JUDGMENT R.K. Agrawal, J.
1. The Income-tax Appellate Tribunal, Delhi, has referred the following two questions of law under Section 27(3) of the Wealth-tax Act, 1957, hereinafter referred to as "the Act", for the opinion to this court :
"1. Whether on the facts and in the circumstances of the case, the hon'ble Tribunal was correct in law in its finding that the assessment order of the Wealth-tax Officer for year under consideration passed on March 27, 1979, after the receipt of the Valuation Officer's report was not erroneous insofar as it was prejudicial to the interest of the Revenue ?
2. Whether on the facts and in the circumstances of the case, the hon'ble Tribunal has not misdirected itself in basing its finding that the Valuation Officer's report under Section 16A not being in respect of the year under consideration, the Commissioner was not correct in considering the value of the immovable properties as on March 31, 1971, worked out therein as the basis for holding that the value adopted by the Wealth-tax Officer did not reflect the fair market value of the property within the meaning of Section 7(1) of the Wealth-tax Act ?"
2. Briefly stated the facts giving rise to the present reference are as follows :
3. The reference relates to the assessment year 1971-72. The valuation date is March 31, 1971. In the assessment of the respondent for the year under consideration the net wealth included the value of immovable properties owned by the respondent located at New Delhi, which was disclosed at Rs. 3,42,918 being half of the value of the said property as per the approved valuer's report. The valuation of the said property was also referred under Section 16A of the Act by the Wealth-tax Officer to the Valuation Officer in regard to the subsequent assessment years, namely, 1972-73 to 1976-77. The Valuation Officer had worked out the value of the property as on March 31, 1971, at Rs. 24,87,460. After the receipt of the said valuation report, the Wealth-tax Officer, however, framed the wealth tax assessment on March 27, 1979, taking the valuation of this property at Rs. 3,42,918. The Commissioner of Income-tax initiated proceedings under Section 25 of the Act and after giving opportunity of hearing to the respondents set aside the order of the Wealth-tax Officer with a view to enable him to reframe the assessment after taking into account all the material facts. The Commissioner of Wealth-tax referred to the valuation report submitted by the valuer which had not been taken into consideration by the Assessing Officer. The respondent preferred an appeal before the Tribunal which has been allowed on the ground that there was no reference under Section 16A of the Act for the year under consideration and, therefore, the valuation of the property in question made by the Valuation Officer was not a material for the Commissioner of Wealth-tax to pass an order under Section 25 of the Act.
4. We have heard Sri A. N. Mahajan, learned counsel for the Revenue and Sri P. K. Jain, learned counsel for the respondent-assessee.
5. Learned counsel for the Revenue submitted that the valuation report was very much available on the record before the Wealth-tax Officer at the time of making the assessment and, therefore, if he had ignored the same, the Commissioner of Wealth-tax was well within his jurisdiction to initiate the proceedings under Section 25 of the Act as the assessment order was not only erroneous but also prejudicial to the interests of the Revenue. He relied upon the following decisions :
(1) CWT v. Niranjan Kumar Hirjee [1993] 201 ITR 183 (Cal) ; and (2) CIT v. Shree Manjunathesware Packing Products and Camphor Works [1998] 231 ITR 53 (SC).
6. Sri P. K. Jain, learned counsel for the respondent submitted that the Wealth-tax Officer had not made any reference for the assessment year in question under Section 16A of the Act to the Valuation Officer, therefore, had not committed any error in valuing the property as per the valuation report submitted by the respondent. According to him, the Commissioner could not have taken into consideration the valuation report submitted under Section 16A of the Act for holding that the order was erroneous and prejudicial to the interests of the Revenue as the property has been assessed at a very low figure.
7. Having heard learned counsel for the parties, we find that the Valuation Officer in his report had worked out the value of the property as on March 31, 1971, at Rs. 24,87,460. The Wealth-tax Officer while framing the assessment on March 27, 1979, had taken the value of the property in question at Rs. 3,42,918. It is true that for the assessment year in question, i.e., 1971-72, no reference was made under Section 16A of the Act to the Valuation Officer but the fact remains that the Valuation Officer had submitted his report dated March 3, 1979, valuing the property at a much higher figure on the relevant valuation date. The Wealth-tax Officer had not considered the said report while framing the assessment.
8. In the case of Niranjan Kumar Hirjee [1993] 201 ITR 183 the Calcutta High Court has held that even if the subsequent fact, the sale of the property could be taken into account, the facts as were relevant at the material time show that the valuation was made correctly by taking the recognised method of valuation in determining the market value of a property occupied by the assessee. The Tribunal has taken into account the rent when the property was let out and if such letting out value was also considered, even then it could not be said that the value which was adopted to determine the valuation of the property at the material time was not correct or proper. It is not the case of the Commissioner of Wealth-tax that the method which was adopted by the Wealth-tax Officer at the material time in determining the value of the property was not the appropriate method or the correct method.
9. In the case of CIT v. Shree Manjunathesware Packing Products and Camphor Works [1998] 231 ITR 53 the apex court has held that the word "record" would mean not only the record as it stood at the time when the order in question was passed by the Assessing Officer but also the records as it stood at the time of examination by the Commissioner. Thus, even if for a moment it is taken that the report of the Valuation Officer dated March 3, 1979, was not on the record before the Wealth-tax Officer while framing assessment for the assessment year 1971-72, the said report can very well be taken into consideration by the Commissioner of Wealth-tax while initiating the proceedings under Section 25 of the Act.
10. In view of the foregoing discussion, we answer both the questions of law referred to us in the negative, i.e., in favour of the Revenue and against the assessee. However, there shall be no order as to costs.