1. This extremely well-argued petition under art. 226 of the Constitution question and challenges the jurisdictional validity of the notice dated 7th January, 1981, issued by the WTO under s. 17 of the W.T. Act, 1957 (hereafter, 'the Act'), seeking to reopen the petitioner's wealth-tax assessment for the assessment year 1976-77.
2. Hearing the rival submissions of the respective counsel, I do not find this to be a fit case for interference under art. 226 of the Constitution. All that has happened at this juncture is the issuance of a show-cause notice. Jurisdiction under art. 226 may, in a given case, warrant interference even at such a stage. There is no single litmus test in that behalf. But, in the facts here and considering the materials presently existing, it is difficult to hold that the WTO here had no reason to believe, within the meaning of s. 17 of the Act, that the net wealth chargeable to tax for the assessment year 1976-77 had escaped assessment and had, therefore, no jurisdiction to issue the impugned notice. Indeed, to the contrary. The valuation report dated 23rd January, 1978, obtained by the assessee himself for the very next succeeding assessment year 1977-78 showed the valuation of the property in question as on 31st March, 1977, at Rs. 5,05,000 (which valuation for just the previous year was shown at Rs. 1,17,793). More still, the assessee sold the property soon thereafter for this almost equivalent value and consideration of Rs. 5,00,000. If, on theses undisputed materials, the WTO states that he had reasons to believe, within the meaning of s. 17 of the Act, that the net wealth chargeable to tax for the assessment year 1976-77 had escaped assessment, it is well-night impossible to find fault therewith and equally difficult, therefore, to interfere in one's jurisdiction under art. 226 of the Constitution.
3. However, Mr. Mukherji, learned counsel for the assessee, placed strong reliance on para. 3(b) of Circular No. 3(WT) dated 28th September. 1957, issued by the CBR, under which the intention is expressed that a valuation once fixed need be disturbed for the two succeeding assessments unless there are special overriding reasons justifying a substantial revision for the valuation made. Contention consequently is that the valuation report submitted by the petitioner for the assessment year 1974-75 should prevail also for the two succeeding assessments and, therefore, also, the WTO was not entitled to reopen the assessment in question. This initially impressive argument was, however, rendered bereft all force and could not be purposed any further after Mr. Chatterjee, learned counsel for the respondents, produced before this court, Board's Circular letter No. 319/12/74-W.T. dated 5th April, 1974, under which the aforesaid para. 3(b) of the Board's earlier Circular No. 3(WT) dated 28th September, 1957, stood with-drawn. Reliance placed on the earlier circular could thus be of no avail.
4. The assessee's learned counsel next relied upon two decisions :
(a) Tulsidas Kilachand v. D. R. Chawla : 122ITR458(Bom) and (b) Brig. B. Lall v. WTO .
5. Qua Tulsidas Kilachand's case : 122ITR458(Bom) , the valuation report relied upon for reopening the assessment therein was one prepared by the I.T. Department's own Executive Engineer (Valuation). Not so here where the valuation report is the one obtained by the assessee himself and the sale transaction is the one effected on that basis also by the assessee himself. As observed in the cited judgment itself (p. 460) :
'It is now well settled that the jurisdiction to reopen the assessment orders which have become final can be exercised provided the officer has reason to believe from information in his possession that earlier orders escaped the net wealth chargeable to tax. Mere change of opinion of the succeeding officer is not enough...'
6. In the instant case, it is not a mere change of opinion but, as already noted, cogent materials, vis., the valuation report obtained by the assessee and the sale also effected by the assessee, coming to the notice of the concerned officer, on the basis whereof he had, within the meaning of s. 17(1) of the Act, information and reason to believe, in pursuance of which belief the impugned notice was issued. Tulsidas Kilachand's case : 122ITR458(Bom) thus fails to aid the assessee.
7. In Brig. B. Lall's case , the assessee had in the original proceedings been assessed on the basis of an approved valuers report and assessment completed. Reassessment proceedings were, however, commenced on the basis of, (i) report of valuation officer called for under s. 16A of the Act, and (ii) certain audit objection. It is on these basic facts that the Rajasthan High Court held that there was no provision or even remote legislative intent to refer the question of the valuation of a property, in a completed assessment, after acceptance of the valuation by a registered valuer and simply for the purpose of finding out whether his own suspicion, that the completed assessment was based on an under valuation, was or was not correct, and thus to enable him to create a ground or foundation for a reasonable belief or information under s. 17(1) of the Act. Altogether different indeed is the position here. There is no resort here to any valuation report called for under s. 16A of the Act nor any recourse to any audit opinion or objection. Here, on the other hand, as already seen, is a case where it is the assessee's own valuation report and the assessee's own sale transaction that constitute the crux. The Rajasthan ruling has thus no application to the facts here. It is clearly distinguishable. In this light, therefore, it is difficult to devalue and reject the contention of the respondents that one and the same property valued for assessment year 1976-77 at Rs. 1,15,000 or Rs. 1,17,793 could not have been suddenly valued by the assessee himself, at more than four times over, at Rs. 5,05,000 for the very next assessment year without there having been a gross undervaluation in the previous year.
8. It is needless to proceed further with the matter and deliver an in-depth judgment as to the merits of the proceedings consequent upon the impugned notice under s. 17 of the Act. Suffice it to note that this surely is not a case where the court can with justification hold the said notice itself as one without jurisdiction. As the materials stand in praesenti, the action in issuing it is faultless. It will, however, be open to the assessee, who will now appear in the proceedings pursuant to the said notice, to contest the same on all such grounds as he may be advised, and, which grounds, when urged, will be decided by the concerned authority on their own merits and in accordance with law uninfluenced by the observations herein which, in their very nature, are made in the context of the claim to have the impugned notice struck down as without jurisdiction ab initio.
9. So far as this petition is concerned, the same fails and is rejected.