JUDGMENT
D.N. Baruah, J.
1. At the instance of the assessee, the following three questions have been referred by the Income-tax Appellate Tribunal under Section 27(1) of the Wealth-tax Act, 1957 (for short, “the Act”) :
“1. Whether, on the facts and in the circumstances of the case, the assessee had automatically become liable to penalty under Section 18(1)(c) of the Wealth-tax Act, 1957 (‘the Act’) (mens rea being taken for granted) by virtue of the provisions of Explanation 4 to that section, because in the view of the Tribunal ‘the assessee did accept the findings given in the quantum matter in which the value of the properties had been correctly adopted’ and ‘it was for the assessee to prove that the returned wealth was correct ?
2. Whether the view taken by the Tribunal about the valuation of the properties having been correctly adopted in the assessment was legally right, especially when that view was in direct conflict with the obvious fact that neither the net wealth nor the minimum penalty as determined by the Wealth-tax Officer was final, as is evident from the direction given in the Tribunal’s order that the Wealth-tax Officer should recompute the minimum penalty after reducing the net wealth by the relief granted by the Commissioner of Wealth-tax (Appeals) ?
3. In view of the provisions of Section 7(2) of the Act prescribing the global method of valuation of the assets of a business and in view of the applicability of this method for the determination, under Rule 2 of the Wealth-tax Rules, of the value of the interests of the assessee as a partner in two firms, the balance-sheet applicable for the purpose being the balance-sheets of the two firms as on 31st December, 1980, the Tribunal was right in law in proceeding on the assumption that the values of the interests in these firms as declared in the return were not the correct value ?”
2. The assessee, Meghraj Tusnial and Brij Ratan Tusnial and their other brothers and widowed mother inherited the immovable and movable properties from their late father and husband, N.D. Tusnial. For the assessment year 1981-82, for their assessment for wealth-tax originally completed on December 17, 1983, they disclosed their wealth at Rs. 6,74,970 and Rs. 7,96,000 of Meghraj Tusnial and Brij Ratan Tusnial. But the Wealth-tax Officer computed the same at Rs. 20,22,961 and Rs. 20,51,000, respectively.
3. The assessee being aggrieved by the aforesaid assessment orders as passed by the Wealth-tax Officer preferred appeal before the Commissioner of Wealth-tax (Appeals) who set aside the assessment orders and granted some relief directing the Wealth-tax Officer to compute the net wealth afresh. In view of the order, the Wealth-tax Officer ultimately computed the net wealth as mentioned above at Rs. 20,00,100 and at Rs. 20,02,000. During the assessment proceedings, he initiated penalty proceedings also under Section 18(1)(c) of the Wealth-tax Act. According to him, the assessee had furnished inaccurate particulars of the assets in view of Explanation 4 of Section 18(1)(c) of the Act. The only ground was that the value of assets returned by the assessee was less than 70 per cent. of the value of the assets and they failed to prove that the value of the assets which they disclosed in the returns as correct. In the appeal, the Wealth-tax Officer by two orders imposed penalty of Rs. 24,380 and in the other case Rs. 22,227, respectively. The assessee being aggrieved preferred an appeal before the Commissioner of Wealth-tax (Appeals). The appellate authority passed a consolidated order and rejected the appeal. While rejecting the appeal, the Commissioner of Wealth-tax (Appeals) observed thus :
“If Explanation 4 to Section 18(1)(c) is applicable the appellant is duty bound to prove that the value of assets as disclosed by him was correct.”
“This fact has not been proved by the appellant at any stage.”
4. Thereafter, the Commissioner of Wealth-tax (Appeals) quoted the written submission and then came to the conclusion that in view of Explanation 4 to Section 18(1)(c), penalty has been correctly levied and, therefore, no interference is called for. However, the valuation given by the assessee why it was not correct has not been stated in the said judgment and no endeavour was made in this regard. Being aggrieved, the assessee preferred an appeal before the Income-tax Appellate Tribunal. The Tribunal also upheld the order passed by the Commissioner of Wealth-tax (Appeals) and observed thus ;
“It appears to us that the enhancement was not made on ad hoc basis nor on blind estimate by the Assessing Officer. Thus, having regard to the entirety of the facts and circumstances of the case, we find no material or justification to interfere with the order passed by the Commissioner of Wealth-tax (Appeals) in respect of these two cases.”
5. There is no quarrel regarding the proposition of law that in case the assessment of the assessee is below 70 per cent. and the announcement of the value of the wealth, it will be normally presumed that the person shall be deemed to have furnished the assets under the meaning of Clause (c) of Sub-section (1) of Section 18 unless he proves the filing of assets as returned by him. As per Explanation 4 to Sub-section (1) of Section 18 when the value of the net asset in the return is less than 70 per cent. then it is to be deemed with such person. In this case, such person shall be deemed to have been incorporated in this matter. Thereafter, the assessee may also prove that the value of the asset as disclosed by him in the return is correct. The assessee may prove it by giving particulars regarding valuation. The Wealth-tax Officer, therefore, has an obligation to examine as to whether it is correct or not. Therefore, it is the statutory duty of the Wealth-tax Officer and for that matter, the Commissioner of Wealth-tax (Appeals) and the Income-tax Appellate Tribunal to find out the valuation given by the assessee for the asset is not correct. The Tribunal, in conclusion of the order, has, however, stated as follows :
“It appears to us that the enhancement was not made on ad hoc basis nor on blind estimate by the Assessing Officer. Thus, having regard to the entirety of the facts and circumstances of the case, we find no material or justification to interfere with the order passed by the Commissioner of Wealth-tax (Appeals) in respect of these two cases.”
6. In our opinion, the Tribunal is not required to say whether the valuation given by the Assessment Officer is arbitrary or not. It is the statutory duty of the Tribunal to see whether the valuation given by the assessee is correct or not. Unfortunately, the Tribunal did not address itself in that regard without going into the definite finding. Before taking final action like imposition of penalty it is the duty of the Wealth-tax Officer to see or to scrutinise whether the valuation given by the assessee is correct or not. No endeavour was made by the Tribunal in this regard. Therefore, we are unable to accept the conclusion of the Tribunal. Therefore, we are of the view that the Tribunal again came to a conclusion regarding incorrectness of valuation without first arriving at a conclusion.
7. In view of the above discussion, we answer question No. 1 in the negative and in favour of the assessee and against the Revenue. In view of our answer to question No. 1, we do not consider it necessary to answer the other two questions. Therefore, we decline to answer these two questions.
