ORDER
V.P. Elhence, Judicial Member
1. By means of the instant Reference Applications the Commissioner of Wealth-tax, Delhi-II, New Delhi has required the Appellate Tribunal to refer under Section 27(1) of the Wealth-tax Act, 1957, the following questions, said to be of law as arising out of its order dated 8-5-1987 in the above captioned appeals for the assessment years 1974-75, 1975-76 and 1976-77 :
I. Whether on the facts and in the circumstances of the case, the Tribunal had sufficient basis and is legally correct in holding that there was no ‘information’ contained in the Revenue audit objections within the meaning of Section 17(1)(6) which could justify the reopening of the assessment in view of Supreme Court’s decision in the case of Indian & Eastern Newspaper Society [1979] 119 ITR 996 ?
2. Whether the aforesaid Supreme Court’s decision had been correctly applied bv the Tribunal in the facts and circumstances of the case ?
2. The assessee Jagmohan Singh Kochhar & Sons is a HUP. For the assessment years in question, a question arose regarding the valuation for wealth-tax purposes of the assessee’s 1/2 share in house property No. 124, Sunder Nagar, New Delhi. The following1 table would show the values of the assessee’s share as declared and as assessed for the assessment years in question as per the original assessments :
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A.Y. Value as declared by Value as assessed in Date of the original
the assessee the original assess- assessment order
ment order
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1974-75 Rs. 1,12,500 Rs. 1,39,000 25-3-1976
1975-76 Rs. 1,39,000 (as Rs. 1,39,000 25-3-1976
per valuer's
certificate)
1976-77 Rs. 1,39,000 Nil 28-2-1977
(A dispute was pending in
Delhi High Court between the
assessee and the co-owner).
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The assessments for the assessment years in question were reopened Under Section 17(1)(b) of the Wealth-tax Act, 1957 by issuing notices dated 27-3-1979. Reassessments were made by the Income-tax Officer by taking the value of 1/2 share of the assessee in the house property in question at Rs. 2,77,215, Rs. 2,82,100 and Rs. 2,82,100 respectively. These values were arrived at by the Wealth-tax Officer on the basis of the report of the Valuation Officer to whom reference was made by the WTO on 9-1-1980.
3. In appeal the learned AAC, relying upon the decision of the Hon’ble Rajasthan High Court in the case of Brig. B. Lall v. WTO [1981] 127 ITR 308 annulled the reassessments.
4. The Appellate Tribunal noticed that the assessments were reopened on the basis of the following identical reasons, photostat copies of which had been filed by the department:
Reasons for reopening :
The audit has in this case pointed out that the valuation in respect of the property at Sunder Nagar stated that the rental income of Rs. 5,000 is not maintainable rent and he has taken his own notional rent of Rs. 44,400 and after deducting outgoings he has taken the net income from property at Rs. 27,808 and multiplied the same by 10 to arrive at a figure of Rs. 2,78,000. The valuer for the assessee has not given any basis for his observation that the rent of Rs. 5,000 is not maintainable rent. It is a matter of common knowledge that the rents in Delhi are increasing day by day and not decreasing. There seems to be no basis for arriving at a lower rental value of the property. The property is constructed on a plot of land measuring 866.67 sq. yds. and the value adopted by the valuer for arriving at a lower rental figure than the actual rental, the property should be got revalued by the Government valuer. It has further been pointed out by Audit that the Valuation of Faridabad property too has not been done in accordance with the accepted principles of valuation. In view of the facts recited above I have reason to believe by virtue of information corning to my knowledge subsequent to the completion of original assessment that wealth has escaped assessment.
Issue notice under Section 17.
Sd/-
ITO
27-3-1979.
The Appellate Tribunal noticed from the original assessment orders for the A.Y. 1974-75 that the assessee had shown the value of 1/2 share at Rs. 1,12,500 but that no valuation report had been filed. The WTO had noticed that as per the valuation report on 31-3-1975 the value had been shown by the registered valuer at Rs. 1,39,000. In the absence of any report for the A.Y. 1974-75, therefore, the WTO took the same value namely Rs. 3,39,000. For the A.Y. 1975-76 the assessee had itself declared a value of Rs. 1,39,000 as per the valuation certificate which was accepted by the WTO. For the A.Y. 1976-77 the statement of wealth furnished by the assessee mentioned that the Hon’ble Delhi High Court had appointed an official receiver in view of the dispute between the assessee and the co-owner and the official receiver was managing the property and receiving the income therefrom and making the necessary expenditure and therefore, he was stated to be responsible as a representative assessee and therefore, the value declared was ‘Nil’. However, the WTO, following the assessment for the preceding assessment year, took the value at Rs. 1,39,000. On these facts the Appellate Tribunal took the view that there was an enquiry and application of mind on the part of the WTO even at the time of the original assessments. The Appellate Tribunal noticed that the audit had pointed out that the registered valuer of the assessee (for the A.Y. 1975-76) had not given any basis for the observation that the maintainable rent was Rs. 5,000 per month. The audit was of the view that rents in Delhi were increasing day by day and that the value adopted by the assessee’s registered valuer was very low and therefore, the property should be got revalued by the Government valuer. On these facts the Appellate Tribunal came to a finding that the audit had not communicated a.ny information on the basis of which the assessments could be validly reopened Under Section 17(1)(6) of the Wealth-tax Act, 1957. The Appellate Tribunal also noticed that it was not the case of the department that any item had been left out by the assessee’s registered valuer while valuing the property in question. The report of the assessee’s registered valuer gave full factual details and calculations were given for taking the maintainable rent at Rs. 44,400 per annum. A multiple of 10 had been applied by him having regard to the current rate of interest of the banks. In the note appended to the said report a reference had also been made to some decisions of the Appellate Tribunal for justifying the method of valuation adopted. The Appellate Tribunal also noticed that the A AC seems to have been under the impression that the reopening had been made on the basis of the report of the departmental valuation officer which was factually not correct. The Appellate Tribunal also noticed that the Supreme Court had overruled its earlier decision in the case of Kalyanji Mavji & Co. v. CIT [1976] 102 ITR 287 where it was laid down that reassessment was permissible even in cases where there was over-sight, inadvertence or mistake of the ITO. Therefore, the Appellate Tribunal took the view that there was no information within the meaning of Section 17(l)(b) contained in the audit objection or audit note which could have justified the reopening of the assessment as interpreted by the Supreme Court in the case of Indian & Eastern Newspaper Society v. CIT [1979] 119 ITR 996. Therefore, the Appellate Tribunal upheld the conclusion reached by the learned AAC.
5. We have heard the learned representatives on both the sides on these Reference Applications. At the outset it may be noticed that so far as the proposed question No. 1 is concerned, the Appellate Tribunal had mentioned the basis for holding that there was no information contained in the revenue audit’s objection. The finding of the Appellate Tribunal in that regard was also based on facts. Therefore, based upon such findings, no question or questions of law could be said to arise.
6. The Reference Applications therefore fail and are rejected.