Tulzapurkar, J. - (1.) This appeal by certificate is directed against the judgment and order dated 4th October, 1977 of, the Allahabad High Court whereby the High Court upheld the reference made by the Wealth-tax officer (respondent No. 1) to the Valuation officers (respondents Nos. 2 and 3) for valuing certain buildings belonging to the appellant No. 1 firm as well as the notices issued by the Valuation Officers to appellant No. 2 in furtherance of the Reference. The appellants had by means of a writ petition challenged the reference as well as the notices on certain grounds and had, prayed for a mandamus restraining respondents Nos. 2 and 3 from valuing the buildings. The writ petition having been dismissed, the appellants have come up in appeal to this Court.
(2.) Most of the material facts giving rise to this appeal are not in dispute and may briefly be stated as follows:Appellant No. 1 (M/s. Juggi Lal Kamlapat Bankers) is a partnership firm. Appellant No. 2 (Padampat Singhania) was one of the partners in the firm in his capacity as a 'Karta' of a Hindu undivided family up to 15-3-1972. He was being assessed to wealth tax in the status of H. U. F. and the assets so assessed for wealth tax included the interest of the family in appellant No. 1 firm. For the assessment years, 1967-68 to 1972-73 wealth-tax returns were submitted by appellant No. 2 in the status of H. U. F. and therein the family's interest in appellant No. 1 firm was included. Since appellant No. 1 firm owned a number of buildings in Kanpur in the returns so submitted the book-value of those buildings had been adopted' by appellant No. 2 for valuing the interest of the family in appellant, No. 1 firm. Respondent No. 1, felt that the market value of those buildings was much more than such book-value. He, therefore, referred the question of valuation of those buildings to respondents Nos. 2 and 3 (the concerned, Valuation Officers) under Section 16-A of the Wealth Tax Act 1957 (hereinafter referred to as 'the Act'). Respondents Nos. 2 and 3 issued notices under S. 38-A (1) (b) of the Act to appellant No. 2 intimating that they would inspect the buildings for determining the fair market value thereof and requested him to afford necessary facilities for such inspection and to produce certain records connected with those buildings. On receiving the notices appellant No. 2 realised that respondent No. 1 had referred the question of valuation of the concerned buildings to respondents Nos. 2 and 3 under Section 16-A of the Act and that the notices issued by respondents Nos. 2 and 3 were in furtherance of such reference. On 9th of Sept, 1974 appellant No. 2 addressed a letter to respondent, No. I contending that none of the properties referred to the Valuation Officers belonged to him and that the reference to them was unauthorised and the same should be withdrawn. He also addressed letters to respondents Nos. 2 and 3 in which he contended that reference made to then by respondent No. 1 was invalid and requested each one of them to return the reference back to the Wealth-tax Officer. Since these contentions were not accepted by the respondents, the appellants filed a writ petition in the High Court challenging the reference made by respondent No. 1 as well as the notices issued by respondents Nos. 2 and 3.
(3.) On behalf of the appellants the following contentions were urged in support of the writ petition:(1) For the assessment of appellant No. 2, respondent No. 1 could not refer to respondents Nos. 2 and 3 the valuation of buildings which did not belong to him but belonged to appellant No. 1 firm; (2) the interest of a H. U. F. in a partnership firm was not exigible to wealth tax; (3) the interest of appellant No. 2 in appellant No. I firm had to be valued in accordance with Rule 2 of Wealth Tax Rules 1957 and hence Section 16-A of the Act had no application; (4) the valuation of the concerned buildings forming part of the assets of the business of appellant No. 1 firm had to be determined in accordance with the commercial principles under Section 7 (2) (a) and not under Section 7 (1) of the Act and (5) the respondents Nos. 2 and 3 could not issue the notices to appellant No. 2 as he was neither the owner of the buildings nor was in occupation thereof.;