JUDGMENT
D.A. Mehta, J.
1. Tribunal, Ahmedabad Bench “C”, has referred the following question under Section 27(1) of the WT Act, 1957 (the Act), at the instance of the CIT :
Whether the Tribunal is right in law and on facts in cancelling the order made by the CWT under Section 25(2) of the WT Act, 1957 ?
2. The assessment years are 1980-81, 1981-82 and 1982-83. The valuation dates for the three years, respectively, are Aso Vad Amas of Samvat Years 2035, 2036 and 2037, the corresponding dates being 27th Oct., 1979, 7th Nov., 1980 and 27th Oct., 1981. The assessee filed his returns of wealth for all the three years. The wealth consisted of movable and immovable properties. The assessee was having partnership share in a firm known as M/s Gum Products; the share was 31 per cent for asst. yr. 1980-81, and 12 per cent for each of the remaining two assessment years. The partnership firm was owner of an immovable property known as ‘Ellisbridge Milkiat’ and the said property was valued at Rs. 21,641 in each of the three years. The basis of arriving at this value was the fact that the property was wholly rented property fetching yearly gross rent of Rs. 2,064 only. The assessee had included his share of this immovable property owned by the partnership firm while returning the wealth in the form of partnership share. The assessments came to be framed on 15th March, 1985, 25th March, 1986 and 25th March, 1986 for the three years under consideration.
3. Sometime in the year 1986, the Central Government came out with a scheme known as Amnesty Scheme which enabled assessees who had not disclosed their correct income/wealth in the returns already filed and in case of declaration under the scheme, an assessee would become entitled to avail of immunity from penalty/prosecution. Accordingly, the assessee filed revised returns for all the three years on 17th Sept., 1986, disclosing jewellery worth Rs. 40,000, Rs. 45,000 and Rs. 60,000 which had not been disclosed in the original returns. The assessee paid self-assessment tax under Section 15B of the Act while filing the revised returns. The AO issued notices under Section 17 of the Act, but vide communication dt. 17th Sept., 1986, the assessee informed the AO to treat the revised returns already filed as returns in response to notice under Section 17 of the Act. The AO framed assessment orders on 24th Nov., 1986 for all the three years, accepting the wealth declared by the assessee under the Amnesty. Scheme.
4. On 21st Dec, 1987, the AO wrote to the assessee to show cause as to why appropriate action should not be initiated, because in the opinion of the AO, the value of the share in Ellisbridge Milkiat property had been shown by the assessee at a lesser figure as against the correct market value. The assessee tendered his explanation by letter dt. nil. The Tribunal has recorded that thereafter whether any further proceedings took place or not, is not available on the record.
5. However, on 13th Oct., 1988, the CWT initiated action under Section 25(2) of the Act, as according to him, the assessments framed on 24th Nov., 1986, were erroneous and prejudicial to the interest of the Revenue. The assessee filed written submissions on 1st Nov., 1988. However, the CWT did not accept the explanation tendered and vide order dt. 22nd Feb., 1989, set aside assessments for all the three years to enable the AO to make proper assessments taking into account the observations made by him in his order. It was recorded by the CWT that the Ellisbridge Milkiat had been incorrectly valued at Rs. 21,641, because on 3rd Sept., 1981, the assessee/partnership firm had entered into an agreement for sale of the said property for a price agreed at Rs. 11,25,000. That the valuation date for asst. yr. 1982-83 being 27th Oct., 1981, and the agreement for sale having been entered into on 3rd Sept., 1981, the assessee had not disclosed correct wealth. That subsequently, in fact, the property had been sold out at the agreed price on 9th Nov., 1982. Insofar as the earlier two years were concerned, namely, asst. yrs. 1980-81 and 1981-82, the CWT did not accept that the gross rent fetched by the property was correct rent considering the location of the property and the surrounding development.
6. The assessee carried the matter in appeal before the Tribunal. The order of CWT was challenged on the ground of limitation as well as on merits. The Tribunal accepted both the challenges. In relation to the order being barred by limitation, it was found by the Tribunal that the subsequent assessment orders dt. 24th Nov., 1986 were passed for a limited purpose and the assessment of the property in question had been made on 15th March, 1985, 25th March, 1986 and 25th March, 1986. Therefore, according to the Tribunal, the CWT could not have invoked his powers under Section 25(2) of the Act in light of the statutory period of limitation of two years.
7. The Tribunal further held on merits of the controversy that it was not in dispute that the Ellisbridge Milkiat property had been acquired in 1960 and had remained since then a tenanted property. That there were disputes between the landlord and the tenants regarding eviction and on the respective valuation dates, the matter of eviction of the tenants was sub judice in revisional proceedings before the competent Court. Thus, according to the Tribunal, the best method of valuation of such property would be rental method only considering the nature of pending litigation and any other method could not have been adopted for valuing the property. That considering the nature of pending litigation, any prospective buyers would have been dissuaded from entering into a transaction to purchase the property. The combined effect of all these factors, according to the Tribunal, went to show that the price of Rs. 11,25,000 did not represent the fair market value of the property in question on the relevant valuation dates. Therefore, according to the Tribunal, there was no error in the assessments framed by the AO, and hence, no prejudice had occasioned to the interest of Revenue. Accordingly, the Tribunal did not uphold the order of CWT on merits also.
8. Mr. B.B. Naik, the learned standing counsel for the applicant-Revenue, has been heard. Though served, there is no appearance on behalf of respondent-assessee.
9. In light of the facts narrated hereinbefore, in the fact-situation of the present case, it is not necessary to enter into the controversy as to whether the order of the CWT made under Section 25(2) was or was not barred by limitation.
10. As the findings recorded by the Tribunal go to show, the Tribunal has found as a matter of fact that the price at which the agreement for sale was entered into, and subsequently the property was sold, did not represent the fair market value of the property in question on the relevant valuation dates. Once this is the position, and it was not disputed on behalf of the Revenue, that this is a finding of fact, it is not possible to uphold the action of the CWT under Section 25(2) of the Act. The entire basis for initiating action under Section 25(2) of the Act is the agreement for sale entered into on 3rd Sept., 1981. At the cost of repetition, it is required to be stated that the Tribunal has found that the said amount mentioned in the agreement for sale did not represent the correct fair market value of the property on the relevant valuation dates and the Revenue has not been able to point out any material on record to dispute the said finding of fact. In absence of any evidence to show that the aforesaid finding of the Tribunal suffers from any infirmity in any manner whatsoever, it is not possible to take any other view of the matter.
11. In the result, the Tribunal’s order is upheld on merits, without going into any discussion on the issue of limitation. The Tribunal was right in law and on facts in cancelling the order made by the CWT under Section 25(2) of the Act. The question is accordingly answered in the affirmative i.e., in favour of the assessee and against the Revenue.
12. The reference stands disposed of accordingly. There shall be no order as to costs.