SCA/13218/1994 1/7 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 13218 of 1994 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA HONOURABLE MR.JUSTICE H.B.ANTANI ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= KRISHNADAS GOVINDDAS PARIKH Versus WEALTH TAX OFFICER & ANOTHER ========================================================= Appearance : MR VK PATEL for MR SN SOPARKAR for Petitioner. MS M.M. BHATT FOR MR MANISH R BHATT for Respondents. ========================================================= CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MR.JUSTICE H.B.ANTANI Date : 17/06/2008 SCA/13218/1994 2/7 JUDGMENT ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA) 1. This petition is a consolidated petition for A.Ys. 1983-84 to 1993-94. Two principal issues under challenge are: [1]. Reopening of assessment by issuance of notice under section 17 of the Wealth Tax Act 1957 [the Act] for A.Y. 1990-91 to 1992-93; [2]. Reference made to Valuation Cell under section 16.A of the Act for A.Ys. 1983-84 to 1993-94. 3. On 29.04.08, after hearing the matter for some time, the Court found it necessary to peruse the reasons recorded for reopening completed assessments for the three assessment years mentioned hereinbefore. Request for time as prayed for by the learned senior standing counsel was granted. Thereafter, on 12.05.08, the following order came to be recorded. “Thereafter, the learned advocate for the petitioner has prayed for extention of time to comply with the aforesaid direction to place on record reasons recorded by the Assessing Officer. Despite two opportunities, the learned advocate is not in a position to produce the reasons recorded by the Assessing Officer. In the aforesaid set of circumstances, as SCA/13218/1994 3/7 JUDGMENT a final opportunity, the request for time to comply with the order dated 29.4.2008 is granted. If on the next date of hearing, the respondent authority is not in a position to place on record the reasons recorded by the Assessing Officer, the petition shall be disposed of finally considering the fact that the petition is of 1994. To be listed on 17.6.2008.” 4. Today, the learned standing counsel has placed on record copies of correspondence exchanged with the respondent authorities commencing from 15.07.04 and resting on 13.05.08 to show that the learned counsel has been pursuing the matter vigorously with the respondent authorities but till date the reasons recorded for re- opening have not been made available. 5. In the aforesaid set of circumstances, it is not necessary to enter into discussion on merits of the controversy between the parties and hence neither detailed facts nor submissions of the respective sides are required to be recorded. In the absence of reasons recorded, the action of the respondent authorities for re-opening completed assessments for A.Ys. 1990-91 to 1992-93 cannot be sustained on this limited count. Accordingly, the action of the respondent authorities in issuing notices dated 22nd August 1994 under section 17 of the Act for the three assessment years, viz. A.Y. 1990-91 to 1992-93, is hereby quashed. SCA/13218/1994 4/7 JUDGMENT 6. Insofar as the second limb of challenge is concerned, annexure 'C' is a notice issued under section 16.A of the Act by the office of the District Valuation Officer, Ahmedabad on 26th September 1994. The said notice pertains to the subject of determining fair market value of properties mentioned in the said notice for A.Ys, 1983-84 to 1993-94. The case of the petitioner- assessee is that the said action is bad in law because the assessing officer could not have initiated the proceedings by making a reference to the Valuation Cell under section 16.A of the Act without any assessment proceedings pending before the Assessing Officer. 7. On behalf of the respondent assessing officer, copy of communication dated 28.07.94 has been placed on record whereunder the Assessing Officer has addressed the Deputy Commissioner of Income Tax AR 5, Ahmedabad proposing to re-open the assessments for A.Ys. 1990-91 to 1992-93. Paragraph No.5 of the said communication reads as under: “It is seen that upto assessment year 1988-89 the assessee has shown the value of property at Rs.68600 as per Rule 1BB which is in order. From A.Y. 1989-90, the assessee has valued this property at Rs.14200 under Schedule III of the WT Rules. On verification it is found that there is a mistake in the value shown by the assessee in as much as 40% difference between unbuilt area and specified area was not added by the assessee to the value. Thus there is a difference of Rs.5680 in the valuation of the house shown by the assessee from A.Y. 1989-90. Therefore, action u/s.17 of the WT Act from A.Y. SCA/13218/1994 5/7 JUDGMENT 90-91 to 92-93 is proposed in this case for which permission may be granted. For the A.Y. 1993-94 as the assessee has not filed the return, notice u/s 16.(4) of the WT Act is being issued. For the assessment year prior to 1989-90 as the wealth escaped is below the required limit, no action is necessary” 8. In the aforesaid set of circumstances, it is apparent that the reference made to the valuation cell on 26.08.94 by the Assessing Officer cannot be sustained for all other assessment years except A.Y. 1993-94 for the following reasons: [i]. In relation to assessment years prior to 1989- 90, it is the case of the Assessing Officer himself that the so called escaped wealth is below the required limit and hence no action is necessary. In other words, the respondent authorities accept the fact that for assessment years prior to 1989-90, not only that no assessment is pending, but there is no proposal even to re-open such assessment years prior to 1989-90. Therefore, the reference made to the valuation cell for A.Ys. 1983-84 to 1989-90 cannot be sustained considering the fact that no assessments are pending for the said assessment years. [ii]. In relation to the A.Ys. 1990-91 to 1992- 93, admittedly though a proposal was made to re-open completed assessments for the said three assessment years, the Court has already recorded hereinbefore that SCA/13218/1994 6/7 JUDGMENT such action cannot be upheld in the absence of reasons recorded to establish that the assessing officer had formed a valid opinion, valid in law, for seeking to re- open the completed assessments. Thus, even for A.Ys. 1990-91 to 1992-93, in the absence of any pending assessment proceedings, no reference could have been made to the Valuation Cell by exercising powers under section 16.A of the Act. [ii]. However, insofar as A.Y. 1993-94 is concerned, the facts show that return of wealth was filed by the petitioner assessee on 01.08.94 and the assessment was accordingly pending as on 26.08.94 when the assessing officer made reference to the Valuation Cell under section 16.A of the Act. Hence the challenge to the reference made for assessment year 1993-94 cannot be sustained and the proposal made to the valuation officer to arrive at the fair market value of the properties in accordance with the provisions of the Act for assessment year 1993-94 does not merit interference. 9. To summarize: [i]. In the absence of reasons recorded, notice dated 22nd August 1994 issued under section 17 of the Act for re-opening completed assessments for A.Ys. 1990-91 to 1992-93 is quashed. [ii]. The action of the assessing officer in making reference under section 16.A of the Act to the Valuation Cell for A.Ys. 1983-84 to 1992-93 is hereby quashed, while action for making reference under section 16.A of the Act for referring the valuation to the valuation cell SCA/13218/1994 7/7 JUDGMENT for A.Y. 1993-94 is upheld. 10. The petition, therefore, succeeds to the aforesaid extent. The petition is allowed accordingly in the aforesaid terms. Rule is made absolute to the aforesaid extent, with no order as to costs. [D.A.MEHTA, J.] mathew [H.B.ANTANI, J.]