1. This appeal by the assessee, Shri S.M. Mohammed Yousuff, relates to his wealth-tax assessment for the year 1976-77. The two objections raised in the grounds of appeal pertain firstly to the valuation of the property held by the assessee at No. 40, Sembudoss Street, Madras, with particular reference to the effect of the notice said to have been issued in respect of it some time during the year ended 31-3-1976 under Section 6 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMFOP Act) and secondly, to the denial of the exemption claimed by the assessee in regard to his share of interest in the agricultural property held by the firms in which he was a partner.
2. So far as the second objection is concerned, the claim of the assesses; has been negatived by the departmental authorities on the ground that since the agricultural properties are held by the firms of which the assessee is a partner, the exemption contemplated is to be considered in the hands of the firm alone while computing the interest of the assessee and not separately in the assessee's hands. However, at the time of hearing it was conceded by the learned departmental representative that the decision of the Special Bench of the Tribunal in the case of L. Gulabchand Jhabakh and J. Anoopchand Jhabak [WT Appeal Nos. 372 & 373 (Mad.) of 1979, dated 31-1-1981] support the contention of the assessee, though the department has not accepted the decision. In the circumstances, following the Special Bench order of the Tribunal and agreeing with it, we accept the assessee's objection and direct exemption accordingly.
3. Coming to the question of valuation of the property, the contention of the assessee firstly is to the computation or method of valuation adopted by the departmental authorities and secondly to the refusal of the departmental authorities to accept the submission that the effect of service of notice under Section 6 of the SAFEMFOP Act in respect of the property is to considerably depress the value of the same. We have been furnished with an extract of the provisions of the Act to highlight the submission of the learned representative of the assessee.
It is pointed out that any transfer of the property in respect of which notice under Section 6 of the said Act has been issued is not recognised and will be declared null and void in the event of its being forfeited under its provisions. The learned departmental representative contended that while the provisions of the said SAFEMFOP Act may or may not depress the value of the property in the hands of the assessee as the owner, it has nothing to do with the determination of the market value of the property and that inasmuch as the assessee does not dispute that the property belongs to him and he is the rightful owner thereof, the considerations as to the effect of notice under Section 6 is not relevant. Besides relying on the decision of the Mysore High Court in U.S. Nayak v. CWT  68 ITR 171 adverted to by the AAC in his order, the learned departmental representative also cited in support of his case the decision of the Supreme Court in Pandit Lakshmi Kant Jha v. CWT  90 ITR 97.
4. We have carefully considered the facts and the rival submissions of the parties. We do find considerable merits in the assessee's contention as to the effect of proceedings under the SAFEMFOP Act by the service of notice on the assessee in respect of the property in depressing its value considerably. Under Section 6 of the said Act if the competent authority has reason to believe that all or any of the properties held by the concerned person to whom the Act applies are illegally acquired property, it may serve a notice upon such person to indicate the sources of his income, earnings or assets by means of which he had acquired the property, evidence in support of the same and why such property should not be declared to be illegally acquired property and forfeit it to the Central Government. Under Section 8 of the Act, the burden of proving that any property specified in the notice under Section 6 is not illegally acquired property shall be on the person affected. Section 11 of the Act declares that any 10 of the transfer of the property subject to a notice under Section 6 or under section said Act by any mode whatsoever shall be ignored for the purpose of proceedings under the Act and if subsequently the property is forfeited to the Central Government under Section 7, then the transfer shall be deemed to be null and void. It is not disputed in the present case that the property is subject to a notice under Section 6 as on the relevant valuation date. In these circumstances, we have no hesitation in holding that the fact that the property was subject to proceedings by issue of a notice under Section 6 would considerably affect the market value thereof as no purchaser would dare to take the risk of purchasing the property in such a situation by paying what normally it would fetch, but for the proceedings under the SAFEMFOP Act. At the time of hearing of the appeal it has also been brought to our attention by the learned representative of the assessee that this question of the effect of proceedings under Section 6 had come up for consideration by the Tribunal in another case and the Tribunal accepting the submission on behalf of the assessee had remitted the matter to the ITO to re-determine the value of the concerned property after taking into consideration the effect of the notice and proceedings under the SAFEMFOP Act. The assessee submits that in the instant case also, the matter may be remitted to the WTO for redetermining the value of the property after taking into consideration the effect of the proceedings under SAFEMFOP Act. The learned departmental representative also agreed, subject to his contention that the proceedings under SAFEMFOP Act will not impinge on the market value of the property.
5. As we have already stated, we accept the contention of the assessee that the proceedings and notice under the SAFEMFOP Act issued in this case would considerably affect the value of the property and in determining the value necessarily this fact has to be taken into consideration. Both the decisions relied on by the departmental representative, one of Mysore High Court and the other of the Supreme Court, are totally distinguishable not only in regard to the facts but also in regard to the points that arose for consideration. As a matter of fact, in the Mysore High Court decision the Tribunal considered that the dispute as to the title was a matter to be considered in fixing the market value and the order of the Tribunal was upheld by the Mysore High Court. What the Court held was that the fact that there was a dispute as to the title and the assessee may lose the property if the case is decided against him, would not be relevant except in fixing the market value. In the present case, the assessee has referred to an order of the Tribunal, Madras Bench 'C' dated 30-12-1982 in a group of cases [VVT Appeals No. 375 (Mad.) of 1982 etc.] in the case of S.M.Kabir where the case was sent back to the WTO with the following observations: The provisions of the SAFEMFOP Act are onerous, risky or hazard involved is also great so as to depress the value of the property considerably if not to nothing as contended by the assessee. The Calcutta High Court has also held likewise in the case of ITO v. Anup Kumar Kapoor  125 ITR 684. Therefore, there is force in the contention of the assessee and the authorities are not justified in rejecting the contention of the assessee. The point regarding the extent of depression in the value of the property has to be considered by the Wealth-tax Officer keeping in view all the facts and circumstances of the case and also the decision of the Mysore High Court cited (supra) wherein 25 per cent discount has been upheld. Since both the parties have expressed a desire that the matter should be restored to the Wealth-tax Officer for reconsideration, we direct the Wealth-tax Officer to go into this matter in accordance with law.
We would, following the earlier order of the Tribunal mentioned above, restore the matter to the WTO for considering the matter afresh and since the matter is going back to him, it would be open to the WTO to consider which he must do, all the other submissions of the assessee in regard to the method or basis of computation of the value of the property in other respects also.