1. This group of ten appeals, though relate to the two assessees are heard together and disposed of by this common order for the sake of convenience, because they raise a common point for decision arising out of the common order dated 25-6-1981 of the AAC relating to all the present ten appeals.
2. The first common ground taken in these appeals is that the AAC erred in making an ex parte order holding that nobody attended on behalf of the appellants even though the representative of the appellants attended before him on the date fixed for hearing, namely, 25-6-1981.
The next common ground in these appeals is that the AAC erred in holding that the only contention raised in the grounds of appeals before him was whether the interests of the appellants in the properties should be valued by an actuary or by an architect when, in fact, several other issues were also raised before him, which have not been adjudicated by him. The last common ground taken in these appeals is that having regard to the various contentions raised before the Valuation Officer by the assessees, the valuation disclosed by the appellants should have been accepted.
3. The assessee, Shri Vamanbhai Bhagwandas, is an individual. The assessment years involved in these appeals are 1970-71 to 1974-75, both inclusive. The other assessee, Shri Ravindra Bhagwardas, is also an individual. The assessment years involved in his case are also that same five assessment years as stated earlier in the case of Shri Vamanbhai Bhagwandas. These two assessees are joint owners, along with other parties, of certain immovable properties. The WTO did not accept the valuation of the immovable properties as returned by the assessee.
He referred the question of valuation of those immovable properties to the Valuation Officer, who gave the valuation in his report dated 28-10-1975. The WTO completed the assessments adopting the valuation reported by the Valuation Officer.
4. The assessees appealed to the AAC, and raised several grounds as enumerated in the order of the AAC. The AAC observed that the appellants appeals were fixed for hearing on 25-6-1981 and notice of hearing was duly served but nobody attended on behalf of the appellants, and so, he proceeded to decide the appeals on the basis of materials already available on record. He then reproduced grounds numbered 2 to 6 taken before him and observed that the contention of the assessee before him was that the rights of the assessees in the immovable properties under consideration should have been valued by an actuary and not by a Valuation Officer. He then proceeded to consider that contention and found no merit in the same. He concluded his order saying: 'since no other point has been raised, the appeal is dismissed.' 5. Shri F.P. Sarkari, the learned representative for the assessees, urged before us that the action of the AAC was not justified. He stated that the AAC had already heard the appeals on 30-3-1981 and 15-4-1981, but did not pass any order on the basis of those hearings. After he was transferred, the AAC who succeeded him fixed the hearing on 25-6-1981 for the first time. The said notice was received by the assessees on 22-6-1981. On 25-6-1981 Shri F.P. Sarkari himself attended before the AAC at 2.30 pm while the notice of hearing stated that the hearing was fixed at 12.30 pm. Shri Sarkari regretted the delay and informed the AAC that the delay was due to the fact that he was held up before the Tribunal, and requested to be heard at 2.30 pm in the interest of justice. The AAC declined to hear the assessees on the ground that the appeals fixed for hearing in the morning were already disposed of.
Thereupon, Shri Sarkari requested him to hear at 2.30 pm as the order was either not dictated or not signed by that time. The AAC, however, declined to hear him and passed an ex parte order, dated the same day, namely, 25-6-1981. Shri F.P. Sarkari stated before us that all the aforesaid happenings on 25-6-1981 were put in writing in the letter dated 25-6-1981 addressed to the AAC. He took us through a copy of the said letter which has been filed alongwith the memorandum of appeals before us. Shri Sarkari urged before us that the AAC should have condoned the slight delay of one hour (excluding the lunch hour) in the interest of justice specially when the delay was occasioned due to the fact that he was held up in the Tribunal. Further, he urged that the various contentions raised before the WTO and the Valuation Officer, including the expert opinion from Shri N.A. Palkhivala, have not been considered by the AAC. He further pointed out that the main ground relating to the excessive valuation of the immovable properties by the Valuation Officer has not been considered by the AAC. According to him, the assessee did not take the only ground as stated by the AAC in his order. In fact, the ground considered by the AAC was only one of the several grounds taken before him. In any case, he stated that the main ground regarding the reasonableness of the valuation adopted by the WTO has not been considered by the AAC. Hence, he submitted that the ex parte order of the AAC might be set aside and the matter may be decided on merits after hearing the assessee.
6. Shri R.N. Vaze, the learned representative for the department, no doubt, tried to support the order of the AAC. However, to a query put by us as to whether the AAC has heard the Valuation Officer as required under Section 23(3A) of the Wealth-tax Act, 1957 ('the Act'), he replied in the negative. He fairly stated that if the Tribunal wanted to send back the case to the AAC for being decided afresh in accordance with law, he could have no valid objection in the interest of justice.
7. We have considered the contentions of both the parties as well as the facts on record. We find that the letter dated 25-6-1981 from the assessee to the AAC is on record and it records the happenings of the same day. It is evidently a contemporaneous document. Under the facts and circumstances stated therein, we are of the opinion that the AAC could have condoned the slight delay in the interest of justice specially when it was first hearing and the counsel of the assessee was held up before the Tribunal. The established legal principle is that an appellate authority should give all reasonable opportunities of being heard to the appellant and should not give the impression of shutting out an appellant from having his say before he passes his appellate order. In this background, the stand of the learned AAC appears to us to be too rigid and hyper-technical.
8. Quite apart from the above, we find that the order of the AAC cannot be sustained on two other grounds. Firstly, he has not heard the Valuation Officer when the subject-matter of appeal before him was the valuation of immovable properties, which have been valued by the Valuation Officer. Sub-clause (a) of Section 23(3A) states that in a case where such valuation has been made by the Valuation Officer under Section 16A of the Act, the AAC shall give the Valuation Officer an opportunity of being heard. The facts of this case, therefore, required that an opportunity of being heard should have been given to the Valuation Officer. This has not been done and so, the order of the AAC suffers from a legal infirmity in this regard. Secondly, the ground No.6 taken before him clearly questions the propriety of valuation adopted by the WTO in the assessment orders. In spite of such a clear ground before him, the AAC has proceeded on the erroneous assumption that the only ground taken before him was that the right in the property under consideration should have been valued by an actuary and not by any body else. It, therefore, follows that ground No. 6 has not been adjudicated upon by the AAC. For the above reasons, we vacate the orders of the AAC and restore these ten appeals to his file for being decided afresh in accordance with law after giving reasonable opportunities of being heard to the parties concerned.
9. In the result, the ten appeals are to be treated as allowed for statistical purposes.
1. I have gone through the order of my learned brother, Shri Rotho, the Accountant Member, carefully and cautiously. But it is my misfortune that I fail to agree with him. Therefore, I say my say as under.
2. The preliminary issue to be determined in these matters is whether the AAC was justified in disposing of the appeals on 25-6-81 vide his consolidated order of even date as ex parte.
It is an admitted position that the notice of hearing was served and received by the assessee for the date fixed on 25-6-1981 with the place and time. The assessee, in pursuance of the notice of hearing, engaged the firm of chartered accountants and one of the partners of this firm, Shri Sarkari, had to appear in these matters before the AAC on behalf of the assessee at the appointed time, place and date. It is an admitted fact that Shri Sarkari did not appear at the appointed time before the AAC on 25-6-1981. Shri Sarkari also admitted that he failed to do so as he was busy in the Tribunal in other matters, and he finished his work in the Tribunal at 12.00 noon and, thereafter, he went to take his lunch. After taking lunch, he went to the AAC at 2.30 pm, who told him that he had decided the appeals as ex parte and, as such, he could not rehear these matters on the request of Shri Sarkari.
At the time of hearing the Bench asked the question to Shri Sarkari whether the office of the AAC was situated in the Income-tax department Building (Aayakar Bhavan) opposite to that of the Tribunal and he answered it in the affirmative. He also answered in the affirmative that the matters before the AAC were fixed at 12.30 pm and he was in a position to send another partner from the firm to inform the AAC, stating that in these matters, the assessee had to be represented by Shri Sarkari and he would come after finishing his work in the Tribunal, which he failed to do. It is also admitted by Shri Sarkari that when he went to the office of the AAC, then he was not hearing any appeal fixed for that day; rather, he was dictating the orders in the heard matters.
3. Therefore, from the aforesaid facts, it is more than manifest that the AAC has decided the matters as ex parte, in accordance with the law and procedure and he is within his rights not to hear Shri Sarkari if he has dictated the order, but did not sign prior to 2.30 pm.
The only remedy for Shri Sarkari or the assessee is to make an application, stating, sufficient cause or reason for non-appearance on the appointed day and time before the AAC and thereby praying that the ex parte order be set aside and the matters be heard afresh. If the assessee or Shri Sarkari has satisfied the AAC for non-appearance at the appointed time and date, then, and then only, the AAC can set aside the ex parte order and that, too, on hearing the ITO. After all this, he can fix the matters for hearing, otherwise not.
Therefore, the onus is upon the assessee to prove that the assessee was prevented under sufficient cause or reason to appear before the AAC at the appointed time, date and place, before him in the matters decided as ex parte. There is no question that sufficient cause or reason is there if the hearing before him is the first hearing. It is a settled law that each day of delay or absence should be explained. Therefore, first hearing cannot be a ground for setting aside the ex parte order, an ex parte order can be set aside if the non-appearance on the date and time of hearing is explained or proved to be under sufficient cause or reason.
4. Therefore, we have to see whether Shri Sarkari was prevented under sufficient cause or reason to appear before the AAC on the appointed day and time.
The learned Accountant Member has relied on the application dated 25-6-1981, for the purpose. A bare reading of this application shows that the assessee and his representative have criticised the conduct of the AAC in deciding the matters as ex parte, which, too, is belied by the fact that the assessee has admitted that notice of hearing in these matters was served and received by the assessee. Therefore, it was the duty of the assessee or his representative to inform the AAC that on account of Shri Sarkari, being busy in the Tribunal, he should either adjourn the matters or hear these in the afternoon; which is not done either by the assessee or by Shri Sarkari, who were bound to do it and very well in a position to do so; as Shri Sarkari is belonging to a firm of chartered accountants. Moreover, the office of the Tribunal and that of the AAC are situated opposite to each other and in between there is a road, which can be crossed, within minutes to be in the office of the AAC. The time required from the office of the Tribunal, cannot be more than 10 or 15 minutes. Therefore, on the admission of Shri Sarkari, he can be there at 12.15 pm as he has stated that all his matters before the Tribunal were finished before or at 12.00 noon. I fail to understand that why Shri Sarkari preferred to take lunch than to go to the office of the AAC for which there was no difficulty on the facts and circumstances of the cage, particularly when the lunch hour in the department is after 1.15 pm and the time fixed in the matters was 12.30 pm. Moreover, there is no evidence on record that actually he was busy in the Tribunal, as stated above, and, even on asking, he failed to provide the details of matters fixed in the Tribunal.
Further, it is an admitted position that the AAC was not hearing the matters of other assessee at 2.30 pm rather he was dictating the orders. Therefore, if in this situation, the AAC did not agree to the request of Shri Sarkari to rehear these matters, then there is no rigidity in him; rather he has acted in a prescribed manner and I appreciate it.
No doubt, the judicial functionary should not be either liberal or rigid, but he should be a balanced one. Therefore, a judicial functionary, who is deciding the matter in accordance with the law and established procedure, cannot be said to be rigid, rather he is supposed to be so, by the law and established procedure.
5. Therefore, in view of these reasons, I hold that there is no sufficient cause or reason for non-appearance before the AAC at the time of hearing of the appeals, by the assessee or his representative; hence, he is justified to dispose of the matters as ex parte.
6. The ex parte orders cannot be set aside on the ground that he has not given an opportunity of being heard to the Valuation Officer and, therefore, the mandatory provision of the Wealth-tax Act on the subject violated. The reason is that in considering the impugned order as are justified, the Tribunal has to see whether the assessee was prevented under sufficient cause or reason for non-appearance before the AAC at the appointed time and if the assessee failed to prove it (that he was prevented to appear on the appointed date and time before him under sufficient cause or reason), then the ex parte order is justified. Such an order cannot be set aside on the plea that no opportunity of being heard was given to the Valuation Officer as it is the grievance of the Valuation Officer or department and, as such, the assessee cannot raise it. Moreover, there is no occasion to look into it as the AAC, in disposing of the matters, as ex parte, has followed the valuation report of the Valuation Officer; and being so, if there is no notice to the Valuation Officer, as required under the law, then his ex parte order is not at all illegal. It cannot be taken likely, if Shri Vaze, the learned departmental representative, says so, stating that he has no objection for setting aside the order of the AAC on account of it, which concession is neither required to be recognised by law nor he is within his powers to do so, since he is supposed to act in the interest of the party to whom he represents, i.e., the department.
7. The impugned order of the AAC cannot be set aside on the ground that he has not considered all the grounds in appeal, as he is not supposed to do so, particularly in ex parte decision as in such situation, he is to rely on the case record before him and the assistance rendered by the respondent and vice versa.
The sum and substance of the order shows that he has considered all the grounds and rejected these, as he has confirmed the order of the assessing authority. Apart from it, his order is justified, as the valuation adopted by him is in accordance with the valuation report of the Valuation Officer, which is an opinion of an expert and a documentary evidence for the purpose of wealth-tax proceedings.
Therefore, ground No. 6 in the appeal has been decided by the AAC, on consideration of the valuation report and it cannot be set aside on the basis of surmises and conjectures, as made by Shri Sarkari, by way of making contentions at the time of hearing, recorded by my learned brother, in his order. Further, the impugned ex parte order can be set aside on merits only, if the Tribunal comes to the conclusion that the impugned quantum of appeal is excessive or unfair, which is not at all so, rather fair and reasonable (sic).
8. Therefore, in view of the above discussion and reasons, I hold that that the AAC is justified in disposing of the appeals as ex parte in the manner he has disposed of. Hence, I confirm his order.
1. There being a difference of opinion between two Members, the following question was referred to the Third Member: Whether, on the facts and in the circumstances of the case, the ex parte orders passed by the Appellate Assistant Commissioner deserved to be vacated with the direction to dispose of them afresh after giving a reasonable opportunity of being heard to the parties concerned, or deserved to be upheld.2. The assessees had filed appeals before the AAC against the WTO's orders for the above assessment years. On 25-6-1981 the AAC had fixed the case for hearing and the notice had also been properly served on the assessees. Since nobody attended on that day on behalf of the assessees, the AAC decided the appeals ex parte. The main point involved in these appeals related to the valuation of the assessees' right in certain leasehold property. The AAC confirmed the valuation figure adopted by the WTO. The matter came on appeal before the Tribunal, The assessee had challenged both the ex parte appeal decision as also the decision on merits. With regard to the latter, it was pointed out that the AAC had not taken into account several documents, items of evidence, etc., which were produced before the WTO in arriving at the valuation of the assets. The learned Accountant Member held that in making an ex parte decision, the AAC was too rigid and hyper-technical. On the merits of the decision itself, he held that the AAC not having heard the Valuation Officer as required under Sub-clause (a) of Section 23(3A), his decision suffered from a legal disability.
The grounds before the AAC clearly questioned the propriety of the valuation adopted by the WTO. The AAC, however, confined himself to a limited ground, viz., whether the right in the property should have been valued by an actuary or any one else and thus according to the learned Accountant Member all the grounds had not been adjudicated upon by the AAC at all. He vacated the order of the AAC and restored the appeals to his file for being decided afresh in accordance with law after giving a reasonable opportunity of being heard to the parties.
3. The learned Judicial Member on the contrary held that in spite of the notice having been served on the assessee and appointment having been fixed at 12.30 pm on 25-6-1981, the assessee's learned representative appeared before the AAC only at 2.30 pm. According to the learned Judicial Member, the non-appearance on the date and time of the hearing had not been explained as due to sufficient reasons. The AAC was, therefore, justified in disposing of the matter ex parte. With regard to the mandatory provisions requiring an opportunity to be given to the Valuation Officer, the learned Judicial Member held that the ex parte order cannot be set aside for this reason. The assessees on their part could not raise the non-availability of an opportunity to the Valuation Officer which could be a grievance of the department or the Valuation Officer himself, as an argument to challenge the ex parte order. The learned Judicial Member also mentioned that even if the departmental representative did not object to the setting aside of the order of the AAC on account of the non-grant of opportunity to the Valuation Officer, this concession ought not to be given by the departmental representative. Holding that the AAC has considered all the grounds and rejected them properly, he confirmed his order. The point of difference as noted above arises from the orders of the two Members as above.
4. The learned Counsel for the assessee, Shri Sarkari, has referred to the details of the proceedings before the AAC to submit that the ex parte order itself was unjustified. The appeals had been fixed earlier on 30-3-1981 and 15-4-1981 before a different AAC who completed the hearing in all its aspects. There was nothing outstanding and the assessee had not to produce any further details at all. The AAC, who heard the appeals, should have passed the order, since the hearing was complete. He, however, did not pass an order and was transferred in the meanwhile. The succeeding AAC gave an appointment to the assessee fixing the hearing on 25-6-1981 at 12.30 pm. The notice was served on the assessees on 22-6-1981 and the assessees had scarcely any time even to inform their representative or make any other alternative arrangements. Even so, the representative knowing that the hearing was fixed for 25-6-1981 made an earnest attempt to arrange his affairs to attend before the AAC. Since there were appointments before the Tribunal earlier fixed which the representative could not avoid, he rushed up to the AAC immediately after he was free to do so. At 2.30 pm on that day the assessees' representative met the AAC but he was told that the appointment having been fixed for 12.30 pm, the hearing and the passing of the order subsequent thereto have all been done.
According to the learned Counsel, apart from the fact that even with two complete hearings earlier, the department has not made up its mind and passed an order of assessment. It was absolutely unfair, to say the least, for the succeeding AAC to have given an appointment with three days notice and even there when the learned representative has presented himself though a little late on account of reasons beyond his control, to inform him that an ex parte assessment was already made.
According to the learned Counsel, even though the appointment was at 12.30 pm he did his best to attend as early as possible. On account of the short notice granted to him he could well have taken the stand that he would not be able to attend on that day. It is also pointed out that there was no justification for the AAC to decide the appeals ex parte, when on two earlier occasions the assessee having attended the office, and the department did not take care to decide them, 5. On merits it is pointed out that the assessees are one of the co-owners of the property to be valued along with 13 others. Both assessments as well as appeals have been properly made in those cases.
There was no reason why the assessee alone should be subjected to an ex parte appeal decision. In fact even if an ex parte decision was to be made, the Commissioner (Appeals) could have availed of the information available in the case of the co-owners. It is also pointed out that elaborate information relating to the valuation has been furnished by the assessees before the WTO. These at least could have been considered and discussed by the AAC in arriving at the value. The Valuation Officer also had not been given an opportunity as is mandated by the statute. According to the learned Counsel for the assessee, both the ex parte assessments as well as the decision on merits of the AAC's order were unjustified and lack legal authority.
6. For the department stress is laid on the orders of the authorities below. The learned Counsel for the department pointed out that it is wrong to presume that his predecessor departmental representative has agreed to remit the matter to the Commissioner (Appeals) for a fresh decision. Like him the predecessor was only pressing the alternate contention that if the matter was to be remitted, the mandatory provisions of the Act requiring the Valuation Officer to be given an opportunity should be observed. There was no concession or compromise on this point.
7. On a consideration of the case and the arguments of the parties, I agree with the learned Accountant Member. The learned Counsel for the assessee has fairly agreed that if the Valuation Officer is given an opportunity to represent his case before the AAC which he is in law entitled to do, he would have no objection to the same. As the fasts above indicate the hearing before the AAC had been completed on two dates 30-3-1981 and 15-4-1981 and even so the AAC who took over from his predecessor has not referred to this matter at all. When the hearing has been completed by his predecessor and there was no further enquiry or clarification necessary, it was the duty of the predecessor-AAC to have passed the order. Since he has been transferred, rightly the succeeding AAC gave an opportunity to the assessees for a fresh hearing. In law granting of an opportunity implies granting of a proper opportunity with an adequate time, convenience, etc. The AAC in the present case has granted just 3 days time to attend to the appeal. It is true that there were two days between the date of the receipt of the notice and the date of the hearing. In a case where an assessee is represented by an advocate or a professional, it is necessary to give him sufficient time to enable the professional to be contacted, etc. The professional representative also would require time to arrange his affairs so as not to conflict with his pre-fixed appointments. All these require grant of a reasonbale notice to the assessee. Serving the notice of appointment on 22-6-1981 and asking the assessees to be present on 25-6-1981 cannot be said to be grant of reasonable opportunity. The assessee, it is true, acknowledged the receipt of the notice and made an earnest effort to attend the office. The time for hearing was 12,30 pm but the assessees' representative attended at 2.30 pm stating that he was free from his pre-fixed appointment at the Tribunal only after the morning session of the Tribunal and immediately thereafter he rushed to be present before the AAC. In my view, this does not smack of lack of diligence on the part of the assessees' representative. On the contrary it indicates care taken by the assessees to fulfil their obligations even though it could have been very easy for them to have not attempted to attend the AAC's office on that day in view of the short notice.
8. From the facts of the case and the fact that, the representative is a very responsible professional person being a chartered accountant, I see nothing wrong in accepting his contention in this behalf. That apart though the appointment was given at 12.30 pm, the AAC's hearing is generally closed at 1.15 pm for lunch time and immediately thereafter the representative has presented himself before the AAC.Virtually he has thus made a delay of only 45 minutes or less. Put against the background of the very short notice given by the present AAC and almost the callous behaviour of the earlier AAC who having heard the case on two occasions did not pass an order, the present AAC's making an issue of half a hour's delay seems to me to be an extreme case of the blackest kettle calling the pot black. It is also judicially settled that when an appointment is given on a day, whatever be the time for which the appointment is made, the deciding officer has to wait till the end of the day to proceed to make an ex prate decision. The logic behind this wholesome judicial view is that in the uncertainty surrounding human affairs delays can always happen preventing a professional to be present on the dot as it were for an appointment. If even at the last minute of the day he were to appear and convince the Court that he had been prevented from sufficient cause to attend, the Court should not go through the futile exercise of making an ex parte order which is to be recalled or revised. In this view of the matter, the AAC erred in holding that because the minute hand of the watches crossed the 12.30 pm mark, the assessee would be visited with an ex parte decision.
9. In my view, therefore, no proper notice was given to the assessee to comply with the hearing notice; the assessee took all possible care to be present on the occasion; no evidence is available to show that the representative even lacked in zeal to honour the appointment; the AAC not only ignored the two earlier appointments of his predecessor which must have concluded the appeals but took an unrealistic view of punctuality in appointment in making an ex parte decision. Even after the representative presented himself before him, the AAC did not care to see whether he had sufficient reason justifying the delay. I, therefore, come to the conclusion that the AAC erred in making an ex parte decision. I agree with the learned Accountant Member on this point.
10. The facts also indicate that even in making an ex parte decision, the AAC did not follow the correct principles of law. Section 23(3A)(a) mandated an opportunity to the Valuation Officer. Whether the department wanted this or not, non-compliance with this mandatory provision of law would make the AAC's order erroneous and for this reason itself his order should be quashed. It is no excuse to say that the opportunity to the Valuation Officer is for the benefit of the department and the assessees could not challenge it in their appeals.
Even this, in my view, is erroneous because the best way to support their case as to valuation would, as far as the assessees are concerned, be to show that the Valuation Officer's stand was untenable.
This they could do only if the Valuation Officer was present. The AAC has also not taken into account the various details which the assessees had produced before him by way of evidence such as the legal opinion of a jurist, other factual material, etc. The assessees are part owner along with 13 other persons of this asset and an ex parte decision is not a vindictive decision and the least the AAC could have done in sustaining the valuation if at all ex parte, was to see from the records of the other co-owners as to how they had been dealt with. Even this the AAC did not do. I, therefore, fully endorse the view of the learned Accountant Member that on merits also the decision of the AAC is erroneous.
11. In the circumstances of the case, the orders of the AAC should be vacated and the appeals restored to him for being decided afresh in accordance with law. I should, in this connection, refer to the stand taken both by the department and the assessee with regard to giving an opportunity to the Valuation Officer to be present at the appeal hearing as the mandatory provisions of the Act require. The learned Counsel for the department has asked for clarifying that no concession in this regard, being a statutory mandate, could even be given by him.
The learned Counsel for the assessee has also accepted the same.
12. The matter will go back to the original bench which heard the appeal for disposal according to law.