Law:

Section:

Wealth tax--- ---Reference---Valuation of assets ---CIT substantially reducing value estimated by Department valuer and Tribunal confirming the order--­Valuation Officer not given opportunity to be heard---No reasons given for reduction in value---Question whether valuation had been properly made was a question of law---Indian Wealth Tax Act, 1957, Ss.23(3-A) 8t 27(3). The assessee was a beneficiary of a trust known as "HEH Nizam's Jewellery Trust". For the assessment year 1981-82, the trustees filed a return of wealth on behalf of the assessee, declaring the value of her proportionate share m the corpus at Rs.11,37,073 and offering the same for assessment under the Wealth Tax Act. The Wealth Tax Officer thought that the value furnished by the trustees needed an upward revision. Based on the valuation of a Department Valuer, the Wealth Tax Officer fixed the wealth representing the assessee's interest in the trust at Rs.12,35,006. The assessee then filed an appeal before the Commissioner (Appeals). As regards the valuation, the Commissioner purporting to follow his own orders in certain connected cases directed the entire corpus of the jewellery to be valued at Rs.16.20 crores, instead of the valuation of Rs.32.43 crores adopted by the Wealth Tax Officer. This was confirmed by the Tribunal. On an application to direct reference: Held, that admittedly in this case, the Commissioner (Appeals) had not followed the procedure prescribed under section 23(3-A) of the Wealth Tax Act, 1957, which enjoins the Appellate Authority to give an opportunity of hearing to the Valuation Officer. That apart, it cannot be stated as an universal proposition of law that a question of valuation is always a question of fact. An arbitrary valuation by taking into account irrelevant factors or by eschewing from consideration relevant factors, or a valuation based on wild guesswork rather than proper data could be found fault with as a legal error and not merely as a factual error. The Tribunal rejected the Revenue's contention purporting to follow "several of the orders in the cases of the beneficiaries of the Nizam's Trust". However, the details of the decision rendered in such cases…

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