M.C. Agarwal, J. - (1.) THESE two petitions have been filed by the same petitioner and involve identical controversy. They were, therefore, heard together and are disposed of by this common judgment.
(2.) WE have heard Sri Shambhu Chopra, learned counsel for the petitioner, and Sri A.N. Mahajan, learned standing counsel for the respondents. The petitioner is a Hindu undivided family which is assessed to wealth-tax. The petitioner carries on business in the name of Lala Kashi Nath Seth Jewellers. Writ Petition No. 423 of 1986 challenges the notice issued by the Commissioner of Wealth-tax under Section 25(2) of the Wealth-tax Act, 1957, proposing to revise the petitioner's assessments for assessment years 1982-83 and 1983-84. A copy of the notice dated March 10/14, 1986, is annexure 5 to the writ petition. It states that in the wealth-tax assessment of the assessee (petitioner), the capital balance of the firm, Lala Kashi Nath Seth Jewellers and Kashi Nath Jewellery House, have been included in the assessable wealth as per balance-sheet and the assessee's share in the firm, Lala Kashi Nath Seth Jewellers, Bareilly, has similarly been taken as per balance-sheet. The Commissioner's contention was that the value of the assets of the said firm exceeded more than 20 per cent. of the value as shown in the balance-sheet and, therefore, as per Rule 2B(2) of the Wealth-tax Rules and as per decision of the Supreme Court in Juggilal Kamlapat Bankers v. WTO [1984] 145 ITR 485, the Assessing Officer should have determined the market value of these assets on the valuation date and since this has not been done, the assessment orders were erroneous and prejudicial to the interests of the Revenue. The petitioner's contention is that the assessments were subjected to appeals before the Appellate Assistant Commissioner of Wealth-tax and the assessment orders, therefore, merged with the appellate orders and, consequently, the Commissioner had no jurisdiction under Section 25(2) to revise the assessment orders. The other contention raised in these writ petitions is that Rule 2B(2) is invalid. It is averred that according to commercial trade and practice based upon standard accounting practice adopted in preparation of the balance-sheet, the commercial value of the business as a whole is to be taken and not the market value of individual assets and if the provisions of Rule 2B(2) are mandatory, then they are violative of Section 7 of the Wealth-tax Act. It is also averred that Rule 2B being against the principles of accountancy is unreasonable, arbitrary and violative of Article 14 of the Constitution of India. In the counter affidavit filed on behalf of the respondents, these contentions are controverted and it is asserted that by virtue of Rule 2B(2) and the decision of the Supreme Court (supra), the Assessing Officer should have taken the market value of the assets of the aforesaid businesses and since this was not done, the assessments are erroneous and prejudicial to the interests of the Revenue. Writ Petition No. 315 of 1990, as stated above, is by the same petitioner and pertains to the assessment years 1985-86, 1986-87 and 1987-88. For these years, the Assessing Officer proposed to determine the market value of the business assets in terms of Rule 2B and the petitioner rushed to this court and has filed this petition challenging the validity of Rule 2B(2) on the same grounds as in Writ Petition No. 423 of 1986. In both these writ petitions by interim orders dated April 28, 1986, and March 15, 1990, respectively, further proceedings before the Commissioner and the Assessing Officer, respectively, were stayed.
(3.) LET us first take up the question of merger which is relevant in Writ Petition No. 423 of 1986. In J. K. Synthetics Ltd. v. Addl. CIT [1976] 105 ITR 344 (All), a Division Bench of this court had held that where an assessment order is appealed to the Appellate Assistant Commissioner, the whole assessment order merges in the appellate order and thereafter it is only the appellate order that can be revised or rectified and this was so even if in the appeal the point on which rectification or revision is intended to be made was not involved. Learned counsel, therefore, contended that although the question of valuation of the assets was not raised in the appeals, yet since the appellate authority had the power of enhancement, the whole assessment was open before it and, consequently, the assessment order as a whole would merge in the appellate order. Learned standing counsel, on the other hand, relied upon the amendment of Section 25 by the Finance Act, 1988, by which an Explanation has been added to Section 25(2) as under : "Explanation.--For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,-- (a) an order passed on or before or after the 1st day of June, 1988, by the Assessing Officer shall include an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on or assigned to him under orders or directions issued by the Board or by the Chief Commissioner or Director-General or Commissioner authorised by the Board in this behalf under Section 120 of the Income-tax Act read with Section 8 of this Act ; (b) 'record' shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner ; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject-matter of any appeal filed on or before or after the first day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal." Thus, the amendment in Clause (c) has complete retrospective effect and the power of the Commissioner under this sub-section shall be deemed always to have extended to such matters as has not been considered and decided in appeal. In the present case, admittedly, the question of valuation of the business assets was not dealt with by the appellate authority and, therefore, the amendment takes care of the arguments raised on behalf of the petitioner. A similar amendment was made in Section 263 of the Income-tax Act, 1961, which is pari materia to Section 25 of the Wealth-tax Act and the Supreme Court in CIT v. Shri Arbuda Mills Ltd. [1998] 231 ITR 50 and in CIT v. Jayhumar B. Patil [1999] 236 ITR 469, has held that by virtue of the amendment, the Commissioner has jurisdiction to revise those parts of the assessment order which have not been considered and decided in the appeal. Thus, in view of the amendment, referred to above, and the aforesaid judgments of the Supreme Court, the argument based on the theory of merger fails.;