Yasoda Nandan, J.
1. The petitioners in these three connected writ petitions are assessees under the W.T. Act (hereinafter referred to as 'the Act')- Bireshwar Mookerji, Prag Dass Agarwal and Smt. Indra Mohini are the petitioners, respectively, in Civil Misc. Writ Petitions Nos. 96 of 1975, 936 of 1975 and 483 of 1976. The three petitions can be disposed of by a common judgment since the basic contentions arising for consideration in all of them are the same, though the learned counsel addressed the same arguments in different forms.
2. The material facts giving rise to these petitions are that all the three petitioners held nazul lands on lease and had made constructions thereon during the subsistence of the leases. It is alleged that the period of their leases had expired and their terms had not been renewed and consequently the petitioners had no right left in them, except the right to remove the malwa of the constructions existing on such properties. According to the petitioners, the lands which were held by them under the leases whose terms had expired and which had become liable to resumption by the State Govt. are not 'assets' within the meaning of Section 2(e) of the Act and were, consequently, not liable to be taken into account for the purpose of assessing the wealth-tax liability of the petitioners.
3. In respect of the different years, each one of the petitioners filed their returns. During assessment proceedings on the 26th September, 1974, the WTO, 'B' Ward, Allahabad (opposite party No. 2) made a reference (Writ Petition No. 96 of 1975) under Section 16A of the Act to the Valuation Officer, Allahabad, the relevant portion of which is in the following terms:
'Shri Bireshwar Mookerji, 1, G.T. Road, Allahabad, Lukerganj, in his/ her income-tax/wealth-tax/gift-tax return for the assessment year(s) has declared the value of immovable property consisting of a land and buildings situated at 7, Albert Road (11/25, 13/27, 13-A/29, Albert Road) Rs. 1,10,010 (43,970), Rs. 35,600 as on 2&3 Babapur, Lukerganj (IGT Lukerganj, (I) Kaladana, Allahabad.
........... (b) I am of the opinion that the fair market value of the asset exceeds the value as returned by more than Rs. 50,000.
(c) Having regard to the nature of the assets and other relevant circumstances, I consider it as necessary to refer the valuation of the asset to the valuation officer.
You are requested to estimate the fair market value of the asset at your earliest convenience and send a copy of your order to me and the assessee.
The assessment is likely to get time barred on......
A note indicating the grounds on which my opinion is based is on the reverse. The following documents filed by the assessee relevant to the valuation of the asset are sent herewith.'
4. The note indicating the grounds on which, the WTO formed his opinion is in the following terms :
'The Albert Road property has been valued at only 10 times of the rental income which appeared to be on the lower side keeping in view the acute shortage at Allahabad increasing rent (sic). While capitalising the value on rental basis the assessee has not considered the value of land.'
5. From the petition filed by the petitioner, Bireshwar Mookerji, it appears that the assessee had not filed any estimate by a registered valuer.
6. In Civil Misc. Writ No. 936 of 1975 and in Civil Misc. Writ No. 483 of 1976, the WTO, B-Ward, Allahabad, passed orders under Section 16A of the Act on the 8th August, 1975, and 4th November, 1975, respectively, more or less in the same terms as the one in Civil Misc. Writ No. 96 of 1975.
7. There are insignificant variations in the allegations in the various writ petitions but they have, no impact or relevance to the submission made and, consequently, we are not referring to them in this judgment.
8. Instead of appearing before the concerned Valuation Officers in compliance with the notices issued to them and participating in the proceedings before them, the petitioners filed the above-mentioned writ petitions in this court and succeeded in obtaining interim orders as a consequence of which proceedings before the Valuation Officers concerned have remained stayed since the year 1975 and assessment proceedings have not 'been completed.
9. Learned counsel for the petitioners have made basically two submissions in support of these petitions. It was firstly contended that before making an order of reference under Section 16A of the Act, it was necessary for the WTO concerned to have given to the petitioners a hearing and an opportunity of satisfying him that a reference to the Valuation Officer for a valuation of the properties which has ceased to be 'assets' within the meaning of Section 2(e) was uncalled for. It was urged that though there was no statutory requirement, the principles of natural justice required that such a procedure should have been followed by the officers concerned. It was next contended that clearly the nazul properties of which the petitioners were the lessees and whose terms of leases had expired had become liable to revert to the State Govt. and, consequently, the subject-matter of the leases had ceased to be 'assets' within the meaning of Section 2(e) of the Act and the petitioners were entitled merely to the malwa of the constructions standing thereon. It was submitted that a reference under Section 16A of the Act could be made by the WTO only for a valuation of 'assets' and hence his reference was beyond the scope of Section 16A(1). It was urged that the valuation of the properties in respect of which references have been made as estimated by the Valuation Officers were binding on him and, consequently, writ petitions under Article 226 of the Constitution were the only efficacious remedy available to the petitioners for impugning the order under Section 16A(1) of the Act.
10. We have heared learned counsel for the parties and, in our opinion, neither of the two submissions made has any substance. The two contentions raised necessitate an analysis of the true character of an order of reference and the consequential proceedings before the Valuation Officer. Section. 16A(1)(a) is in the following terms ;
'In a case where the value of the asset as returned is in accordance with the estimate made by a registered valuer, if the Wealth-tax Officer is of opinion that the value so returned is less than its fair market value.'
11. Sub-clause (b) of this provision states thus:
'In any other case, if the Wealth-tax Officer is of opinion-
(i) that the fair market value of the asset exceeds the value of the asset as returned by more than such percentage of the value of the asset as returned or by more than such amount as may be prescribed in this behalf; or
(ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do.'
12. These provisions vest the WTO with a wide discreption to make a reference to the valuation officer who is an expert in his sphere if he has formed the requisite opinion. The WTO in each one of the cases in clear and unambiguous terms has expressed the opinion that the valuation given in the returns filed by the petitioners were under-estimated. He has set out the circumstances on the basis of which he had formed his opinion. A reference to the Valuation Officer under Section 16A(1) is merely an interlocutory stage during the course of assessment proceedings as is clear from the use of the words 'for the purpose of making an assessment' occurring therein. The reference gives rise to proceedings before the Valuation Officer. Sub-section (2) of Section 16A requires the Valuation Officer to serve the assessee with notice requiring him to produce or cause to be produced on the specified date such accounts, etc., as might be required by him for the purpose of estimating the value of assets forming the subject-matter of the reference. If on examining such records, etc., the officer comes to the conclusion that the valuation declared by the assessee in the return made are correct, he, by means of a written order, communicates his finding to the WTO and the assessee as required by Sub-section (3). If on the other hand the Valuation Officer arrives tentatively at a contrary conclusion, he has to follow the procedure laid down in Sub-section (4). Sub-section (5) gives a right to the assessee, on receipt of a notice under Sub-section (4), to controvert the proposed or provisional estimates, made by the Valuation Officer, and communicated to him by means of the notice, through an objection. If the assessee chooses to contest the proposed estimate of the Valuation Officer, he has a right to lead evidence to establish that the valuation disclosed by him is correct. On a consideration of all such evidence and other relevant material the Valuation Officer who is required to act quasi-judicially may accept the assessee's valuation or may not. In the latter case, he makes his own valuation on the basis of evidence produced by the assessee and other relevant material. The valuation, as estimated by the Valuation Officer, either on acceptance, as correct, that disclosed by the assessee in his return or made by himself on rejecting thereof, becomes binding on the WTO according to Sub-section (6) who has to complete the assessment in conformity with such estimate.
13. We shall now straightaway consider the submissions made by learned counsel in their challenge to the legality of the order tinder Section 16A(1).
14. The principle audi alteram partem (hear both sides), in our opinion, applies only to proceedings in which is involved some element of decision making which may adversely affect the party concerned. The pre-requisite to the application of the principle of the right to be heard is that the proceedings should require the resolution of some controversy which might jeopardize some legal right of a party. The proceedings in which such a right is asserted must entail some enquiry resulting in some order which has at least a rudiment or millieu of adjudicatory action. On p. 127 (4th Edn.) of Administrative Law, Garner poses the question: 'When must natural justice be observed ?' and answers it by the statement 'perhaps when the rights of an individual are involved'. Applying these tests, we do not find it possible to accept the submission that the petitioners were entitled to any hearing before the respondent, WTO, who passed the orders under challenge.. The WTO while passing an order under Section 16A does so on the formation of the requisite opinion only to secure an estimate regarding the valuation from a statutory expert. The reference to the WTO (sic) has no adjudicatory element involved and of its own force can have no adverse effect on the assessee concerned. The procedure to be followed by the Valuation Officer is as elaborate as can be expected of any judicial proceedings. On material and evidence produced by the assessee, the Valuation Officer is absolutely free, in spite of the opinion of the WTO, to return a finding that the valuation disclosed in the return filed by the assessee is correct.
15. The second contention raised by the learned counsel for the petitioners, in our judgment, also has no substance. A reference to the Valuation Officer is made by the WTO 'for the purpose of making an assessment'. It is merely a step during the course of the assessment proceedings. He decides nothing when passing an order under Section 16A(1)(a). As is clear from Sub-section (6) of Section 16A, the WTO in his assessment order is merely bound to accept the estimates of the Valuation Officer. It is the WTO alone who is competent to decide whether the properties, in respect of which the Valuation Officer has given his estimate of valuation, are 'assets' or not, subject to taxation. The opinion of the Valuation Officer in this respect does not affect the power of the WTO to determine this question. At the stage when assessment proceedings re-commence before the WTO after the Valuation Officer has passed an order under Sub-section (3) or (5) of Section 16A, the petitioners have a right to urge and persuade that the valuations given by theValuation Officer are in respect of properties which are not 'assets' andhence not taxable. Neither any statutory provision nor any principle oflaw justifies the view that the WTO should proceed with the assessmentpiecemeal and decide at an intermediate stage as to whether a particularproperty is an 'asset' or not and hence liable to taxation or otherwise,if the assessees are aggrieved by the assessment orders passed they havea statutory right of appeal under Section 23 of the Act and thereafter under Section 24.
16. For the reasons given, we are of the view that these petitions are misconceived and are consequently dismissed. The respondents will be entitled to their costs from the petitioners. Interim orders in all the petitionsstand vacated.