SENGUPTA, J. - (1.) IN this reference under S. 27(3) of the WT Act, 1957 ('the Act') for the asst. yr. 1979-80 the following question of law has been referred to this Court : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law that the order passed by the CIT under S. 25(2) of the WT Act, 1957 was not legal and valid and in that view setting aside the order passed by the CIT ?" Shortly stated, the facts are that the assessee is an individual and the assessment year involved is 1979-80. On the valuation date relevant to the above assessment year, the assessee held 4050 equity shares of Mokalbari Kanoi Tea Estate (P) Ltd. Those shares were not quoted. The value of each share was returned on the basis of the registered valuer's report at Rs.53 before the AO. The AO, accordingly, adopted value of the shares returned by the assessee. Subsequently, the CIT, on perusal of the record, found that the order passed by the AO was erroneous and prejudicial to the interests of the Revenue. He was of the opinion that the shares should have been valued according to r. 1D of the WT Rules, 1957. He, therefore, issued a show-cause notice to the assessee. The assessee did not appear and the CIT set aside the order passed by the AO on the issue directing him to value the shares of Mokalbari Kanoi Tea Estate (P) Ltd. By applying r. 1D.
(2.) ON further appeal before the Tribunal, it was contended on behalf of the assessee that r. 1 D was not mandatory. The counsel for the assessee stated that the High Courts as well as the Tribunal are divided on this issue. The assessee applied the value determined by the registered valuer. Once the principle had not been settled by the Supreme Court, it could not be said that the valuation made by the AO on the basis of the registered valuer's report was erroneous. Consequently, it was urged that the order of the CIT should be set aside. In support of the above, the counsel submitted copies of the orders of the Tribunal in WT Appeal No. 163(Cal) of 1986; WT Appeal Nos, 945 & 947 (Cal) of 1982, ; WT Appeal No. 1067 (Cal) of 1983; WT Appeal Nos. 1077 & 1078 (Cal) of 1983 and WT Appeal Nos. 458 and 459 (Cal) of 1985. The Departmental representative, on the other hand, urged that the Tribunal passed some of the above orders taking the view that application of r. 1 D was mandatory and the Bench must follow it. Reliance was placed on the decision in CIT vs. L.G. Ramamurthi 1977 CTR (Mad) 416 : (1977) 110 ITR 453 (Mad) and Russell Properties (P) Ltd. vs. A. Chowdhury, Addl. CIT (1977) 109 ITR 229 (Cal) It was urged that the order passed by the AO was erroneous and prejudicial to the interests of the Revenue and, therefore, it was rightly set aside by the CIT.
(3.) THE Tribunal after considering the rival submissions and after going through the materials placed before it gave its finding in para 5 of its order as under : "5. The order of the WTO on the facts and circumstances of the case could not have been set aside by the CWT under S. 25(2) of the Act on the ground that the order passed by the WTO was erroneous and prejudicial to the interest of the Revenue. The above conclusion was drawn by the CWT on the ground that the WTO valued the shares of Mokalbari Kanoi Tea Estate (P) Ltd. Held by the assessee by the value determined by the registered valuer. The assessee has rightly argued that it has not finally been settled that r. 1D is mandatory. The Courts as well as the Tribunal are divided on this issue. Some of the orders of the Tribunal as mentioned above have been filed by the assessee's Counsel to show that the Tribunal has taken the view that r. 1 D is directory. Further, if the decisions in 124 ITR 793 (sic), 82 ITR 621 (SC) (sic), 112 ITR 36 (sic) , CWT vs. Padampat Singhania (1979) 9 CTR (All) 56 : (1979) 117 ITR 443 (All) CGT vs. Smt. Kusumben D. Mahadevia (1980) 14 CTR (SC) 366 : (1980) 122 ITR 38 (SC), CIT vs. Swadeshi Mining and Mfg. Co. Ltd. (1979) 116 ITR 259 (Cal) CWT vs. Executors to the Estate of Sir E.C. Benthal (1980) 121 ITR 814 (Cal) and 21 ITR 137 (sic) are taken into consideration, it is clear that the view of the Courts and the Tribunal on this issue is divided. Under the said circumstances, If the principle about the application of r. 1D has not been taken into consideration by the WTO for determining the market value of the shares held by the assessee, it cannot be said that the order passed by the WTO was erroneous and prejudicial to the interest of the Revenue. Consequently, the order of the CWT is set aside and the order of the Wealth-tax is maintained." The Tribunal in the above paragraph came to the conclusion that the order passed by the AO was neither erroneous nor prejudicial to the interests of the Revenue. This finding was given by the Tribunal relying on the various decisions and indicating that the Supreme Court decision that the r. 1 D is mandatory is not available. ;