Law: Wealth Tax Act, 1957

Section: 25(2),7,3,8

Law: Income Tax Act, 1961

Section: 120,263

Law: Wealth Tax Rules, 1957

Section: 2B(2)

(a) Wealth tax-----Revision---Commissioner---Scope of powers---Effect of amendment of Explanation to S.25 by Finance Act, 1988, with retrospective effect--­Valuation of business assets not dealt with by Appellate Authority---No merger of order of Assessing Officer---Commissioner has jurisdiction to revise part of assessment order dealing with valuation---Indian Wealth Tax Act, 1957, S.25. In the wealth tax assessment of the assessee, a Hindu undivided family which did jewellery business, the capital balance and the assessee's share in the firm were taken according to the balance-sheet. Since the market value of the assets of the firm exceeded by more than 20 per cent., the value as shown in the balance-sheet, the Commissioner was of the view chat the market value of the assets should have been determined in accordance with rule 2B(2) of the Wealth Tax Rules, 1957, and, therefore, invoking his powers of revision, sought to revise the assessment order. The notice issued under section 25(2) of the Wealth Tax Act, 1957, was challenged in writ petitions, contending (a) that since the assessments were subjected to appeals before the Appellate Assistant Commissioner the assessment orders had merged with the appellate orders and the Commissioner had no jurisdiction to revise the order; and (b) that rule 2B(2) was invalid because it was against the standard and established accounting practice: Held, dismissing the petitions, that by virtue of the amendment of section 25 by the Finance Act, 1988, by which an Explanation had been added to section 25(2) with retrospective effect, the Commissioner had jurisdiction to revise those parts of the assessment order which were not considered and decided in the appeal. Admittedly, since the question. of valuation of the business assets was not dealt with by the Appellate Authority the theory of merger would not apply. C.I.T. v. Shri Arbuda Mills Ltd. (1998) 231 ITR 50 (SC) and C.I.T. v. Jaykumar B. Patil (1999) 236 ITR 469 (SC) fol. (b) Wealth tax--- ---- Valuation of assets---Rule providing for determination of market. value of assets if , market value exceeds balance-sheet value by more than 20 per cent.---Rule not repugnant or…

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