High Court Of Gujarat
Commissioner Of Wealth Tax vs. Lalitchandra M. Patel
Section WT 25(2)
Asst. Years 1970-71, 1971-72, 1972-73, 1973-74
M.S. Shah & K.A. Puj, JJ.
WT Ref. No. 6 of 1988
20th June, 2002
Counsel Appeared
Tanvish Bhatt, for the Applicant : None, for the Respondent
JUDGMENT
M.S. SHAH, J. :
In this reference at the instance of the Revenue, the following questions are referred for our opinion in respect of the asst. yrs. 1970-71 to 1973-74 :
“1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in setting aside the order of the CWT under s. 25(2) of the WT Act, 1957?
2. Whether, the finding of the Tribunal that the CWT had exceeded his jurisdiction and his order cannot be sustained is correct in law?”
2. The respondent-assessee was a partner in the firm called L.M. Patel & Co. having 40 per cent share. While assessing the interest of the assessee as partner in the said firm, the question of value of property of the firm consisting of 5 storeyed commercial-cum-office building on land admeasuring 11,043 sq. ft. came up for consideration. The WTO adopted the value of the said property as determined by the assessee’s valuer. Subsequently on a reference made to the Departmental Valuer, the property was valued at Rs. 12,44,000 for the years under consideration. The CWT after examining the wealth-tax record of the assessee for the years under consideration found that the assessment framed by the WTO were prejudicial to the interest of the Revenue, as the value determined by the DVO (i.e., Departmental Valuer) was higher than the value assessed by the assessee’s valuer. Hence, there was a gross understatement. The CWT under s. 25(2) of the WT Act, 1957 (hereinafter referred to as ‘the Act’) set aside the assessments made by the WTO directing him to recompute the correct net wealth and tax accordingly. The assessee succeeded in appeal before the Tribunal. Hence, this reference at the instance of the Revenue.
3. We have heard Mr. Tanvish Bhatt, the learned standing counsel for the Revenue. Though served, none appears for the respondent-assessee.
4. The learned counsel points out that the Tribunal’s decision holding that the CWT erred in law in referring to material which was not on record before the WTO is passed on the decision of the Calcutta High Court in Ganga Properties vs. ITO (1979) 118 ITR 447 (Cal) : TC 57R.176. Mr. Bhatt, however, submits that the said view is now overruled by the Supreme Court in CIT vs. Shree Manjunathesware Packing Products & Camphor Works (1997) 143 CTR (SC) 406 : (1998) 231 ITR 53 (SC) : TC S57.4434 wherein the apex Court interpreted a pari materia provision of s. 263 of the IT Act, 1961. The learned counsel further relied on the decision of the Madras High Court in CWT vs. S.V. Sivarathina Pandian (2000) 241 ITR 146 (Mad) wherein the Madras High Court interpreted the provisions of s. 25(2) itself.
5. Having heard the learned counsel for the Revenue and having perused the aforesaid decisions, we find considerable substance in the submissions made by Mr. Tanvish Bhatt, the learned counsel for the Revenue. In Shree Manjunathesware Packing Products & Camphor Works’ case (supra), the Supreme Court interpreted a pari materia provision of s. 263 and held that while calling for and examining the record of any proceeding under s. 263(1), it is and it was open to the CWT not only to consider the record of that proceeding but also the record relating to that proceeding available to him at the time of examination. The Supreme Court even held that the decision of this Court, i.e., the Gujarat High Court in CWT vs. Rajashree S. Parekh taking the contrary view and against which the Department’s SLPs were dismissed, did not lay down correct law and that the dismissal of the special leave petitions summarily did not mean that the Supreme Court approved the view that was taken by the Gujarat High Court in the case of Rajashree S. Parekh (supra). The Court explained the legislative history of s. 263 with particular reference to the controversy about the scope of the expression ‘record’ and observed that if on further examining the record and after making or causing to be made an inquiry, the CWT considers the order to be erroneous and prejudicial to the interest of the Revenue, he can pass the order thereon as circumstances of the case justify and the apex Court in terms observed that obviously, as a result of the enquiry, the CWT may come into possession of new material and he would be entitled to take the new material into account. If the material, which was not available to the WTO when he made the assessment could thus be taken into consideration by the CWT after holding an enquiry, there is no reason why the material which had already come on record though subsequently to the making of the assessment cannot be taken into consideration by him. Hence, the apex Court concluded that it was open to the CWT not only to consider the record of that proceeding but also the record relating to that proceeding available to him at the time of examination.
The Madras High Court followed the aforesaid decision in S.V. Sivarathina Pandian’s case (supra) which was concerned with a case similar to the case before us. Following the aforesaid decision, the Madras High Court held that the CWT was perfectly justified in setting aside the order of assessment and directing the WTO to redo the assessment, taking into consideration the record relating to the proceedings available at the time of examination by the CWT and that the record was not confined to the material available to the WTO. Following the aforesaid decision of the apex Court and agreeing with the aforesaid view of the Madras High Court, we are of the same view that the CWT was justified in setting aside the assessment made by the WTO and in directing the WTO to recompute the correct net wealth and tax after considering the valuation made by the Departmental Valuer. In view of the above, our answer to both the questions referred to us is in the negative, i.e., in favour of the Revenue and against the assessee. The reference, accordingly, stands disposed of.
[Citation : 258 ITR 232]
