V.K. SINGHAL, J. - (1.) THE Tribunal has referred the above two cases under s. 27(1) of the WT Act, 1957 in respect of asst. yrs. 1972-73 and 1973-74, which arise out of its order dt. 27th Aug., 1981.
(2.) THE jurisdiction of the WTO to initiate reassessment proceedings is in dispute. The WTO made a reference under s. 16A of the WT Act to the Departmental Valuation Officer on 20th May, 1975 for valuation of immovable property (Gem Cinema) owned by the firm M/s Maniram & Sons, for the relevant asst. yrs. 1971-72 and 1974-75. The valuer submitted his report on 30th April, 1976 determining the value at Rs. 15,45,000 and Rs. 20,20,000 as on Dewali 1970 and Diwali 1973 respectively. The WTO issued the notice for asst. yr. 1972-73 and 1973-74 for escaped assessment under s. 17(1)(b). The reassessment order was accordingly framed. In appeal, the AAC relying upon the decision of this Court in the case of Brig. B.L. Lall & Ors. vs. WTO (1980) 15 CTR (Raj) 180, held that the power to refer the question of valuation of property in a completed assessment, after accepting valuation of a registered valuer could not be exercised and that the firm Maniram & Sons is not an assessee under WT Act, and thus there was no valid reference. In the second appeal before the Tribunal, it was observed that no wealth-tax proceedings were pending for the two partners, namely, Shri L.K. Kasliwal and Shri R.K. Kasliwal, and even if the WT assessment of third partner, namely, Smt. Ratan Prabha were pending for 1971-72 and 1972-73, the assessment which has been completed could not be reopened under s. 17(1)(b) of the Act on the basis of the report of the Valuation Officer. This Court in Smt. Nawal Kanwar vs. WTO (also Brig. B. Lall vs. WTO) (1980) 15 CTR (Raj) 180 : (1981) 127 ITR 308 (Raj) has held, `we are of the opinion that the foundation or bedrock of the jurisdictional facts necessary for giving jurisdiction under s. 16A is that the WTO must be seized of a return filed by the assessee containing valuation of his assets for which he is to apply his mind and adjudicate the valuation for completing the assessment. The situation contemplated in cls. (a) and (b) of sub-s. (1) of s. 16A can be visualised only in a case of pending assessment and not a completed assessment. Once the assessment is completed and before the reassessment commences the WTO becomes functus officio for the purposes of s. 16A, as he is not in the process of completing any assessment, for the purpose of which he wants to check up from the Valuation Officer, the correctness of the valuation of the assets disclosed by the assessee in the return and which, according to him, are under- valued, looking to the fair market value or as per the standards laid down in cl. (a) or cl. (b) of sub-s. (1). In CWT vs. Master Kairas Tarapore (1986) 53 CTR (Raj) 318 : (1987) 163 ITR 311 (Raj), this Court had held that the reference under s. 16A, after completion of assessment is without jurisdiction and is not valid. In Brig. B. Lall vs. WTO (supra), it was held that the Valuation Officer's report under s. 16A could not form the basis for reassessment proceedings. Similarly, in Sardar Kehar Singh vs. CIT (1991) 92 CTR (Raj) 88 : (1992) 195 ITR 769 (Raj), it was held that the valuation report cannot be a valid basis for reassessment under s. 147(a) of the IT Act, 1961. We have considered over the matter. Reference to the Valuation Officer in respect of asset of firm for ascertaining the value of partners, interest is permissible but, that power could be exercised, if the assessment is pending. Sec. 17(1)(b) of the WT Act is applicable, if the WTO has, in consequence of any information in his possession, reason to believe notwithstanding there has been no such omission or failure as is referred to in cl. (a), that the net wealth chargeable to tax has escaped assessment for any year, whether by reason of under assessment or assessment at too low a rate or otherwise may proceed to assess or reassess. This provision makes it clear that, there should be information "and reason to believe"for the exercise of such power.
(3.) BOMBAY High Court in the case of Tulsi Das Kika Chand vs. D.R. Chawla (1980) 122 ITR 458 (Bom) has held that the assessment completed on the basis of valuation report of an approved valuer cannot be reopened on the basis of valuation given by the Departmental Valuation Officer giving the higher figure. The view of the BOMBAY High Court has been dissented by Karnataka High Court in Amrit Talkies vs. ITO (1984) 150 ITR 386 (Kar). The view of this Court consistently had been that where no proceedings are pending before the WTO, then no reference to the Valuation Officer can be made under s. 16A. If there is no information as contemplated by s. 17(1)(b) then there could not be valid initiation of proceedings. In the present matter, since assessments of the above two partners/assessees had already been completed, the reference by the WTO under s. 16A for valuing property of the firm M/s Maniram & Sons in respect of Gem Cinema, cannot be considered to have given any right for reopening the completed assessment. Accordingly it is held that the Tribunal was justified in holding that the WTO did not have jurisdiction to initiate the reassessment proceedings and in cancelling the assessment made under s. 17(1)(b) of the WT Act, 1957. The reference is accordingly answered in favour of the assessee and against the Revenue.;