Commissioner of Wealth-tax vs Smt. Suguna Mahendran and others

K.A. Swami, C.J.—These petitions are filed u/s 27(3) of the Wealth-tax Act, 1957, seeking a direction to the Tribunal to state the case and

refer the following question of law, which, according to the petitioner, arises in T.C.P. Nos. 833, 837 and 841 of 1991, relating to the assessment

year 1982-83 in each case :

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in upholding the order of the first appellate

authority holding that the Assessing Officer should not have based the valuation on the event which occurred in 1986 and ignored the Board''s

Circular No. 326 (see [1982] 134 ITR 167), dated February 6, 1982 ?

It is contended on behalf of the petitioner that the Board''s Circular No. 326 (see [1982] 134 ITR 167), dated February 6, 1982, is only

directory and in addition to that it only lays down the guidelines, therefore, the Tribunal ought not to have completely rested its decision as to

income capitalisation only on that circular and ought to have relied on the sale of the property that had taken place in the year 1986 and on that

basis it should have worked out the value of the property backwards as in the assessment year 1982-83. On the contrary, it is contended by

learned counsel for the assessee that it is not at all open to determine the value of the property on taking into consideration the event of sale that

takes place nearly four years after the assessment year. As far as the Board''s Circular No. 326 (see [1982] 134 ITR 167), dated February 6,

1982, is concerned, the same was in force in the assessment year 1982-83, therefore, the Tribunal was justified in relying upon the same.

We are of the view that it is not at all permissible to the assessing authority or for that matter the Tribunal to rely upon an event of sale which

takes place subsequent to the assessment year in question to determine the value of the property as in the relevant assessment year. Such a method

is not known in the filed of income capitalisation method. On the contrary, the value is worked out from the event of sale that takes place till the

assessment year if that assessment year happens to be subsequent to the year of sale. In addition to this the Tribunal cannot be held to have

committed an error in law in relying upon Circular No. 326 (see [1982] ITR 134 , dated February 6, 1982, as that circular is issued for the

purpose of determining the value of the lands by following the income capitalisation method. The circular lays down the guidelines for the purpose

of determining the valuation so that different methods are not followed by the Department for the purpose of determining the value of the property.

In order to ensure uniformity in the manner and mode of determining the value of the property, the wealth-tax circular in question has been issued

u/s 10 of the Wealth-tax Act. In this regard, we may usefully refer to the decision of the Supreme Court in K.P. Varghese Vs. Income Tax Officer,

Ernakulam and Another, , in which it has been held as follows (at page 612) :

But the construction which is commending itself to us does not rest merely on the principle of contemporanea expositio. The two circulars of the

Central Board of Direct Taxes to which we have just referred are legally binding on the Revenue and this binding character attaches to the two

circulars even if they be found not in accordance with the correct interpretation of sub-section (2) and they depart or deviate from such

construction. It is now well-settled as a result of two decision of this court one in Navnitlal C. Javeri Vs. K.K. Sen, Appellate Assistant

Commissioner of Income Tax, ''D'' Range, Bombay, and the other in Ellerman Lines Ltd. Vs. Commissioner of Income Tax, West Bengal,

Calcutta, , that circulars issued by the Central Board of Direct Taxes u/s 19 of the Act are binding on all officers and person employed in the

execution of the Act even if they deviate from the provisions of the Act.

However, it is contended that as the circular prescribed only the guidelines, the actual value of the property as in the assessment year 1982-83

ought to have been determined. With reference to this contention it is sufficient for us to observe that the question is not framed in that fashion.

Therefore, it need not be considered. For the reasons stated we are of the view that no referable question of law as raised by the petitioner arises

in these cases. Accordingly, the tax case petitions are rejected.

Judgment assessment cannot be found to be arbitrarily made the High Court cannot interfere with it in writ proceedings, As the petitioner could

not show that the estimate made by the third respondent is not in accordance with law and as the appellate authority as well as the revisional

authority had considered the matter and confirmed the order of the third respondent, this court in exercise of its jurisdiction under article 226 of the

Constitution of India cannot probe into the matter with regard to the quantum and make its own estimate in the matter.

The petitioner is not entitled to the reliefs sought in the original petition. The original petition is dismissed.