RAJESH BALIA, J. - (1.) HEARD learned counsel for the Revenue.
(2.) THE learned counsel for the respondent has not appeared on previous two occasions and the matter was adjourned on last two hearings. THE matter was heard during the course of the day, but has been kept pending as an opportunity to the respondents to avail for putting its case before the Court's, assistance. Today at commencement of the day, Mr. Mahendra Trivedi for the respondent has appeared only to seek adjournment which was declined. THEreafter Mr. Trivedi withdrew himself from the Court and did not appear. The two WT Ref. Nos. 103/95 and 106/95 arise out of same set of facts and, therefore, are being heard and decided together. The reference in each case, made by the Tribunal, relates to the asst. yrs. 1980-81 to 1986-87 in connection with the proceedings under the WT Act, 1957. The respondent-assessee in each case during the relevant assessment period was one of the five partners of firm M/s Ashoka Palace Hotel, Banswara. Returns for all the assessment years were filed by the assessee in both the cases on 10th March, 1989, and assessment was completed under s. 16(1) of the Act without requiring the presence of assessee by accepting the returns submitted by the assessee and computation of wealth-tax payable under the Act was made on that basis. In the returns, net wealth of the assessee included share of the assessee in value of building known as Ashoka Palace Hotel which was the property of partnership firm as per his share in the partnership firm for each assessment year. It appears that before returns were filed, WTO has made a reference to the Departmental Valuation Officer under 16A for determining the value of Ashoka Palace Hotel as property of firm for asst. yrs. 1980-81 to 1984-85 on 2nd Dec., 1983 and for asst. yrs. 1985-86 and 1986-87 on 23rd July, 1986. While report in pursuance of the reference made on 7th Dec., 1983, by the Department Valuation Officer was submitted on 20th March, 1984, on the later reference, report was submitted on 27th March, 1989. Thus, on the date of filing of returns, by the assessee for seven assessment years and its assessment under s. 16(1) on 16th March, 1989, valuation report dt. 20th March, 1984, submitted by the Departmental Valuation Officer was already on record, but valuation report in respect of asst. yr. 1985-86, though the matter was already referred to the Departmental Valuation Officer, was not received. The same was received after assessments were made. Thereafter on going through the record of assessment in the case of assessment for the aforesaid years under consideration, the learned CWT was of the opinion that because one valuation report was already on record and for subsequent period, reference was also made under s. 16A, he ought to have waited for receipt of the report from the Departmental Valuation Officer and should not have taken recourse to framing assessment under s. 16(1) by accepting the returns. The difference in value of share of the assessee in the Ashoka Palace Hotel Building as computed by the respondent-assessees and on the basis of valuation report submitted by the Departmental Valuation Officer in tabular form stands as under : With these considerations, the CWT set aside the assessment under s. 16(1) of the Act and directed the AO to proceed to make assessments afresh in accordance with and after taking into consideration that material. In the meantime, the AO has himself reopened the assessment under Asst. yr. Valuation declared by assessee Valuation determined by DVO Rs. Rs. 1980-81 1,01,610 3,15,200 1981-82 1,21,150 3,62,400 1982-83 1,31,454 3,88,400 1983-84 1,72,457 4,69,000 1984-85 1,91,509 5,19,000 1985-86 2,33,720 6,71,600 1986-87 2,59,595 7,66,200 s. 17(1) of the Act on 28th Sept., 1989, by issuing notice to the assessee under that provision. The three-fold contentions were raised before the CWT against the proposed action under s. 2(5). Firstly, the AO has reopened the assessment under s. 17(1) on 28th Sept., 1989, and, therefore, the assessment orders lost their existence for all practical purpose and no order could have been made under s. 25(2); secondly, report of Valuation Officer cannot be considered as part of record of assessment, because no assessment was pending when the two references were made to Departmental Valuation Officer (DVO) inasmuch as neither any returns were filed nor any statutory notices were served on the assessee; to constitute any proceedings which could be said to be pending during which reference to DVO could have been made under s. 16A, lastly references made by the WTO were not valid as the same were made in the case of firm Ashoka Palace Hotel and notices were issued to the firm but no notices were issued to the partners of the firm. Such valuation made by giving notice to the firm only, which is not at all an assessable entity, could not be considered as material on record of assessee's wealth-tax file. All the objections were overruled by the CWT, and WTO was directed to pass fresh assessment orders after setting aside the orders made under s. 16(1). On appeal before the Tribunal, the Tribunal held that the orders of WTO passed under s. 16(1) were not orders but only intimations under s. 16(1)(a) of the Act and, therefore, provisions of s. 25 would not apply thereto. Secondly, reference having been made only in the name of M/s Ashoka Palace Hotel which was a firm, and the firm being not an assessable entity under the Act no reference could have been made under s. 16A and question of considering such valuation reports by the WTO in the case did not arise. Therefore, the orders under s. 16(1)(a) were not erroneous.
(3.) SO far as contention of the assessee to the effect of the notice under s. 17(1) on the existence of assessment orders under s. 16(1) was concerned, it did not find favour with the Tribunal also. Under the aforesaid circumstances, the following two questions of law have been referred to this Court for its opinion in each case by the Tribunal : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the acceptance of the return under s. 16(1) is no order which could enable the CWT to assume revisionary jurisdiction for issue of notice under s. 25(2) of the WT Act ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that on the basis of valuation in the case of firm, the share of valuation taken in the hands of the partners is unjustified.?" Sec. 16 of the WT Act as it existed prior to 1st April, 1989, before it was substituted reads as under : "Sec. 16 Assessment.--(1) If the AO is satisfied without requiring the presence of assessee or production by him of any evidence that a return made under s. 14 or s. 15 is correct and complete, he shall assess the net wealth of the assessee and determine the amount of wealth-tax payable by him or the amount refundable to him on the basis of such return. (2) If the AO is not so satisfied, he shall serve a notice on the assessee either to attend in person at his office on a date to be specified in the notice or to produce or cause to be produced on that date any evidence on which the assessee may rely in support of his return. (3) The AO, after hearing such evidence as per the person may produce and such other evidence as he may require on any specified points and after taking into account all relevant material which the AO has gathered, shall, by order in writing, assess the net wealth of the assessee and determine the amount of wealth-tax payable by him or the amount refundable by him or the amount refundable to him on the basis of such assessment. (4) For the purpose of making an assessment under this Act, the AO may serve on any person who has made a return under sub-s. (1) of s. 14 or upon whom a notice has been served under sub-s. (2) of that section or who has made a return under s. 15, a notice requiring him to produce or cause to be produced on a date specified in the notice such accounts, records or other documents as the AO may require. (5) If any person fails to make a return in response to any notice under sub-s. (2) of s. 14, or fails to comply with the terms of any notice, issued under sub-s. (2) of sub-s. (4), the AO, after taking into account all relevant material which he has gathered shall estimate the net wealth to the best of his judgment and determine the amount of wealth-tax payable by the person or the amount refundable to him on the basis of such assessment." ;