only during the pendency of the assessment proceedings and not for the purpose of reopening of the assessment.
The following question of law arising out of the above order of the Tribunal has been sent for the opinion of this court :
"Whether, on the facts and in the circumstances of the present case, the Tribunal was justified in holding that the assessment has not been yalidly reopened and in setting aside the order of the Appellate Assistant Commissioner and cancelling the assessment made under Section 17 of the Wealth-tax Act, 1957?"
(3.)ON a thoughtful consideration of the facts and circumstances of the case, we are of the opinion that apart from the judgment of the Calcutta High Court referred to by the Income-tax Tribunal, this Court also in Brig. B. Lall v. WTO  127 ITR 308 (Raj), has taken the same view that a completed assessment cannot be reopened by making reference to the report of the Valuation Officer obtained for the purpose of reopening as it is not a reason for belief within the meaning of Clause (a) of Section 17(1).
It was observed as under (pp. 328, 329) :
"Section 16A has got no relevancy and cannot be applied after the assessment is complete and before reassessment has commenced, that is, for the purposes of consideration of the question whether a completed assessment can be reopened or not or, in other words, to decide and consider the question whether the valuation accepted by the Wealth-tax Officer was a case of wealth escaping assessment on account of undervaluation. Any reference made under Section 16A cannot lead to the reopening of a closed assessment under Section 17(1) as report submitted by the Valuation Officer would be in an invalid reference and must be treated as a nullity in the eye of law, non est and void ab im'tio...The report so obtained can neither constitute information within the meaning of Section 17(1)(b), nor can it become a reason for the belief within the meaning of Section 17(1)(a)."
The crucial point which arises in such cases is whether the report of Valuation Officer was obtained for the purpose of reopening of a completed assessment.
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