Sabyasachi Mukharji, J. - (1.) IN this reference under Section 27(1) of the Wealth-tax Act the following question has been referred to this court : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that in disposing of an appeal against an assessment under Section 16(5), the Appellate Assistant Commissioner should confine himself only to the "materials on record at the time of assessment, i.e., the previous assessment order ? "
(2.) This reference relates to the assessment year 1960-61. The relevant valuation date is 31st March, 1960. The assessee is an individual. A notice under Section 14(2) of the Wealth-tax Act was served on the assessee on the 20th August, 1960. No return was filed. There was no application for extension. A notice under Section 16(4) was issued fixing the case on the 24th February, 1961. The assessee applied lor adjournment." No return was filed even thereafter and the Wealth-tax Officer made the assessment under Section 16(5) of the Wealth-tax Act on the 23rd March, 1961, " due to the failure to comply with the notice under Section 14(2)". The wealth was estimated at Rs. 20,00,000. The assessee appealed to the Appellate Assistant Commissioner. In the additional grounds tiled before the Appellate Assistant Commissioner the assessee claimed that the market value of the quoted shares and the break-up value of the unquoted shares should be considered in determining the total value. Some exemptions were also claimed. The assesses filed various statements regarding the assets held by him on the date of valuation. The Appellate Assistant Commissioner went into the details and reduced the net wealth from Rs. 20 lakhs to Rs. 14,06,000. Both the assessee and the Wealth-tax Officer appealed to the Tribunal. The main ground urged on behalf of the Wealth-tax Officer in his appeal was that the Appellate Assistant Commissioner in an appeal against an assessment order under Section 16(5) of the Wealth-tax Act was not justified and competent to go into the materials other- than those on record at the time of assessment. The Tribunal relying on the decision in the case of Girdher Javer & Co. v. Commissioner of Income-tax, [1953] 24 I.T.R. 540 (Bom.) accepted the department's contention, and held that the Appellate Assistant Commissioner should have confined himself to the previous assessment made on the assessee in making an estimate as to the assessee's net wealth. The Tribunal after taking into consideration the past assessments estimated the net wealth at Rs. 16,00,000. Thereafter, the assessee made an application for reference of two questions of law to this court, namely : " (1) Whether, on a true interpretation of the provisions of Section 23(5) of the Wealth-tax Act, the Tribunal was correct in holding that the Appellate Assistant Commissioner in making an estimate of the net wealth should have confined himself to the previous assessments only ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in enhancing the figure of net wealth, when the quantum of net wealth determined by the Appellate Assistant Commissioner was not challenged by the department in the other grounds of appeal ?"
(3.) The Tribunal, however, referred the first question and did not refer the second question and the assessee did not make any application for direction on the Tribunal to make any reference upon the second question. It appears to us that the section is clear on this point. Section 23(4) and (5) of the Wealth-tax Act, 1957, provides, inter alia, as follows: "(4) The Appellate Assistant Commissioner may- (a) at the hearing of an appeal, allow an appellant to go into any ground of appeal not specified in the grounds of appeal ; (b) before disposing of an appeal, make such further inquiry as he thinks fit or cause further inquiry to be made by the Wealth-tax Officer. (5) In disposing of an appeal the Appellate Assistant Commissioner may pass such order as he thinks fit which may include an order enhancing the assessment or penalty.";