Kamal Chand Kasliwal Vs. Wealth-tax Officer - Court Judgment

Excerpt:
1. this appeal is by the assessee and the only grievance of the assessee is against the invoking of action under section 17(1)(a) of the wealth-tax act, 1957 ('the act')-the facts are that the original assessment was completed on 25-3-1976 at a net wealth of rs. 65,000.this included the land and building owned by the assessee and used by the assessee for his business under the name and style of kamal & co.coach works and the value of the same was shown at rs. 58,937. during the course of assessment proceedings, the assessee agreed with the wto that the value of the said property be assessed at rs. 65,000 only and, accordingly, the assessment was completed.the assessment was reopened by applying the provisions of section 17(1)(a) by the wto on the ground that the same property was.....

Judgment:
1. This appeal is by the assessee and the only grievance of the assessee is against the invoking of action under Section 17(1)(a) Of the Wealth-tax Act, 1957 ('the Act')-The facts are that the original assessment was completed on 25-3-1976 at a net wealth of Rs. 65,000.

This included the land and building owned by the assessee and used by the assessee for his business under the name and style of Kamal & Co.

Coach Works and the value of the same was shown at Rs. 58,937. During the course of assessment proceedings, the assessee agreed with the WTO that the value of the said property be assessed at Rs. 65,000 only and, accordingly, the assessment was completed.

The assessment was reopened by applying the provisions of Section 17(1)(a) by the WTO on the ground that the same property was valued at Rs. 1,15,000 by the departmental valuer under Section 16A(5) of the Act for the assessment year 1969-70 and, therefore, the value of the same property for the subsequent year could not have been less. The WTO, therefore, came to the conclusion that the assessee had failed to disclose fully and truly all the material facts in regard to the fair market value of the above property and, thus, the wealth chargeable to tax has escaped assessment by reason of Underassessment. The departmental record of the assessee had been examined and the reasons for reopening have been brought out from out of the departmental record.

2. The contention of the assessee was that for the year under review there was no reference made to the Valuation Officer. The WTO did not exercise the option of making a reference to the Valuation Officer for the year under review. The reference to the Valuation Officer was made for the assessment year 1969-70, which was pending at the time when the assessment for the present year in appeal was concluded. The report of the Valuation Officer was obtained on 20-7-1977 for the valuation date 31-3-1969. According to the assessee, the dates are important, i.e., the valuation report for the earlier year was obtained almost one year and four months after the conclusion of the assessment for the present assessment year. The assessee had raised the objection before the A AC that there has been full and true disclosure by the assessee of the property and its value. The WTO had agreed at the time of original assessment to assess the property at Rs. 65,000 only and he did not choose to refer the matter to the Valuation Officer. It was submitted in appeal before the AAC that the valuation report for the assessment year 1969-70 was obtained much after the assessment had been concluded for the assessment year in question. It could under no circumstances be the basis for formation of a belief that the wealth that has been declared by the assessee is underassessed. The learned AAC, however, rejected the plea of the assessee and following his earlier order for 1969-70 allowed a relief of Rs. 25,000 for the year under review.

3. Before us, Mr. Mathur, the learned counsel raised the preliminary objection about relying on the Valuation Officer's report for the earlier year for formation of the belief that wealth has escaped assessment was bad as the wealth was disclosed and its value was also disclosed and the WTO had already made an addition to the value disclosed by the assessee by about Rs. 7,000. Further, he did not choose to refer the matter to the Valuation Officer. According to Mr.

Mathur, once he has chosen not to refer the matter to the Valuation Officer and makes an assessment by making some addition, then the report of the Valuation Officer for the earlier year cannot be the basis for reopening as that report cannot be binding on the WTO. Mr.

Mathur submitted even the Valuation Officer's report is very much after the date of completion of the assessment order and the valuation report is for the valuation date 31-3-1969 only. Since this is not the report relevant to the assessment year in question, it cannot be applied as it is. The WTO could not have applied this valuation report as this was obtained very much later to the assessment. He relied on Brig. B. Lull v. WTO [1981] 127 ITR 308 (Raj.) for the purpose that the Valuation Officer's report cannot be the information for formation of the belief about the property being underassessed.

4. The learned departmental representative relied on Trustees and Executors of the late Shri Shamji Kheta v. ITO [1984] 148 ITR 219 (Bom.) and Juggilal Kamlapat Bankers v. WTO [1984] 145 ITR 485 (SC) for the proposition and definition of the term 'full and true' disclosure.

According to the learned departmental representative, when the value of the property was determined at Rs. 1 lakh and above, how could the same property for the subsequent year be lower than Rs. 1 lakh. Therefore, the assessee did not make a full and true disclosure of the value. He, therefore, supported the order of the AAC and pleaded that there was no merit in the assessee's appeal and the same needs to be dismissed.

5. We have heard the submissions of the parties. The question that needs be considered by us is whether the Valuation Officer's report relevant to the assessment year 1969-70 though obtained subsequent to the completion of assessment for the assessment year 1970-71 could be said to be information for the purpose of formation of belief that wealth is underassessed or not. The identical issue was considered by the Rajasthan High Court in the case of Brig. B. Lall (supra). In this case, their Lordships have observed that the provisions of Section 17 applied to a case where assessments have been completed on the basis of the return of the assessee which was based on either the approved valuer's report or otherwise. They examined the issue of reference to the Valuation Officer under Section 16A(5). They have examined the purpose of bringing in Section 16A(5) by the Legislatures and also examined the functions of the Valuation Officer. Their Lordships have examined the conditions for making a reference to the Valuation Officer, which is reproduced below: The condition precedent or the pre-requisite conditions for providing jurisdiction to the WTO for making a reference to the Valuation Officer, as laid down in Section 16A are as under : 1. that the WTO wants to have the report of the Valuation Officer on the valuation of any asset for the purpose of making an assessment; 2. that this is required to be done because the value of the asset as returned in accordance with the assessment made by a registered valuer is, in the opinion of the WTO, less than its fair market value ; or 3. (a) the WTO is of the opinion that the fair market value of the asset exceeds the value of the asset as returned by the assessee by more than such percentage of the value of the asset or more than such amount as may be prescribed, or (b) that having regard to the nature of other relevant circumstances, it is necessary so to do. (p. 323) We are of the opinion that the foundation or bedrock of the jurisdictional facts necessary for giving jurisdiction under Section 16A is that the WTO must be seized of a return filed by the assessee containing valuation of his assets for which he is to apply his mind and adjudicate the valuation for completing the assessment. The situation contemplated in clauses (a) and (b) of Sub-Section (1) of Section 16A can be visualised only in a case of pending assessment and not a completed assessment. Once the assessment is completed and before the reassessment commences the WTO becomes functus officio for the purposes of Section 16A, as he is not in the process of completing any assessment, for the purpose of which he wants to check up from the Valuation Officer, the correctness of the valuation of the assets disclosed by the assessee in the return and which, according to him, are undervalued, looking to the fair market value or as per the standards laid down in clause (a) or clause (b) of Sub-section (1).

We have mentioned the above to emphasise that in spite of the amendment introduced by Section 16A, the revenue cannot use it for an enquiry to consider whether to reopen or not to reopen a completed assessment on the ground of alleged undervaluation of wealth. It may be that when we resort to strict and stringent interpretation of Section 16A, it may lead to consequences where the revenue may allege that there would be avoidance of some taxes.

However, this is primarily for the consideration of the Legislature and not of the court. Justice Shah in CIT v. A. Raman & Co. [1968] 67 ITR 11 (SC) said (p. 17) : Avoidance of tax liability by so arranging commercial affairs that charge of tax is distributed, is not prohibited. A taxpayer may the resort to a device to divert the income before it accrues or arises to him. Effectiveness of device depends not upon considerations of morality, but on the operation of the Income-tax Act. Legislative injunction in taxing statutes may not, except on peril of penalty, be violated, but it may lawfully be circumvented.

In substance, Section 16A curtails the jurisdiction of the WTO under Section 17(1) to ascertain the price of any asset. Once the WTO chooses to make a reference to the Valuation Officer, the valuation of the property made by the Valuation Officer is to be accepted by the WTO. A combined reading of Sub-section (1) and Sub-Section (6) of Section 16A would show that no discretion has been given to the WTO to reject or vary the report of the Valuation Officer. Contrary to it, if the WTO decides not to make a reference to the Valuation Officer, he will have no option but to accept the position that the returned value of the asset is not less than its fair market value.

The limited enhancement is only permissible Under clause (b) of Sub-section (1) of the section. Of course, the WTO can recall his order of reference but this can be done before the Valuation Officer starts functioning and then he has to follow either clause (b) or clause (c).

...We have, therefore, no hesitation in holding that apart from the other reasons given for rejecting this contention, the scheme of Section 16A in its entirety providing for appeals and finality is binding on the WTO and the provisions for giving of notice to the assessee before making the valuation and further provisions of giving the powers of the CPC the Valuation Officer for entry, inspection and calling of the record, etc., all lead to an inevitable and inescapable conclusion that such report can neither be termed nor be used as an administrative order or report. We are, therefore, firmly of the opinion that Section 16A has got no relevancy and cannot be applied after the assessment is complete and before reassessment has commenced, that is, for the purposes of consideration of the question whether a completed assessment can be reopened or not or in other words, to decide and consider the question whether the valuation accepted by the WTO was a case of wealth escaping assessment on account of undervaluation. Any reference made under Section 16A cannot lead to the reopening of a closed assessment under Section 17(1) as the report submitted by the Valuation Officer would be in an invalid reference and must be treated as a nullity in the eye of law, nonest and void abinitio.

Consequently, all the eight notices in these eight writ applications being based on the Valuation Officer's report obtained under Section 16A cannot be sustained and are liable to be quashed on this ground alone.

Exhibit R-1 order for issuing notices under Section 17 to the petitioners in all the above eight cases is based on the valuation report received under Section 16A of the Act wholly and solely. This report is non est as being without jurisdiction, illegal, null and void and, therefore, the entire fabric for reopening these proceedings falls flat and the impugned notices deserve to be quashed. The notices are based on an absence of the existence of any legal foundation which could have given rise to a valid belief or reason to believe, as contemplated by Section 17(1)(a) or could have provided information as contemplated by Section 17(1)(b) of the Act.

It can neither constitute information within the meaning of Section 17(1)(b) of the Act nor can it become a reason for the belief within the meaning of Section 17(1)(a) of the Act. These eight writ applications, therefore, deserve to be accepted on this short but surest ground as the notices, in view of our finding above discussed, are without any legal and valid foundation both under Section 17(1)(a) and (b) of the Act (pp. 323-329) On behalf of the revenue, it was also argued that even if it is assumed that the Valuation Officer's report under Section 16A cannot be called for for the purpose of consideration of reopening only, even then once it has come on the record of the WTO, he cannot be prevented from using it as an administrative or executive document and making it a reason for belief. It was negatived by their Lordships and they observed as under : ...This contention cannot be accepted for the simple reason that it is well-established law that if the law permits anything to be done in a particular manner or if it prohibits doing a thing in a particular manner, it cannot be allowed to be done in any other manner. The Supreme Court laid down in Narbada Prasad v. Chhaganlal AIR It is a well understood rule of law that if a thing is to be done in a particular manner it must be done in that manner or not at all.

Other modes of compliance are excluded.

We respectfully follow the above principle of law enunciated by the Supreme Court and hold that since the valuation report under Section 16A cannot be obtained for the prupose of deciding the question whether a completed assessment should be reopened or not on the ground that Section 16A cannot be applied in such cases, the same cannot be used by an indirect process of treating it as a non-statutory administrative or executive document. This would be circumventing the provisions of Section 16A and permitting the same effect even after holding that under Section 16A neither this report can be called nor it can be used. (p. 331) The crux of the ratio decidendi in the above judgments is that the assessee is required to disclose the primary facts which are material for the assessment purposes and once he has done so, he is not required to point out what inferences can be drawn from them. It was for the ITO to accept or reject these primary facts and to raise such inferences as he may deem proper and if he has not done so, it cannot become a ground for reopening under Section 17(1)(a) and (b) of the Act. Even the wrong acceptance, of a valuer's report by the WTO cannot become a ground for reopening because so far as the assessee is concerned, the report was produced and it was for the WTO to accept or reject it on any ground whatsoever. The emphasis under Section 17(1)(a) is on non-disclosure or failure to disclose.

Production of a valuer report in support of the material fact of the value of the the property is a disclosure and could never be termed as a nondisclosure, as a non-disclosure is an antithesis of a disclosure. (p. 339) The department's contention was that the valuation report received is enough for a reasonable belief that the assessee had failed to disclose the material facts truly and fully as a result of which the wealth escaped assessment. Their Lordships observed as under : We have given very careful and thoughtful consideration to the various principles enunciated in the important judgments mentioned above. The relevant portions extracted above from the judgments of the Supreme Court in Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191, CIT v. Bhanji Lavji [1971] 79 ITR 582, CIT v. Burlop Dealers Ltd. [1971] 79 ITR 609, Chhugamal Rajpal v. S.P. Chaliha [1971] 79 ITR 603, Gemini Leather Stores v. ITO [1975] 100 ITR 1, ITO v. Lakhmani Mewal Das [1976] 103 ITR 437, Parashuram Pottery Works Co.

Ltd. v. ITO [1977] 106 ITR 1 and of the Gujarat High Court in Poonjabhai Vanmalidas & Sons (HUF) v. CIT [1974] 95 ITR 251, establish that once the assessee discloses the primary facts without concealing any material fact there cannot be any basis for the belief that the assessee has failed to disclose material facts truly and correctly resulting in wealth escaping assessment. If from the primary facts more inferences than one could be drawn, it would not be possible to say that the assessee should have drawn any particular inference and communicated it to the assessing authority.

If any evidence can be discovered from the books and documents produced by the assessee which can be used against the assessee, the assessee is not under an obligation to inform the ITO about the possible inferences which can be raised against him. The omission or failure should be on the part of the assessee. The only obligation on the assessee was to place all the primary facts and once he places those primary facts, his obligation comes to an end. It is not for the assessee to put forward before the ITO a version contrary to the version that he was contending for. It is the ITO to make all necessary enquiries and draw proper inferences. If it becomes a case of oversight it cannot be said that income chargeable to tax has escaped assessment. So far as the adequacy of the grounds is concerned, the court cannot investigate but the existence of such a belief can be challenged. The expression 'reason to believe' does not mean a purely subjective satisfaction of the assessing authority. It can neither be a pretence merely to reopen the assessment and it must be held in good faith. If the assessing authority, relying upon the record, only makes a mistake the responsibility cannot be ascribed to an omission or failure on the part of the assessee.

Thus, according to their Lordships in the above case, once all the primary facts were disclosed truly and fully as required under law, the WTO is only required to make an assessment and once he makes an assessment by estimating the value, which valuation is a matter of estimate, and to some extent guess work also. Once all this having been done the assessee has discharged his duties truly and fully as regards material facts. According to their Lordships if the assessing authority, relying upon the record only makes a mistake, the responsibility cannot be ascribed to an omission or failure on the part of the assessee. Therefore as held in the above case there could be no non-disclosure by the assessee under Section 17(1)(a) as regards the true material facts. They Uhave also observed that 'it cannot be said that the WTO has received any information under Section 17(1)(b) simply because the Valuation Officer has given a different valuation of the property later on, on a reference by the WTO' (p. 346). The facts of the above case are somewhat similar to the facts of the case of the assessee in consideration. The only difference is that the case before their Lordships of the Rajasthan High Court was in regard to the reference which was made after the assessment was completed and in respect of those very assessment years for which reopening was made on the basis of the Valuation Officer's report. In the instant case, reference to the Valuation Officer was made for an earlier year and the report was received subsequent to the passing of the assessment order for the year under review after making a marginal addition to the wealth returned. When we compare the issues of the present case with a case before their Lordships, the situation is almost identical and, therefore, the case would be applicable to the facts of the case and, therefore, for the observations made by their Lordships of the Rajasthan High Court with which we respectfully agree and which is binding on us, we hold that the action initiated under Section 17(1)(a) in the instant case before us is bad in law and is, accordingly, quashed.

1. I have had the benefit of going through the order proposed by my learned brother and with great respect to the detailed discussion and the exposition of law made by him, I am afraid I have not been able to endorse his ultimate conclusion.

2. In order to appreciate the issue, the facts of the case need be briefly mentioned.

3. Proceedings for assessment of this very wealth were pending in relation to the earlier year, i.e., 1969-70 and a reference had already been made to the Valuation Officer under Section 16A by the WTO on 23-1-1976 requesting him to determine the fair market value of the property as on 31-3-1969.

4. The return of wealth was filed at a figure of Rs. 58,937 (which was also the figure mentioned in the earlier year and was below taxable limit) on 29-1-1971 and was still pending when on 22-3-1976 assessment was suddenly made at a net figure of Rs. 65,000 which again was not taxable. This was not on the basis of any enquiry or any other material but was based upon agreement only. When the question of valuation for the earlier year had been referred to the Valuation Officer for determining the market value of the property under Section 16A at least the assessee should have brought this fact to the notice of the WTO. A WTO ordinarily would not remember the entire facts of the case of each assessee, but an assessee would know about the stage of the proceedings of his own case.

5. In Trustees and Executors of late Shri Shamji Kheta's case (supra) it has been held that where in the absence of true and full disclosure of material facts, the ITO who is aware of it proceeds to make an assessment, the circumstances will not operate as a bar to subsequent reopening thereof. Further, in CIT v. Tara Chand Khanna [1984] 148 ITR 647 (Punj. & Har.) it has been held that it is the duty of an assessee not only to disclose particulars of assets belonging to him but also the estimated value thereof. In the circumstances from the fact of assessee disclosing the value of the property at Rs. 58,937, not informing the WTO about the factum of the reference in relation to the earlier year and getting an agreed assessment at Rs. 65,000 (which was not at all taxable) it can safely be presumed that the ITO was justified in believing that by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of his net wealth for the relevant year the same has escaped assessment.

6. Coming to the case relied upon by my learned brother, namely, Brig.

B. Lall's case (supra), the facts in that case were that the value of the share of the property owned by the petitioner was estimated by a registered valuer who had submitted detailed valuation report during the assessment proceedings. The same had been accepted by the WTO after discussing the case with the assessee's representative. The assessment order contained computation of the net wealth as per valuation certificates and reports. In case of one property, the price of open land and gallery has also been increased over the price mentioned in the earlier year. At the top of p. 314, their Lordships observed that it was after an intelligent and conscious application of mind that the WTO had assessed the petitioner and while doing so, had accepted the valuation of the Jaipur and Jodhpur properties as per valuer's certificate and report. In one case the basis for reopening was the revenue audit of the department and in relation to other cases the argument of the assessee's representative is contained in the penultimate paragraph, which reads as under : The first and the foremost contention of the learned counsel for the petitioners is that Section 16A can be invoked only for the purpose of making an assessment and this assessment can include the proceedings of reassessment also after the same has already been initiated but excludes the proceedings where the assessment is complete and such assessment has also not been reopened Section 17 so far.... (p. 317) Again the last paragraph contains the following observations by their Lordships : ...The language of Section 16A is 'for the purpose of making an assessment'. This would no doubt include reassessment but this contemplates a case where an assessment is not complete or final. It contemplates a case where no assessment has been made. It would also include a case where even after the assessment has become final, the matter has been reopened under Section 17 because that would also be a case of 'for the purpose of making an assessment'. It will not certainly include a case where the assessment is complete and such assessment has not been reopened under Section 17....But for that purpose without reopening a case under Section 17 a reference cannot be made under Section 16A. This position would also be made clear from Sub-section (6) of Section 16A.... Therefore, it is clear that such a power of reference can be exercised only when the assessment is not complete. In a case where the assessment is complete and it has not been reopened, this power under Section 16A cannot be exercised by the WTO. (p. 319) This makes the opening phrase 'for the purpose of making an assessment' extremely important and an opening gate through which and through which alone, the WTO can have access and approach to the Valuation Officer. The opening gate of Section 16A is wholly, solely and exclusively governed and contained in the phrase 'for the purpose of making an assessment' which, of course, can include the reassessment as per the definition of assessment as mentioned above.

(p. 324) One of the reasons for quashing the reopening can be gathered from the following observations made by their Lordships : ...It is not intelligible why the WTO did not get the valuation done as on 31st March of every year because if he wanted to adopt the rental methods, the rent of the properties were available to him, in the income-tax returns, which were admittedly filed by both the assessees.... (p. 330) In the present case, the most important fact to note is that a reference had already been made to the Valuation Officer in respect of an assessment for an earlier year which was pending and, therefore, the reference itself was perfectly valid in law. It is correct that in this case there are some observations of their Lordships which go to support the view taken by my learned brother but each case is an authority for what it decides and not for any collateral observations which may not apply to another case which has some different facts. I have already analysed the facts of this case at length above and in the exceptional circumstances of this case in which an agreed assessment had been made without waiting for the report of the Valuation Officer for the earlier year in respect of which a reference was already pending, the present assessment certainly was Under misapprehension and if the assessee managed to get it, it was a fraud on the policy of law.

7. Assuming for argument's sake that it be accepted that the assessee had not been guilty of not disclosing fully and truly all the material facts necessary for the assessment of his net wealth in the present case, the report of the Valuation Officer is at least an information within the meaning of clause (b) of Section 17(1) that notwithstanding that there had been no omission or failure as is referred to in clause (a) the net wealth of the assessee chargeable to tax had escaped assessment for that year. It is a matter of common knowledge that the prices of immovable properties in the city of Jaipur are rising from year to year. There can be no two opinions about the fact that the market price of the present property in a subsequent year must be higher than the market price in an earlier year. Therefore, the moment the report of the Valuation Officer which was in pursuance of a valid reference was received by the WTO, he could certainly have a reasonable belief that the wealth of the assessee had been underassessed in respect of the present year and, therefore, he could have at least reopened the assessment Under clause (b) of Section 17(1). The reopening of the present assessment, cannot, therefore, be said to be bad in law because at least there was definite information with the WTO that the wealth of the assessee had been assessed at a lower figure. In the earlier year, the report has been fully scrutinised and a definite value has been determined to be the market value of the property in dispute. Obviously the value in this year cannot be less. I would, therefore, hold that the value of the land and building in question, determined at Rs. 1,01,500 by the AAC was correct and the present appeal ought to be dismissed.

ORDER UNDER SECTION 24(11) OF THE WEALTH-TAX ACT, 1957, READ WITH SUB-SECTION (4) OF SECTION 255 OF THE INCOME-TAX ACT, 1961 As there has been difference of opinion between us, the following point is referred to the Third Member for his opinion Under Sub-section (11) of Section 24 of the 1957 Act, read with Sub-Section (4) of Section 255 of the Income-tax Act, 1961 : Whether the reopening of the wealth-tax assessment completed on 25-3-1976 by the Wealth-tax Officer was in accordance with law 1. The following difference of opinion between the learned Members of the Jaipur Bench in the above case was referred to me by the President as a Third Member for my opinion under Section 255(4) : Whether the reopening of the wealth-tax assessment completed on 25-3-1976 by the Wealth-tax Officer was in accordance with law 2. The assessment in this case was originally made on 25-3-1976 on a net wealth of Rs. 65,000, which included the land and building owned by the assessee and used by him for his business purposes. The value of land and building was shown at Rs. 58,937. The departmental Valuation Officer in connection with the assessment for the assessment year 1969-70 valued this property at Rs. 1,15,000 on a reference made to him under Section 16A(5). On the ground that the value of the same property for the subsequent year could not be less than the value of the property taken in the earlier year, the WTO reopened the assessment under Section 17(1)(a) and reassessed it. The question before the Tribunal was whether the reassessment was proper or not and whether the assessment was properly reopened or not. Implicit in this question was the further question whether the assessee disclosed fully and truly all the material facts necessary for making the assessment of the fair market value of the above property. The contention of the assessee before the Tribunal was that for the year under appeal there was no reference made to the Valuation Officer that the reference to the Valuation Officer made in the assessment year 1969-70 which was pending at the time when the assessment for the present year was concluded could not have been made use of. The assessee had disclosed fully and truly all the material particulars. The WTO did not choose to refer the matter to the Valuation Officer. Therefore, the valuation report obtained long after the assessment was made though it related to the earlier year could not be made the basis for the formation'' of belief that the wealth assessable for the year under appeal escaped assessment. Another contention raised was that the WTO applied his mind while making the assessment of this year because as against the value of Rs. 58,937 shown, its value was adopted at Rs. 65,000 and the further addition of Rs. 7,000 made must be the result of the application of mind by the WTO and having applied his mind in a particular way, he could not now choose to say that the assessee failed to disclose fully and truly all material particulars all because the Valuation Officer's value was found to be much higher. It was also contended relying upon a decision of the Rajasthan High Court in Brig.

B. Lall's case (supra) that the Valuation Officer's report could not be the information for formation of a belief that wealth had escaped assessment. The learned Accountant Member relying upon the decision of the Rajasthan High Court agreed with the assessee's contention that the reopening of assessment was bad. The learned Judicial Member felt that there was failure on the part of the assessee to disclose fully and truly all material particulars and, consequently, wealth escaped assessment and the reopening of the assessment was valid. He was of the opinion that the valuation report could be relied upon by the WTO and that the decision of the Rajasthan High Court was not properly appreciated and applied. He also held that the value placed upon this property by the Valuation Officer for the earlier year at Rs. 1,15,000 not being in dispute, the value of the same property for the subsequent year could not be less. This anomaly meant that there was undervaluation of the asset for the year under appeal. Thus, the difference of opinion as formulated above that arose between the learned Members was referred to me for my opinion.

3. On going through the facts and after considering the arguments addressed to me, I am of the opinion that the view taken by the learned Judicial Member is justified and correct and I would agree with it. The essence of the order of the learned Accountant Member is reliance upon the decision of the Rajasthan High Court in Brig. B. Lall's case (supra) which, according to him, applied to the facts of the case in full. The facts of this case were : reassessment proceedings for the years 1969-70 to 1973-74 were started against the assessment based upon audit objection and also on the report under Section 16A of the Valuation Officer, who had valued the property as on 1-4-1974. The assessee in the original assessment proceedings submitted reports by the approved valuers for each of the years Under consideration and the assessments were made after notice to the assessee and discussion with their authorised representatives. When the notice for making reassessment was issued, based upon the audit objection and report of the Valuation Officer under Section 16A, writ petitions were filed before the Rajasthan High Court to quash the notices for reassessment.

The High Court found in this case that the reference to the Valuation Officer was made by the WTO after the completion of the assessment. The question then arose whether the report of the Valuation Officer constituted information within the meaning of Section 17(1)(b) or provides a reason for the belief that wealth has escaped assessment due to assessee's failure to disclose material facts under Section 17(1)(a).. Since the reference to the Valuation Officer was made after the assessment was completed, the High Court held that Section 16A has no relevance and cannot be applied after the assessment is completed and before the reassessment has commenced. The Rajasthan High Court pointed out that there is no provision or even remote legislative intent to arm the WTO with the power to refer the question of valuation of property in a completed assessment after he has accepted the valuation of a registered, valuer simply for the purpose of rinding out whether his suspicion that the completed assessment was based on undervaluation was correct so as to enable him to create a ground or foundation either for a reasonable belief under Section 17(1)(a) or for information under Section 17(1)(b). In either case, the reference, in such circumstances, would be based on a sort of roving or fishing enquiry for either confirming or removing his suspicion and that is not permissible under Section 16A. It was for this reason that the Rajasthan High Court held that the Valuation Officer's report given on a reference made to him after the completion of an assessment can neither constitute information within the meaning of Section 17(1)(b) nor provide a reason for the belief that income has escaped assessment due to the assessee's failure to disclose material facts under Section 17(1)(a). The High Court pointed out that the report submitted by the Valuation Officer would be an invalid reference and the report must be treated as non est and void ab initio. The High Court also pointed out that a bald reference to audit objection would not be sufficient and could not form the basis for reassessment proceedings.

4. Now in this case the reference to the Valuation Officer was validly made while making the assessment for the assessment year 1969-70. There is no dispute on this fact. That reference was pending with the Valuation Officer at the time when the assessment for the year under appeal was being completed. The report given by the Valuation Officer as a consequence of a valid reference cannot be said to be non est in law or void ab initio. That report can, therefore, be acted upon for the purpose of making assessment for the assessment year 1969-70. In the light of that valuation report if it is found that for the subsequent year the value of the same property was taken at reduced value, that would give definitely information to the WTO that wealth had escaped assessment. The question would then be whether there is any failure on the part of the assessee to disclose fully and truly all material facts. It is now on record that no particulars whatsoever regarding the factory building were furnished while filing the return of wealth. Neither the particulars of the area of land, nor the particulars of built up area and the nature of construction were disclosed. The extent of the open land was not at all mentioned. In the absence of these particulars, which are vital for the purpose of arriving at correct market value of the property, it cannot be said that the assessee disclosed fully and truly all material particulars. I am, therefore, of the opinion that there was a failure on the part of the assessee to disclose fully and truly all the material facts necessary for making the assessment. Therefore, the reopening of the wealth-tax assessment by the WTO was in accordance with law and was not opposed to law. The Rajasthan High Court decision was in my opinion, not properly appreciated by the learned Accountant Member because that was a case where the valuation report was held to be nonest in law and could not constitute information because that was a report obtained on a reference made not in accordance with the . of law. But here the report obtained was in accordance with the provisions of law and a valid reference made to the Valuation Officer. This makes all the difference. I, therefore, agree with the view expressed by the learned Judicial Member. Now the matter will go before the regular Bench for disposal of the appeal according to the majority opinion.