SAMMUDEEN ROWTHER v. WEALTH-TAX OFFICER
[Citation -1984-LL-0707]

Citation 1984-LL-0707
Appellant Name SAMMUDEEN ROWTHER
Respondent Name WEALTH-TAX OFFICER
Court ITAT
Relevant Act Wealth-tax
Date of Order 07/07/1984
Assessment Year 1976-77
Judgment View Judgment
Keyword Tags reassessment proceedings • land and building method • residential purpose • method of valuation • valuation report • valuation cell • rental method • yield method • res judicata • maharaja
Bot Summary: 1977-78 the question of valuation of these properties, it is stated, was referred to the Valuation Cell of the IT Department and it is on the basis of this valuation report that the assessment for the year 1976-77 under appeal has been reopened. 1977-78 the AAC in the appeal preferred before him considered it necessary to reduce the value adopted for that year, which shows that the value adopted as per valuation report of that year itself cannot be regarded as proper valuation and in such a case it cannot be regarded as relevant and material for the assessment year under consideration, namely 1976-77, especially regard being had to the position that each year is separate and independent and determination of any issue in one year does not act as estoppel or res judicata for any other year. In support of the contention that in regard to rented properties the proper method of valuation is the rental basis and not land and building, reference is made and reliance placed on the decisions: T. Kanagasabapathy Pillai vs. CIT 51 ITR 146. In the first place, we are inclined to accept the assessee's submission that the subsequent valuation report in regard to the properties cannot constitute information for the purpose of reopening under s. 17(1)(b) at is that even the very basis adopted for balding the properties by the DVO is open to serious objection on the ground that the proper method is not land and building method in the case of properties let out, but only the rental method by capitalising the annual rent. In the present case it is seen that out so seven properties, six properties are let out properties and only one is partly used for residential purpose and partly for business. Thirdly, there is not evidence or material brought on record on behalf of the department with reference to actual sales of comparable properties which might justify the inference of the AAC that the rise in values of property was gradual so that there would not be a wide variation between the value adopted for 1977- 78 and the year 1976-77 under appeal and that the increase was not sudden within a short span. In the view we have taken in regard to the validity of reassessment proceedings, it is not necessary for us to go into the merits of the values adopted except to say that if we are to decide the question we would find it necessary to remit the case to the Departmental Authorities for determining the values afresh in the light of rental method i the absence of any better evidence in the shape of instances of comparable sales of properties.


This appeal is by assessee pertaining to his reassessment to wealth- tax under s. 17(1)(b) of WT Act for year 1976-77. It appears, original assessment was made on assessee for this year on 22nd Jan., 1977 in which values as returned by assessee in respect of certain properties amounting to Rs. 3,33,766 were accepted and it is stated that this is value adopted for earlier asst. yr. 1975-76. However, for asst. yr. 1977-78 question of valuation of these properties, it is stated, was referred to Valuation Cell of IT Department and it is on basis of this valuation report that assessment for year 1976-77 under appeal has been reopened. first contention raised by assessee against order of AAC is that valuation report relating to asst. yr. 1977-78 does not and cannot form basis for reopening assessment as it cannot be regarded as information within meaning of s. 17(1)(b). It is pointed out that even for asst. yr. 1977-78 AAC in appeal preferred before him considered it necessary to reduce value adopted for that year, which shows that value adopted as per valuation report of that year itself cannot be regarded as proper valuation and in such case it cannot be regarded as relevant and material for assessment year under consideration, namely 1976-77, especially regard being had to position that each year is separate and independent and determination of any issue in one year does not act as estoppel or res judicata for any other year. Again, it is argued that almost all properties which are subject matter of dispute in regard to valuation are let out except one property, which is partly used for business and partly for residential purpose and in such case proper method for determining value is on basis of rental or yield method, whereas value determined by DVO is on basis of land and building method. In support of contention that in regard to rented properties proper method of valuation is rental basis and not land and building, reference is made and reliance placed on decisions: (1) T. Kanagasabapathy Pillai vs. CIT (1964) 51 ITR 146 (Mad). (2) CWT vs. V. C. Ramachandran (1966) 60 ITR 103 (Mys). (3) CED vs. Radha Devi Jalan (1966) 67 ITR 761 (Cal). (4) Couthamchand Golada & Gyanchand Galada vs. CWT (1972) 86 ITR 292 (Mad). (5) Debi Prosad Poddar vs. CWT (1977) 109 ITR 760 (Cal). On question of what would constitute information for purpose of s. 17(1)(b) reference was made to two decisions of Supreme Court in Maharaja Kumar Kamal Singh vs. CIT (1959) 35 ITR 1 (SC) and CIT vs. A. Raman & Co. (1966) 67 ITR 11 (SC). ld. Departmental Representative contended in reply that valuation report of subsequent year does constitute proper information for purpose of s. 17(1)(b) as held in decision reported in K. G. Kemptur vs. Second WTO (1984) 39 CTR (Kar) 1: (1984) 146 ITR 611 (Kar). He also supported basis of valuation adopted. On careful consideration of facts and circumstances of he case and submissions of parties, we hold that there is considerable merit in assessee's objection. In first place, we are inclined to accept assessee's submission that subsequent valuation report in regard to properties cannot constitute information for purpose of reopening under s. 17(1)(b) at is that even very basis adopted for balding properties by DVO is open to serious objection on ground that proper method is not land and building method in case of properties let out, but only rental method by capitalising annual rent. decisions sated on behalf of assessee show that rental method would be proper one in such case. In present case it is seen that out so seven properties, six properties are let out properties and only one is partly used for residential purpose and partly for business. Secondly, it is seen that valuation adopted for asst. yr. 1977-78 itself has been substantially reduced in appeal, which shows that value determined by DVO itself is excessive and high. Thirdly, there is not evidence or material brought on record on behalf of department with reference to actual sales of comparable properties which might justify inference of AAC that rise in values of property was gradual so that there would not be wide variation between value adopted for 1977- 78 and year 1976-77 under appeal and that increase was not sudden within short span. Having regard to all these considerations, we hold that reassessment is not justified and is without jurisdiction. In view we have taken in regard to validity of reassessment proceedings, it is not necessary for us to go into merits of values adopted except to say that if we are to decide question we would find it necessary to remit case to Departmental Authorities for determining values afresh in light of rental method i absence of any better evidence in shape of instances of comparable sales of properties. In result, reassessment is cancelled and appeal is allowed. *** SAMMUDEEN ROWTHER v. WEALTH-TAX OFFICER
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