Income Tax Appellate Tribunal - Nagpur
Smt. S.V. Dhanwatay vs Wealth-Tax Officer on 5 December, 1988
Equivalent citations: [1989]28ITD135(NAG)
ORDER
S.P. Kapur, Judicial Member
1. This Special Bench has been constituted to consider the following question of law:
Whether the assessment made on the basis of valuation report of the wrong Valuation Officer can be vacated and the Wealth-tax Officer can be directed to make fresh assessment in accordance with law relying on the only valid valuation report of the registered valuer filed by the assessee along with the returns of wealth ?
2. Vide orders dated 30th November, 1981 made on cross-appeals by the assessee and the revenue in WTA Nos. 85 to 94/Nag/1981 (by the assessee), 64 to 73/Nag/1981 and 226/Nag/1981 (by the revenue) involving assessment years 1965-66 to 1974-75 and 1975-76 in the case of the present appellant-assessee, Income-tax Appellate Tribunal, Nagpur Bench, at Nagpur (qua the question of law before this Special Bench), held as under:
The valuation reports made by the District Valuation Officer would have no sanctity but for the existence of circumstances under Section 16A of the WT Act. In the instant case, there is no valid reference under Section 16A to the District Valuation Officer and, therefore, his reports are invalid reports as held by us earlier and, therefore, the reports of the District Valuation Officer have to be ignored. For arriving at this decision we are supported by the Andhra Pradesh High Court decision in the case of G.M. Omer Khan v. District Valuation Officer 1977 Tax LR 582. At this stage we have to consider the request on behalf of the Revenue that the matter may be restored to the file of the WTO for making a fresh reference to the appropriate Valuation Officer under Section 16A of the Wealth-tax Act. We, however, see no substance in this request inasmuch as in our opinion, a report from a Valuation Officer is not a sine qua non for a wealth-tax assessment. As may be seen from the language of Section 16A of the WT Act, the WTO may make a reference to a Valuation Officer in certain circumstances. In legal parlance "may" always includes "may not". It is entirely discretionary for the WTO either to make a reference or not to make a reference. In the instant case, he might have originally thought of making a reference to a Valuation Officer. But he has failed to do so inasmuch as the only reference that he made was an invalid reference, which was no reference under Section 16A of the WT Act. In the circumstances, we have to proceed as if here is a case where no reference has been made under Section 16A of the WT Act to a Valuation Officer. Farther, in our opinion, the submission on behalf of the assessee that he should not be subjected to a fresh round of hearings before the lower authorities, including the Valuation Officers for the valuation of the properties on the grounds of balance of convenience also appeals to us. In wealth-tax proceedings all that the assessee was expected to do was to furnish a proper wealth-tax return supported by a valuation by a duly qualified valuer. The assessee has discharged her duties. Nothing further was required to be done by her. If the WTO had any doubts about the valuation of the properties, the law provided for the procedure to be followed in the circumstances, vis., the procedure laid down under Section 16A of the WT Act. If he has not followed this procedure properly, we see no reason why the assessee should be subjected to unnecessary and avoidable harassment. We, therefore, see no reason to refer the matter back to the WTO for revaluation by a proper Valuation Officer.
The revenue having been able to make out a case for constitution of a Special Bench with the above background of the case, the hearing was fixed at Bombay at the request of both the parties. The following table depicts the details about the property, asses-see's share therein, valuation returned by the assessee, valuation put by the assessing officer and the valuation as per the order of the learned first appellate authority:
Name of Share Valuation Valuation As put by
property as return- assessed first
ed by by WTO appellate
assessee authority
1 2 3 4 5
Rs. Rs. Rs.
International
Bldg. 0-2-0 85,625 6,08,875 4,59,500
Engineering
Centre 0-4-0 2,84,250 7,47,750 5,49,250
Shivsagar
Estate 0-0-4 1,44,279 5,59,957 2,90,240
Plot No. 79 0-0-5 51,433(--) 26,780 26,750
Farm House 0-4-0 -- -- 44,000
Wardha Rd.
Garden (Non-
agrl.) 0-4-0 -- 78,875 14,600
Wardha Rd.
Garden
(Agricul-
tural) 0-4-0 29,075 -- 64,276
Land at
Kachimet 1.20 12,000 12,000 12,000
Total: 6,06,662 20,34,237 14,60,616
3. Shri C.J. Thakar, the learned authorised representative of the assessee, while opening the case of the assessee, made the following pertinent points:--
That reference made by the Wealth-tax Officer to the Valuation Cell under Section 16A of the Wealth-tax Act, 1957 is not legalsince the District Valuation Officer could not come into the picture as he had no jurisdiction because of the undisputed facts that the value of the shares of each of the co-owners in the properties (subject matter of valuation by the District Valuation Officer) as returned by the assessee is less than Rs. 2 lakhs except in the case of one property, vis., Engineering Centre, where the returned valuation is more than Rs. 2 lakhs but less than Rs. 5 lakhs. He relied upon the figures as are mentioned in the Annexure attached with the order of the learned first appellate authority. To support his above contention, he relied on Section 16A of the Act, which deals with the topic 'reference to Valuation Officer' and further pressed into service Rule 3A - Wealth-tax Rules, 1957 - , which deals with the topic 'jurisdiction of Valuation Officers'. Specifically pointing out Sub-rule (2) of Rule 3A, he contended that District Valuation Officers, Valuation Officers and Assistant Valuation Officers have to perform the functions of a Valuation Officer in respect of "such areas and in relation to such classes of assets as the Board may direct. Sub-rule (3) of Rule 3A was relied upon for the proposition that what is to be valued is 'any rights in buildings or land' and further that if the value of the asset as declared in the return by the assessee exceeds Rs. 10 lakhs, the Wealth-tax Officer has to make a reference and the jurisdiction to make the report lies with the District Valuation Officer but if the value of the assets as declared in the return exceeds Rs. 2 lakhs but does not exceed Rs. 10 lakhs, the ductions have to be performed by the Valuation Officer and if the valuation as returned by the assessee does not exceed Rs. 2 lakhs, then the valuation has to be made by the Assistant Valuation Officer. Shri Thakar relied on Section 12A, which deals with the topic 'appointment of Valuation Officers' and pointed out that Valuation Officers were doing statutory duties and their appointments and functioning, including giving of reports under Section 16A of the Act were in the nature of powers exercisable by a quasi-judicial authority and once the valuation report made by any of them, viz., Assistant Valuation Officer, Valuation Officer and District Valuation Officer is not in accordance with Rule 3A, the report becomes non est because it is not legal and valid one. Shri Thakar thus argued that in the present case the District Valuation Officer could not have made the valuation report as he lacked jurisdiction and accordingly this report could not have been adopted for the purposes of framing of assessment and once it is so, the only evidence with the Wealth-tax Officer was the assessee's registered valuer's report, which could only have been adopted. Shri Thakar thus contended that in view of this legal position as also the earlier order of the Income-tax Appellate Tribunal dated 30th November, 1981 (supra), the assessee's version has to be accepted. He further placed strong reliance on Section 3, which deals with the topic 'charge of wealth-tax'and provides that there shall be charged for every assessment year wealth-tax in respect of the net wealth, subject to the other provisions contained in the Act. He relied on the definition of 'assets' as defined in Section 2(e) of the Act as also definition of 'net wealth' as defined in Section 2(m) of the Act. Shri Thakar here specifically pointed out that 'any interest in property' is an asset and the asset must 'belong to the assessee' for the purposes of assessment. Shri Thakar contended that jurisdiction of the District Valuation Officer/Valuation Officer and Assistant Valuation Officer is determinable in relation to the valuation of the asset as returned by the assessee and belonging to the assessee. He particularly laid emphasis on the words 'any rights in buildings or lands' in Rule 3A(3). He contended that although Section 16A of the Act in terms does not speak of hierarchy of Valuation Officers, under Section 2(r) Valuation Officer means a person appointed as a Valuation Officer under Section 12A and includes a Regional Valuation Officer, a District Valuation Officer and an Assistant Valuation Officer. His stand is that reference under Section 16A has to be vis-a-vis 'any rights in building or land', and 'belonging to the assessee' and that being the asset, which is a subject matter of reference, the reference must be made to the correct Valuation Officer within the framework of Rule 3A and once it is not so, the Valuation Officer being a statutory authority under Section 12A of the Act, with powers exercisable under statute and has also to give a report, under Section 16A of the Act, any lack of jurisdiction in him goes to the root of the matter and makes the reference and the resultant report illegal and invalid, which, according to him, is the case here. The District Valuation Officer could not have exercised jurisdiction in the case of the assessee inasmuch as assessee's 'interest in the building', as returned by the assessee, was less than Rs. 2 lakhs and Rs. 5 lakhs. Shri Thakar further pointed out, that under Section 16A read with Rule 3A, the Wealth-tax Officer is obliged to make reference to the proper authority vis-a-vis valuation of an asset and vis-a-vis the jurisdiction of the Valuation Officer and the Wealth-tax Officer must take note of both the provisions and since he has not done so in the present case, the reference has to be held to have been made to an improper authority, as such, there is no reference in the eye of law because an invalid and illegal reference is non est in law. Shri Thakar derived the desired fortification from the earlier order of the ITAT dated 30th November, 1981 (supra) where it has been held to be so, i.e., that on the facts and in the circumstances of the case the reference not being in terms of Section 16A read with Rule 3A the report was non est being illegal and invalid. Shri Thakar contended that the directions of the ITAT in the order made for the earlier years having become final, there is no justification to make a departure, particularly when the directions of the ITAT have been made as on the valuation date 31st March, 1974, and the valuation date involved in the present appeal being 31st March, 1975, there being no distinguishing factors for arriving at a different valuation the same values should have been adopted. He contended that the evidentiary value of District Valuation Officer's report was not affected and can be taken note of, but not as a binding report on the Wealth-tax Officer, and since the said report had already been considered by the ITAT for the earlier years, no fresh reference need have been made. Hence, the earlier order of the ITAT should have been followed. He finally submitted that the reference be held to be bad, and that assessments be framed on the basis of assessee's registered valuer's report, which was improperly rejected.
4. The learned departmental representative appearing for the revenue made the following points:--
- that reference under Section 16A of the Act and the resultant valuation report were valid ;
- that the co-owners of the properties constitute 'association of persons' and under Rule 2, interest of a member is to be worked out accordingly.
Strong reliance was placed on Section 4.(b) of the Wealth-tax Act, 1957 and Section 26 of the Income-tax Act, 1961 to bring home the point that the co-owners in fact and in law are 'associates' and inter se they constitute 'association of persons' despite the fact that their shares be determinate and income assessable on those basis as co-owners---Smt. Prem Lata Agarwal v. CWT [1983] 142 ITR 586 at page 590 (All.) was pressed into service for this proposition. The learned departmental representative further contended that in view of the ratio of the decision of the Supreme Court in the case of Juggilal Kamlapat Bankers v. WTO [1984] 145 ITR 485, reference under Section 16A is relatable to valuation of the asset as a whole, i.e., all the immovable properties because to work out the valuation of assessee's right therein, the property as a whole has to be valued, hence the District Valuation Officer's report is legal and valid. He placed strong reliance on Section 2(r) of the Act, which defines the 'Valuation Officer'. Proviso(s) to Rule 3A were also pressed into service, which, according to the learned departmental representative, have the overriding effects. He further contended that a proviso to a rule or a section has to be construed to make it workable and once an interest of a person is to be valued in a property, the property as a whole has to be valued and interest of an assessee has to be worked out accordingly. While pressing into service proviso(s) to Rule 3A, he relied on the words ... "if he considered it necessary or expedient so to do for the purpose of proper and efficient management of the work of valuation, himself perform such function in relation to any asset referred to in Clause (ii)". These words are attributable to the District Valuation Officer's jurisdiction and thus the learned departmental representative submitted that the District Valuation Officer could assume jurisdiction depending upon his discretion, namely when he considered expedient, that in this case assessee's interest in the property could not be worked out without valuing the property as a whole and since the valuation of the property as a whole fell within the jurisdiction of the District Valuation Officer, the reference under Section 16A as also District Valuation Officer's report were legal and valid. He also contend-ed that demonstrably, it need not be proved that the District Valuation Officer has thought it expedient and necessary so to do and taken upon himself the valuation as the properties were huge and of heavy valuation as also fell within his jurisdiction as to valuation. Board's circular as placed on page 56 of revenue's paper book was also pressed into service. It contained directions of the Board under the enabling provision of Sub-rule (2) of Rule 3A. In the alternate, the learned departmental representative pleaded that jurisdiction is a procedure, hence if at all there was any infirmity attached to the District Valuation Officer's report, it was a mere irregularity and not an illegality. Guduthur Bros. v. ITO [1960] 40 ITR 298 the Supreme Court was pressed into service for this proposition. Further, it was contended that the District Valuation Officer's report could not have been brushed aside because it still retained its character as a piece of evidence, despite (assuming but not admitting) that this District Valuation Officer's report was without jurisdiction. Dr. Partap Singh v. Director of Enforcement [1985] 155 ITR 166, a decision of the Supreme Court was pressed into service for this proposition. Their Lordships held in that case that illegality of search does not vitiate the evidence collected during such illegal search. His contention was that the District Valuation Officer's report should be considered as a piece of evidence on merits, if the findings of the ITAT were to be that the said report was not legal and valid. Proceeding further, the learned departmental representative contended that the ITAT is duty bound to rectify its error vis-a-vis its findings in the order of the ITAT for earlier years and for the purpose reliance was placed on the case of Kapurchand Shrimal v. CIT [1981] 131 ITR 451 at page 460 (SO).
He submitted that since the assessee had appeared before the Wealth-tax Officer, the District Valuation Officer as also the learned first appellate authority and not having made any grievance about the jurisdiction of the District Valuation Officer, it was not open to him to contend for the first time before the Income-tax Appellate Tribunal, making a grievance of lack of jurisdiction of District Valuation Officer. Also that it was a case of contributory negligence and at worst a supervening irregularity which can be cured, but not fatal as to vitiate the order. Supdt. v. Pratap Rai [1978] 114 ITR 231 at page 234 (SC) and Thimmasamudram Tobacco Co. v. Assistant Collector of Central Excise AIR 1961 AP 324 at page 325 were pressed into service in support of this proposition. The learned departmental representative contended in conclusion that the matter may be remanded back to the learned first appellate authority for deciding the issue of valuation afresh in accordance with law after considering the District Valuation Officer's report as well as the assessee's registered valuer's report on merits.
The learned authorised representative of the assessee, Shri Thakar, in reply, contended that the argument that co-owners could be treated as 'association of persons' had been nobody's case at no stage of the proceedings. The assessee was assessed as individual and that fact should not be overlooked. The decision of the Supreme Court relied upon by the learned departmental representative and in Juggilal Kamlapat Bankers' case (supra) is not relevant in the context of this appeal; co-owner concept is known to Rent Control Acts and to civil laws but not to income-tax/ wealth-tax proceedings since under Section 26 of the Income-tax Act, 1S61 if the shares are determinate, the co-owners are assessed as individuals and not as 'association of persons' and that is the case here also ; that valuation is relatable to assessee's 'interest in the property' and not the property as a whole ; that taxation laws are codes by themselves and no external aid is required for interpreting the same. Rules of constructions and interpretation of statutes have to be observed as enunciated by their Lordships of the Hon'ble Supreme Court in Kanai Lal Sur v. Paramnidhi Sadhukhan AIR 1957 SC 907 ; that question of jurisdiction goes to the root of the cause and this can be raised by any party at any stage of the proceedings and hardship to a party is no criterion or consideration for not following the correct interpretation of a statute ; that ITAT should be consistent in its decisions and order for earlier years should be followed and directions issued accordingly ; CIT v. L.G. Ramamurthi [1977] 110 ITR 453 (Mad.) was pressed into service for the above proposition. Concluding, it was contended that since the earlier order of the ITAT had become final, the natural inference is that the revenue is satisfied and not aggrieved, hence this litigation is of academic nature. Shri Thakar as such prayed that the earlier years' order be followed and matter of valuation be referred to the learned lower authorities with the directions to put the valuation in tune with the assessee's registered valuer's report.
5. We have heard the parties at length. We have also perused afresh our order dated 30th November, 1981 (supra) as well as the orders of the learned lower authorities along with paper books of the parties. We have addressed ourselves to the following facets of the case:
(a) Whether the assessee with the other co-owners constitute an association of persons ;
(b) Whether procedural sections/rules should be interpreted to further the working of the Act rather than impeding ;
(c) Whether the order of the ITAT for the earlier years should be followed or not ;
(d) Whether the question of "jurisdiction can be raised at the stage of the ITAT for the first time ;
(e) Whether District Valuation Officer's report should be considered or not;
(f) Whether reference to the Valuation Officer/District Valuation Officer under Section 16A of the Act is valid ;
(g) Whether valuation by the District Valuation Officer is valid or not ; and
(h) What is the effect of the Board's circular (instruction No. 808) -XX/VH/73 - valuation of property in which the assessee has a share - Rule 3A of the Wealth-tax Rules (reference is to Central Board of Direct Taxes F. No. 328/260/74-WT, dated the 2nd December, 1974).
6. Since there is no dispute between the parties as to the application of Section 1.6A of the Act on the facts and in the circumstances of the assessee's case, the only dispute being about the jurisdiction of the District Valuation Officer, we are confining our discussion and finding to that issue only. Sub-section (1) of Section 16A of the Act, which is material for the present case, is reproduced here:
16A. (1) For the purpose of making an assessment (including an assessment in respect of any assessment year commencing before the date of coming into force of this section) under this Act, the Wealth-tax Officer may refer the valuation of any asset to a Valuation Officer--
(a) in a case where the value of the asset as returned is in accordance with the estimate made by a registered valuer, if the Wealth-tax Officer is of opinion that the value so returned is less than its fair market value ;
(b) in any other case, if the Wealth-tax Officer is of opinion--
(i) that the fair market value of the asset exceeds the value of the asset as returned by more than such percentage of the value of the asset as returned or by more than such amount as may be prescribed in this behalf ; or
(ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do.
From the above, it follows that the reference has to be made to 'a Valuation Officer'. 'Valuation Officer' has been denned by Section 2(r) as under:
"Valuation Officer" means a person appointed as a Valuation Officer under Section 12A, and includes a Regional Valuation Officer, a District Valuation Officer, and an Assistant Valuation Officer ;
Valuation Officer for the purposes of Section 16A(1) as such has to be a person appointed as a Valuation Officer under Section 12A and includes Regional Valuation Officer, a District Valuation Officer and an Assistant Valuation Officer. So the reference by the Wealth-tax Officer under Section 16A in terms means a reference made to either of the three officers mentioned in Section 2(r).
Rule 3A - Wealth Tax Rules - deals with the topic 'jurisdiction of Valuation Officers' and it reads as under:
3A. (1) Regional. Valuation Officers shall exercise, within such areas as the Board may direct, general supervision over the work of District Valuation Officers, Valuation Officers and Assistant Valuation Officers.
(2) District Valuation Officers, Valuation Officers and Assistant Valuation Officers shall perform the functions of a Valuation Officer in respect of such areas and in relation to such classes of assets as the Board may direct.
(3) Where under any directions issued under Sub-rule (2), the functions of a Valuation Officer in relation to any class of assets, being buildings or lands or any rights in buildings or lands, in respect of any area have been assigned to a District Valuation Officer, Valuation Officer and an Assistant Valuation Officer, such functions shall be performed by the District Valuation Officer, the Valuation Officer or, as the case may be, the Assistant Valuation Officer as provided hereunder:
(i) if the value of the asset as declared in the return made by the assessee under Section 14 or Section 15 exceeds Rs. 10 lakhs or if the asset is not disclosed or the value of the asset is not declared in such return or no such return has been made and the value of the asset, in the opinion of the Wealth-tax Officer, exceeds the aforesaid amount, the functions shall be performed by the District Valuation Officer ;
(ii) if the value of the asset as declared in the return made by the assessee under Section 14 or Section 15 exceeds Rs. 2 lakhs but does not exceed Rs. 10 lakhs or if the asset is not disclosed or the value of the asset is not declared in such return or no such return has been made and the value of the asset, in the opinion of the Wealth-tax Officer, falls within the aforesaid limits, the functions shall be performed by the Valuation Officer ; and
(iii) if the value of the asset as declared in the return made by the assessee under Section 14 or Section 15 does not exceed. Rs. 2 lakhs, or if the asset is not disclosed or the value of the asset is not declared in such return or no such return has been made and the value of the asset, in the opinion of the Wealth-tax Officer, does not exceed the aforesaid amount, the functions shall be performed by Assistant Valuation Officer:
Provided that the District Valuation Officer referred to in Clause (0 having jurisdiction in respect of the area may, if he considers it necessary or expedient so to do for the purpose of proper and efficient management of the work of valuation, himself perform such functions in relation to any asset referred to in Clause (n):
Provided further that the Valuation Officer referred to in Clause (ii) having jurisdiction in respect of the area may, if he considers it necessary or expedient so to do for the purpose of proper and efficient management of the work of valuation, himself perform such functions in relation to any asset referred to in Clause (iii).
(4) Where the valuation of any asset, being building or land or any right in any building or land, referred to the District Valuation Officer is pending with him on the 15th day of December, 1976, being the date of commencement of the Wealth-tax (Fourth Amendment) Rules, 1976, the District Valuation Officer shall transfer the reference to the Valuation Officer referred to in Clause (n) of Sub-rule (3) if the value of the asset as declared in the return made by the assessee under Section 14 or Section 15 does not exceed Rs. 10 lakhs or, if the asset is not disclosed or the value of the asset is not declared in such return or no such return has been made, the value of the asset, in the opinion of the District Valuation Officer, does not exceed the said amount.
7. From the above rule, it follows that--
(i) if the value of the asset as declared in the return made by the assessee exceeds Rs. 10 lakhs, the valuation and the resultant report is to be made by the District Valuation Officer ;
(ii) but if the value of the asset as declared in the return made by the assessee exceeds Rs. 2 lakhs but does not exceed Rs. 10 lakhs, then the functions have to be performed by the Valuation Officer ; and lastly
(iii) if the value of the asset as declared in the return by the assessee does not exceed Rs. 2 lakhs, the functioning is restricted to Assistant Valuation Officer.
The above is subject to two provisos as under:
(i) District Valuation Officer if he considers it necessary or expedient so to do for the purpose of proper and efficient management of the work of valuation, he may himself perform functions in relation to any asset where the value of the asset as declared in the return made by the assessee exceeds Rs. 2 lakhs but does not exceed Rs. 10 lakhs ;
(ii) The Valuation Officer may likewise, if he considers it necessary or expedient so to do for the purpose of proper and efficient management of the work of valuation himself perform such functions if the value of the asset as declared in the return made by the assessee does not exceed Rs. 2 lakhs.
From the above provisos, and Sub-rule (3) of Rule 3A - Wealth-tax Rules - it follows that the District Valuation Officer can exercise jurisdiction for the purpose of the valuation of an asset even if the value of the asset as declared in the return made by the assessee does not exceed-Rs..10 lakhs. This can be done by the District Valuation Officer, if he considers it necessary or expedient so to do for the purposes of proper and efficient management of the work of the valuation. Thus, the matter of valuation of properties not falling within the pecuniary jurisdiction of the District Valuation Officer, can still be valued by him, if he considers it expedient so to do in achieving efficient management of work of valuation. All that can be read into this provision is that assumption of jurisdiction by the District Valuation Officer must be for good and valid reasons and should not be for mala fide reasons. There is no suggestion that the District Valuation Officer had entertained any mala fide reasons, other than bonafide exercise of powers vested in him. A combined reading of Section 16A and Rule 3A extracted above, do make it clear to us, that the Wealth-tax Officer should make a reference for valuation to a "Valuation Officer" and it does not specify that at that time of reference he should go by the monetary limits prescribed in Rule 3A. After a reference was made to the Valuation Officer, which is valid in all aspects it is a matter left to them to organise the work inter se for proper and efficient management. The contention based upon pecuniary jurisdiction cannot therefore stand. On the facts and in the circumstances of this assessee's case, where the assessee is a co-owner with several others and the valuation of the buildings in which the assessee's rights/shares worth lakhs of rupees are involved, in our considered opinion, the District Valuation Officer can be said to have justifiably, on facts and in law, exercised jurisdiction in making the valuation report, though it is desirable that a noting to that effect is made, yet its absence does not vitiate the valuation. We therefore hold, that on these facts, the District Valuation Officer justifiably considered it necessary and expedient to perform the functions himself.
In view of the above discussion, reference to the Valuation Officer under Section 16A and the resultant report by the District Valuation Officer have to be held as valid and in accordance with law.
Before we conclude this issue, we may make a mention to the Board's circular. Instruction No. 808, i.e., circular of the Central Board of Direct Taxes dated 2nd December, 1974 is to the following effect:
Sub-rule (3) of Rule 3A lays down monetary limits for valuation of properties to be done by the District Valuation Officer, Valuation Officers, Assistant Valuation Officers.
2. An assessee may have only a share in a large property and, therefore, the value of the asset as declared by him represents only a share of the value of the property as a whole. Under Rule 3A, however, if the value of assessee's share in fsuch properties does not exceed Rs. 2 lakhs, though the value of the property as a whole is much higher, the Wealth-tax Officer will have to refer the question of valuation of this property to the Assistant Valuation Officer. The Board would suggest that in such cases the valuation may be done by Valuation Officers in terms of proviso to Rule 3A and not by Assistant Valuation Officers.
3. Officers working in your charge may, therefore, be directed to refer valuation of properties in which the assessee has a share and the value of the assessee's interest does not exceed Rs. 2 lakhs, to the Valuation Officer and not to the Assistant Valuation Officer.
[CBDT P. No. 328/260/74-WT dated the 2nd December, 1974] Since the jurisdiction of Valuation Officers and the functioning is subject to directions of the Central Board of Direct Taxes as provided in Sub-rule (2) of Rule 3A - Wealth-tax Rules - , the above circular goes a long way to advance the case of the revenue.
8. Since we have held that reference to the District Valuation Officer under Section 16A as also the District Valuation Officer's report are valid, his report has not only to be considered but also adopted for framing of assessment as provided in Sub-section (6) of Section 16A of the Act. The appellate authorities have to consider it and in terms of Sub-section (3A) of Section 23 and Sub-section (5) of Section 24, the Valuation Officer has to be heard also during appellate proceedings.
9. As regards the issue about the objection to the jurisdiction and whether it can be raised for the first time at the stage of the Income-tax Appellate Tribunal or not, we will say that jurisdiction goes to the root of the matter and accordingly this being a pure and simple issue of law, not involving investigation into fresh facts, it can be raised at any stage by any party. The correct position in law is that the ITAT have the jurisdiction in every case to entertain a ground, which has not been urged before the lower authorities whose order is appealed against, though these powers have to be exercised judicially provided the matter has relation to the order appealed against. In this case, the question of jurisdiction relates to the competency of the forum and accordingly once an authority/Tribunal has no jurisdiction, its actions have to be held as non est not being in accordance with law and powers conferred on it by Parliament. Since the assessee here agitates and attacks the very jurisdiction of the District Valuation Officer to make the report, which has been adopted at the assessment stage for charge of her net wealth under the provisions of the Wealth-tax Act, 1957, we have entertained tins ground, although this was not raised specifically in so many words before the lower authorities. In the case of Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232, the Supreme Court held that the Tribunal has the jurisdiction to allow any new questions to be raised for the first time in appeal before it and should allow such a question to be raised if it is a question which can be decided on the facts already on record.
The next issue is about the stand of the assessee about the assessee constituting an association of persons with the other co-owners. The learned authorised representative of the assessee had relied on the following observations taken from the celebrated author Salmond on Jurisprudence:
(46) Sole ownership and co-ownership--
As a general rule a thing is owned by one person only at a time, but duplicate ownership is perfectly possible. Two or more persons may at the same time have ownership of the same thing vested in them. This may happen in several distinct ways, but the simplest and most obvious case is that of co-ownership. Partners, for example, are co-owners of the chattels which constitute their stock-in-trade, of the lease of the premises on which their business is conducted, and of the debts owing to them by their customers. It is not correct to say that property owned by co-owners is divided between them, each of them owning a separate part. It is an undivided unity, which is vested at the same time in more than one person. If two partners have at their bank a credit balance of £1,000, there is one debt of £1,000 owing by the bank to both of them at once, not two separate debts of £500 due to each of them individually. Bach partner is entitled to the whole sum, just as each would owe to the bank the whole of the firm's overdraft. The several ownership of a part is a different thing from the co-ownership of the whole. So soon as each of two co-owners begins to own a part of the thing instead of the whole of it, the co-ownership has been dissolved into sole ownership by the process known as partition. Co-ownership involves the undivided integrity of what is owned.
Co-ownership, like all other forms of duplicate ownership, is possible only so far as the law makes provision for harmonising in some way the conflicting claims of the different owners inter se. In the case of co-owners the title of one is rendered consistent with that of the other by the existence of reciprocal obligations of restricted use and enjoyment.
Co-ownership may assume different forms by virtue of the different incidents attached to it by law. Its two chief kinds in English law are distinguished as ownership in common and joint ownership. The most important difference between these relates to the effect of the death of one of the co-owners. In ownership in common the right of a dead man descends to his successors like any other inheritable right. But on the death of one of two joint owners his ownership dies with him, and the survivor becomes the sole owner by virtue of his right of survivorship or jus accrescendi.
10. The above, in our considered opinion, is not relevant in the context of the issue we are seized with in the present appeal, since it is relevant for Rent Control Acts and the civil litigation. The tax law being self-contained code by itself, the best external aid could be had, in this case, from Section 26 of the Income-tax Act, 1961, which reads as under:
Where property consisting of buildings or buildings and lands appurtenant thereto is owned by two or more persons and their respective shares are definite and ascertainable, such persons shall not in respect of such property be assessed as an association of persons, but the share of each such person in the income from the property as computed in accordance with Sections 22 to 25 shall be included in his total income.
Explanation: For the purposes of this section, in applying the provisions of Sub-section (2) of Section 23 for computing the share of each such person as is referred to in this section, such share shall be computed, as if each such person is individually entitled to the relief provided in that sub-section.
The above section provides that where the shares of the co-owners are definite and ascertainable, the assessee shall not in respect of such property be assessed as an association of persons. On the facts and in the circumstances of the case, with which we are seized, the assessee's share in the property is denned and ascertainable, hence her status remains that of an individual and she along with other co-owners cannot be said to form an association of persons. We hold accordingly.
11. Lastly, the earlier order of the Income-tax Appellate Tribunal, Nagpur Bench, in the case of Smt. Shakuntala Bai V. Dhanwaty (Ind.) v. WTO [WT Appeal Nos. 85 to 94 (Nag.) of 1981], Central Circle II, Nagpur and Anr. proceeded more on the basis that the Central Board of Direct Taxes, has under Rule 3A(2), directed the distribution of work, among the Valuation Officers, fixing their pecuniary jurisdiction that under the proviso to Wealth-tax Rule 3A, the District Valuation Officer could not perform the functions of Assistant Valuation Officer, and that even otherwise during the course of arguments before it, it was not pleaded that the District Valuation Officer acting under the proviso to Rule 3A, if considered necessary or expedient, can exercise the functions of Valuation Officer for the efficient management of work of valuation. Though a reference was made in passing to the decision of Andhra Pradesh High Court in the case of G.M. Omer Khan v. District Valuation Officer 1977 Tax LR 582, the decision of the Bench rested on the above ground. But in the case before us, specific arguments were taken about the exercise of jurisdiction by the District Valuation Officer and we reached a finding that his assumption of jurisdiction having regard to the circumstances of the case was valid and bona fide. Hence, the decision of Nagpur Bench cannot be considered to be on all fours with the case before us, and thus clearly distinguishable.
12. In view of our discussion as above, our answer to the question is as under:
That the assessment made on the basis of valuation report of the District Valuation Officer is valid and has to be adopted under Sub-section (6) of Section 16A of the Act for the purposes of framing of the assessment and it has to be considered in accordance with law by the appellate authorities along with the assessee's registered valuer's report.
13. The impugned order of the learned first appellate authority stands set aside and the appeal stands restored to his file for fresh decision in accordance with law. Assessee as also the Assessing Officer shall be heard. District Valuation Officer's report as also assessee's registered valuer's report shall be taken note of and considered in full in all aspects. District Valuation Officer shall be heard as provided for under Sub-section (3) of Section 23 of the Act. If the assessee so chooses, her right of representation through her registered valuer shall also be allowed to her.
Our answers above, should serve as answers to all the questions posed by us in para 5 of our order.
14. Assessee fails for statistical purposes, since we have answered the question posed to the Special Bench against her.