WILLIAM DE NORONHA and Others vs ASSISTANT COMMISSIONER OF INCOME TAX and Others

When this writ petition was taken up an application for adjournment of the writ petition was made by Sri Shambhu Chopra on the plea that one of counsel for the petitioners, namely, Sri P. N. Bathan, has gone to the United States of America. However, as the petitioners have engaged and are represented by two counsel even if one of them is not available having gone abroad, that cannot be a valid ground for adjournment of the case as the other counsel for the petitioners is here and can well argue the petition. That being so, the application for adjournment is turned down.

Sri Prabhakar Mehrotra appears for the petitioners and Sri Bharatji Agarwal appears for the Revenue and they are heard.

By this petition, the petitioners seek quashing of the reference made by respondent No. 1 for the valuation of properties Nos. 17/9 and 17/9-A, the Mall, Kanpur, and also pray that the respondents be restrained from making any valuation on the basis of the reference made by respondent No. 1, vide his orders dt. 2nd February, 1995 and 10th July, 1995.

Counter-affidavit has been filed denying the averments made in the petition. No rejoinder affidavit has been filed. After hearing learned counsel appearing for the parties this petition is finally disposed of.

The only contention raised by learned counsel appearing for the petitioners is that the valuation of the petitioners properties which have been done under impugned orders dt. 2nd February, 1996, and 10th July, 1995, respectively, is contrary to the specific provisions of s. 16A of the WT Act (hereinafter referred to as "the Act"). It is submitted that where under the provisions of this Act read with the rules made under this Act any proceeding including an assessment proceeding in respect of any assessment year commencing from the date of coming into force of this section is pending, then only s. 16A of the Act be invoked and the authorities may direct for valuing of the property but neither any assessment proceeding is pending nor any other proceedings are pending, despite that proceedings for valuing of the petitioners property have commenced which is prejudicial to the petitioners and, therefore, the said proceedings be quashed. While filing the counter-affidavit controverting the submissions of learned counsel appearing for the petitioners it is submitted that one of the five partners, Sri Terrance De Noronha, was a partner in Garg Noronhas against which proceedings under s. 148 of the IT Act were pending. In such circumstances, it is contended that it is wrong to suggest that no assessment or reassessment proceedings are pending and in contravention of the provisions of s. 16A of the WT Act or those of s. 55A of the IT Act proceedings for valuing the petitioners property have commenced. Dealing with the point in issue elaborately it is contended in para 15 of the counter-affidavit giving adequate reply to the petitioners submissions that s. 16A of the Act applies with full force and the AO can make reference to the Valuation Officer regarding the petitioners property and s. 16A of the Act also provides for fair market value of the assets.

For an appraisal of the case in a nutshell it is necessary to reproduce the reply submitted by the respondent in their counter-affidavit, vide para. 15 :

"The action of the respondent is not arbitrary in making the reference under s. 16A(1) of the WT Act, s. 55A of the IT Act for the purpose of valuation of the properties No. 17/9 and 17/9A, Kurewan the Mall, Kanpur. The reference is perfectly legal and valid. Assertion of the petitioner that no assessment or reassessment proceeding under the IT Act, WT Act or GT Act was pending against the petitioners as such the reference proceedings was bad in law, is wholly misconceived. As already stated in opening paragraphs of this counter-affidavit, the valuation reference was made by respondent No. 1 with a view to determine the capital gains liability as provided under s. 45 r/w s. 9(1)(i) of the IT Act r/w r. 10 of the rules framed thereunder and to determine the liability of the deemed gift as per s. 4(1)(a) of the GT Act. Respondent No. 1 in his reference letter to the Valuation Officer dt. 2nd February, 1995, has also recorded reasons for such reference, as the property was located in the prime area of Kanpur which carries much higher market value of the land than that declared by the assessee, it is being referred to you for valuation purpose. The letter of reference dt. 2nd February, 1995, has already been annexed along with this counter-affidavit. It may be submitted that one of the five partners, Shri Terrance De Noronha was a partner in Garg Noronha against which proceeding under s. 148 of the IT Act was pending."

Thus, the action taken by the respondents does not suffer from any legal infirmity warranting interference in writ jurisdiction under Art. 226 of the Constitution of India.

Further, on the facts as emerging and referred to above, the decisions referred to by learned counsel appearing for the petitioners, V. K. JAIN Vs. WEALTH-TAX OFFICER AND ANOTHER., and LAXMI DEVI JAIN Vs. WEALTH-TAX OFFICER AND ANOTHER., (sic - not applicable) to the facts of the instant case and, therefore, are of no avail to the petitioners.

Thus, in our considered opinion, this petition lacks merit and it is accordingly dismissed. The stay order dt. 17th October, 1995, is hereby vacated.