Commissioner of Wealth Tax Bombay and Another v. Mrs. Kasturbai Walchand & Otiiers

+ -f COMMR. OF WEALTII TAX v. MRS. KASTURBAI !PATIIAK, CJ.I 133 +. PATHAK, CJ. These appeals by special leave raise the ques- tion whether the High Court is right in holding that the proviso to A sub-s. (1) of s. 25 of the Wealth Tax Act cannot be invoked by the Revenue on the facts of this case. The respondent is assessed in the status of an individual under 'I the Wealth Tax Act, 1957, and these appeals relate to the assessment B years 1958-59, 1959-60, and 1960-61 for which the corresponding .., valuation dates are 31 March, 1958, 31 March, 1959 and 31 March, 1960 respectively. - The respondent is a share holder in Walchand and Company Private Limited. On each of the three valuation dates she held 140 c +· shares in the Company. For the purpose of assessment under the ' Wealth Tax Act, the respondent adopted the valuation of the shares at their break-up values with paid up capital and reserves as there was no market quotation for those shares. When making the assessment Orders for each of the three assessment years, the Wealth Tax Officer rejected the valuation of the shares as claimed by the respondent, and D estimated their value on the basis of capitalisation of profits at six per cent for the assessment year 1960-61 and on the basis of the break-up value with certain modifications for the assessment years 1958-59 and • '< 1959-60. The respondent appealed to the Appellate Assistant Commis- sioner of Wealth Tax, and the Appellate Assistant Commissioner determined the value of the shares on the basis of capitalisation of th_e E investment income at six per cent and other income at twelve and half per cent. He allowed the appeals of the respondent in part by separate orders dated 10 November, 1961. The Commissioner of Wealth Tax preferred appeals to the Appellate Tribunal on the question relating to . '"' valuation of the shares . I F ... ' The Appellate Tribunal passed a consolidated order on 23 July, 1963, dismissing the appeals for the three assessment years. It observed that the valuation of the shares of the company on the rele- vant valuation dates determined by two valuers on arbitration in the case of another assessee should be taken as the valuation in the case of >,, the assessee also. The value of the shares, the Appellate Tribunal said, worked out to an amount much less than the valuation determined by the Appellate Assistant Commissioner, and therefore, the question of enhancing the value determined by the Appellate Assistant Commis- sioner did not arise. The Appellate Tribunal did not reduce the values determined by the Appellate Assistant Commissioner as no appeals had been filed by the respondent. Meanwhile, however, during the H 134 SUPREME COURT REPORTS [1989) 2 S.C.R. pendency of the appeals before the Appellate Tribunal, the respon- + A dent preferred revision applications on 29 June, 1962 under sub- section (1) of section 25 to the Commissioner of Wealth Tax in respect of the aforesaid assessment years and contended that the valuation of the shares adopted by the Appellate Assistant Commissioner was unreasonable and excessive and should be duly modified. The Com- B missioner made an order dated 12 August, 1964 rejecting the revision .... applications on the ground that they were incompetent in view of cl. I (b) of the proviso to sub-s. (1) of s. 25 of the Act. Against that order '" the respondent filed a writ petition in the High Court of Bombay and contended that the Commissioner had erred in dismissing the revision ~ applications as incompetent. On 10-11 October, 1966 a learned Single Judge of the High Court allowed the writ petition holding the revision applications to be competent, and accordingly directed the Commis- ' 4-sioner to entertain and dispose of the revision applications in accor- ' dance with law. The Commissioner appealed to a Division Bench of the High Court and the appeal was dismissed on 10 January, 1973. D The relevant provisions of s. 25 of the Wealth Tax Act read as follows: "Powers of Commissioner to revise orders of subordinate authorities.-The Commissioner may either of his own y motion or on application made by an assessee in this be- E half, call for the record of any proceeding under this Act in which an order has been passed by any authority sub- ordinate to him, and may make such inquiry, or cause such inquiry to be made, and, subject to the provisions of this Act, pass such order thereon, not being an order prejudi- cial to the assessee, as the Commissioner thinks fit; 1' F ~ Provided that the Commissioner shall not revise any order under this sub-section in any case- (a) where an appeal against the order lies to the Appellate Assistant Commissioner or to the Appellate Tri- G bunal, the time within which such appeal can be made has not expired or in the case of an appeal to the Appellate +- Tribunal the assessee has not waived his right of appeal; (b) where the order is the subject of an appeal before the Appellate Assistant Commissioner or the Appellate H Tribunal." COMMR. OF WEALTH TAX v. MRS. KASTURBAI [PATHAK, CJ.[ 135 + The High Court has taken. the view that cl. (b ).of the proviso to sub-.s. ( 1) of s. 25 of the Act operates as a bar to a revision application by an A assessee before the Commissioner only where the assessee has also filed an appeal before the Appellate Tribuanl. According to the High Court, the bar does riot come into operation against an assessee where the appeal before the Appellate Tribunal has been filed by the --i Revenue. It seems to us that the view taken by the High Court cannot B be sustained. Where an appeal is filed before the Appellate Tribunal I. against an order of the Appellate Assistant Commissioner, the impugned order merges in the order of the Appellate Tribunal when - the appeal is disposed of on merits. If meanwhile a revision application has been filed before the Commisioner against the same order of the Appellate Assistant Commissioner, it will not be open to the Comm is- c sioner to pass any order in revision against the order of the Appellate +- Assistant Commissioner as the latter will have merged with the order ' of the Appellate Tribunal. It is immaterial that the appeal and the revision application have not been filed by the same party. This would be plainly so as in the present case, the subject matter of the appeal before the Appellate Tribunal is the same as that of the revision appli- D cation before the Commissioner. Here, the subject matter of the appeal before the Appellate Tribunal was the valuation of the shares held by the respondent. So it was also in the revision application -y before the Commissioner. In the circumstances, we are unable to agree with the reasoning E adopted. by the High Court. The High Court has proceeded on the - view that it was open to the Commissioner to dispose of the revision applications filed by the respondents. The High Court, it seems to us, omitted to consider that the appeals filed before the Tribunal had been ~' disposed of, and the impugned order of the Appellate Assistant Com- missioner must be taken to have merged in the order of the Appellate F # Tribunal. The revision applications, in short, had become infructuous. What the respondent should have done, on coming to know of the filing of the appeal by the Revenue before the Appellate Tribunal, was to have withdrawn the revision petitions filecl. before the Commis- ... sioner and filed her own appeals before the Appellate Tribunal with an G application for condonation of delay under sub-s. (3) of s. 24, in case the period of limitation had expired, and accordingly both the sets of appeals would have been disposed of by the Appellate Tribunal. In case the respondent came to know of the filing of the appeals by the Revenue before the Appellate Tribunal and had not yet applied in revision to the Commissioner she should not have filed the revision H A applications but should have preferred her own appeals before the Appellate Tribunal. It must be noted that the Appellate Tribunal is a superior body to the Commissioner, as will be clear from sub-s. (1) of s. 26 which provides that an appeal will lie to the Appellate Tribunal from an order under sub-s. (2) of s. 25 of the Commissioner. There B would have been no difficulty in the Appellate Tribunal considering the appeals of both parties and passing suitable orders in regard to the valuation of the shares. There is no difficulty now in dealing with such a situation in view of sub-s. (2A) of s. 24. In the case of the other respondents, there is a similar history of proceedings with similar orders passed therein, and this judgment will C be considered as disposing of the appeals filed here in those cases also. In the result, the appeals are allowed and the impugned orders of the Division Bench and the Single Judge on the writ petitions are set aside and the writ petitions are dismissed. In the circumstances of the case there is no order as to costs. H.L.C. Appeals allowed. ~ I -+ ~ ..