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PETITIONER: COMMISSIONER OF WEALTH TAX BOMBAYAND ANOTHER

       Vs.

RESPONDENT: MRS. KASTURBAI WALCHAND & OTHERS

DATE OF JUDGMENT28/03/1989

BENCH: PATHAK, R.S. (CJ) BENCH: PATHAK, R.S. (CJ) MISRA RANGNATH

CITATION:  1989 AIR 1326            1989 SCR  (2) 131  1989 SCC  Supl.  (1) 640 JT 1989 (2)     4  1989 SCALE  (1)728

ACT:             Wealth  Tax Act, 1957--Cl. (b) of Proviso to Sub-s.  ( 1)         of  s. 25--When an appeal against an order of the  Appella te         Assistant Commissioner by either party is pending before t he         Appellate  Tribunal, a revision application to  the  Commi s-         sioner against the same order is not competent.

HEADNOTE:             Sub-s. (1) of s. 25 of the Wealth Tax Act, 1957  inves t-         ing  the  Commissioner  with the power to  revise  an  ord er         passed by any authority subordinate to him stipulates in c l.         (b) of the proviso thereto that the power of revision  sha ll         not  extend  to an order which is the subject of  an  appe al         before the Appellate Assistant Commissioner or the Appella te         Tribunal.             The  respondent, a share-holder in a  company,  adopte d,         for  the purpose of assessment under the Act,  valuation of         shares  at  their breakup values with paid  up  capital  a nd         reserves  which was rejected by the Wealth Tax  Officer  w ho         estimated  their  value on the basis  of  capitalisation of         profits for the assessment year 1960-61 and on the basis of         the  break-up value with certain modifications for  the  a s-         sessment years 1958-59 and 1959-60. The respondent’s appea ls

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       were partly allowed by the Appellate Assistant  Commission er         against  which  the  Commissioner of  Wealth  Tax  preferr ed         appeals  to the Appellate Tribunal. The  Appellate  Tribun al         dismissed  the appeals. During the pendency of  the  appea ls         before  the  Tribunal,  the  respondent  preferred  revisi on         applications to the Commissioner of Wealth Tax and contend ed         that  the valuation of the shares adopted by  the  Appella te         Assistant  Commissioner was unreasonable and  excessive  a nd         should  be  duly  modified. The  Commissioner  rejected  t he         applications  on  the ground that they were  incompetent in         view  of  cl.  (b) of the proviso to sub-s. (1)  of  s.  2 5.         Against  that  order the respondent filed  a  writ  petiti on         which was allowed by a Single Judge of the High court  hol d-         ing that the revision applications were competent since  t he         aforesaid  provision would not operate as a bar  against an         assessee  in  a case where the appeal before  the  Appella te         Tribunal  is filed by the Revenue. An appeal  filed  again st         his order was         132         dismissed by a Division Bench of the High Court.         Allowing the appeal,             HELD:  Where  an appeal is filed  before  the  Appella te         Tribunal against an order of the Appellate Assistant Commi s-         sioner, the impugned order merges in the order of the Appe l-         late  Tribunal when the appeal is disposed of on merits. If         meanwhile  a revision application has been filed before  t he         Commissioner against the same order of the Appellate Assis t-         ant Commissioner, it will not be open to the Commissioner to         pass  any order in revision against the order of the  Appe l-         late  Assistant Commissioner as the latter will have  merg ed         with  the order of the Appellate Tribunal. It is  immateri al         that  the appeal and the revision application have not  be en         filed by the same party. This would be plainly so as in  t he         present  case, the subject matter of the appeal  before  t he         Appellate  Tribunal  is  the same as that  of  the  revisi

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on         application before the Commissioner. [135B-D]             In this case the High Court omitted to consider that t he         appeals filed before the Tribunal had been disposed of,  a nd         the  impugned order of the Appellate Assistant  Commission er         had merged in the order of the Appellate Tribunal  renderi ng         the  revision applications infructuous. What the  responde nt         should  have  done was to file her own  appeals  before  t he         Appellate  Tribunal.  It must be noted  that  the  Appella te         Tribunal is a superior body to the Commissioner, as is cle ar         from sub-s. (1) of s. 26 which provides that an appeal sha ll         lie to the Appellate Tribunal from an order under sub-s. ( 2)         of  s.  25  of the Commissioner. There would  have  been no         difficulty in the Appellate Tribunal considering the appea ls         of both parties and passing suitable orders in regard to t he         valuation of the shares. [135F-G; 136A-B]

JUDGMENT:             CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 88 to 93         to 1974.             From  the  Judgment and Order dated 10.1.  1973  of  t he         Bombay High Court in Appeal Nos. 102 to 107 of 1966.         Dr.  V. Gauri Shankar and Ms. A. Subhashini for  the  Appe l-         lants.         Nemo for the Respondents.         The Judgment of the Court was delivered by         133             PATHAK,  CJ.  These appeals by special leave  raise  t he         question whether the High Court is right in holding that t he         proviso to sub-s. (1) of s. 25 of the Wealth Tax Act  cann ot         be invoked by the Revenue on the facts of this case.             The respondent is assessed in the status of an individ u-         al under the Wealth Tax Act, 1957, and these appeals  rela te         to  the assessment years 1958-59, 1959-60, and  1960-61  f or         which the corresponding valuation dates are 31 March,  195 8,         31 March, 1959 and 31 March, 1960 respectively.             The respondent is a share holder in Walchand and Compa ny         Private  Limited. On each of the three valuation  dates  s he

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       held  140 shares in the Company. For the purpose of  asses s-         ment  under the Wealth Tax Act, the respondent  adopted  t he         valuation  of the shares at their break-up values with  pa id         up capital and reserves as there was no market quotation f or         those shares. When making the assessment Orders for each of         the three assessment years, the Wealth Tax Officer  reject ed         the  valuation of the shares as claimed by  the  responden t,         and estimated their value on the basis of capitalisation of         profits at six per cent for the assessment year 1960-61  a nd         on  the basis of the break-up value with  certain  modific a-         tions  for  the assessment years 1958-59  and  1959-60.  T he         respondent appealed to the Appellate Assistant  Commission er         of  Wealth  Tax, and the  Appellate  Assistant  Commission er         determined the value of the shares on the basis of capital i-         sation  of the investment income at six per cent  and  oth er         income  at twelve and half per cent. He allowed the  appea ls         of the respondent in part by separate orders dated 10 Nove m-         ber, 1961. The Commissioner of Wealth Tax preferred  appea ls         to the Appellate Tribunal on the question relating to valu a-         tion of the shares.              The  Appellate Tribunal passed a consolidated order on         23 July, 1963, dismissing the appeals for the three  asses s-         ment years. It observed that the valuation of the shares of         the  company on the relevant valuation dates  determined by         two  valuers on arbitration in the case of another  assess ee         should be taken as the valuation in the case of the assess ee         also. The value of the shares, the Appellate Tribunal  sai d,         worked out to an amount much less than the valuation  dete r-         mined  by the Appellate Assistant Commissioner,  and  ther e-         fore, the question of enhancing the value determined by  t he         Appellate  Assistant Commissioner did not arise. The  Appe l-         late  Tribunal did not reduce the values determined  by  t he         Appellate  Assistant  Commissioner as no  appeals  had  be en

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       filed by the respondent. Meanwhile, however, during the         134         pendency  of the appeals before the Appellate Tribunal,  t he         respondent preferred revision applications on 29 June,  19 62         under  subsection (1) of section 25 to the  Commissioner of         Wealth Tax in respect of the aforesaid assessment years  a nd         contended  that the valuation of the shares adopted  by  t he         Appellate Assistant Commissioner was unreasonable and exce s-         sive  and should be duly modified. The Commissioner made an         order dated 12 August, 1964 rejecting the revision  applic a-         tions  on the ground that they were incompetent in  view of         cl.  (b) of the proviso to sub-s. (1) of s. 25 of  the  Ac t.         Against  that order the respondent filed a writ petition in         the High Court of Bombay and contended that the Commission er         had erred in dismissing the revision applications as  inco m-         petent. On 10-11 October, 1966 a learned Single Judge of t he         High  Court allowed the writ petition holding  the  revisi on         applications  to be competent, and accordingly directed  t he         Commissioner to entertain and dispose of the revision appl i-         cations in accordance with law. The Commissioner appealed to         a  Division Bench of the High Court and the appeal was  di s-         missed on 10 January, 1973.             The  relevant provisions of s. 25 of the Wealth Tax  A ct         read as follows:         "Powers  of  Commissioner to revise  orders  of  subordina te         authorities.--The Commissioner may either of his own  moti on         or  on application made by an assessee in this behalf,  ca ll         for the record of any proceeding under this Act in which an         order  has been passed by any authority subordinate to  hi m,         and may make such inquiry, or cause such inquiry to be mad e,         and, subject to the provisions of this Act, pass such  ord er         thereon, not being an order prejudicial to the assessee, as         the Commissioner thinks fit;                  Provided that the Commissioner shall not revise a ny         order under this sub-section in any case--                  (a)  where an appeal against the order lies to  t

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he         Appellate Assistant Commissioner or to the Appellate  Trib u-         nal,  the time within which such appeal can be made has  n ot         expired or in the case of an appeal to the Appellate  Trib u-         nal the assessee has not waived his right of appeal;                  (b)  where  the order is the subject of  an  appe al         before the Appellate Assistant Commissioner or the Appella te         Tribunal.         135         The High Court has taken the view that cl, (b) of the prov i-         so to sub-s. (1) of s. 25 of the Act operates as a bar to  a         revision application by an assessee before the  Commission er         only where the assessee has also filed an appeal before  t he         Appellate  Tribuanl.  According to the High Court,  the  b ar         does  not come into operation against an assessee where  t he         appeal  before the Appellate Tribunal has been filed by  t he         Revenue..It  seems  to us that the view taken  by  the  Hi gh         Court  cannot be sustained. Where an appeal is filed  befo re         the  Appellate  Tribunal against an order of  the  Appella te         Assistant  Commissioner,  the impugned order merges  in  t he         order of the Appellate Tribunal when the appeal is  dispos ed         of  on merits. If meanwhile a revision application has  be en         filed  before the Commisioner against the same order of  t he         Appellate Assistant Commissioner, it will not be open 10 t he         Commissioner to pass any order in revision against the ord er         of  the Appellate Assistant Commissioner as the latter  wi ll         have merged with the order of the Appellate Tribunal. It is         immaterial that the appeal and the revision application ha ve         not  been filed by the same party. This would be plainly so         as  in  the present case, the subject matter of  the  appe al         before  the  Appellate Tribunal is the same as that  of  t he         revision  application  before the  Commissioner.  Here,  t he         subject  matter of the appeal before the Appellate  Tribun al         was  the valuation of the shares held by the respondent. So         it  was also in the revision application before the  Commi

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s-         sioner.             In  the circumstances, we are unable to agree  with  t he         reasoning  adopted  by. the High Court. The High  Court  h as         proceeded  on the view that it was open to the  Commission er         to  dispose  of the revision applications filed by  the  r e-         spondents.  The High Court, it seems to us, omitted to  co n-         sider  that the appeals filed before the Tribunal  had  be en         disposed of, and the impugned order of the Appellate Assis t-         ant  Commissioner must be taken to have merged in the  ord er         of  the  Appellate Tribunal. The revision  applications, in         short, had become infructuous.             What the respondent should have done, on coming to  kn ow         of the filing of the appeal by the Revenue before the Appe l-         late Tribunal, was to have withdrawn the revision  petitio ns         filed  before  the Commissioner and filed  her  own  appea ls         before the Appellate Tribunal with an application for cond o-         nation  of  delay  under sub-s. (3) of s. 24,  in  case  t he         period  of limitation had expired, and accordingly both  t he         sets of appeals would have been disposed of by the Appella te         Tribunal. In case the respondent came to know of the  fili ng         of the appeals by the Revenue before the Appellate  Tribun al         and had not yet applied in revision to the Commissioner  s he         should not have filed the revision         136         applications  but  should  have preferred  her  own  appea ls         before  the  Appellate Tribunal. It must be noted  that  t he         Appellate  Tribunal is a superior body to the  Commissione r,         as  will  be clear from sub-s. (1) of s. 26  which  provid es         that  an appeal will lie to the Appellate Tribunal  from an         order  under sub-s. (2) of s. 25 of the Commissioner.  The re         would  have  been no difficulty in  the  Appellate  Tribun al         considering the appeals of both parties and passing suitab le         orders in regard to the valuation of the shares. There is no         difficulty  now in dealing with such a situation in view of

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       sub-s. (2A) of s. 24.             In the case of the other respondents, there is a simil ar         history  of proceedings with similar orders passed  therei n,         and  this  judgment will be considered as disposing  of  t he         appeals filed here in those cases also.             In the result, the appeals are allowed and the  impugn ed         orders  of  the Division Bench and the Single Judge  on  t he         writ  petitions  are set aside and the  writ  petitions  a re         dismissed.  In  the circumstances of the case  there  is no         order as to costs.         H.L.C.                            Appeals allowed.         137