The rules providing for methods of valuation under the Wealth Tax Act are not substantive, but procedural and they are applicable to all pending proceedings.

R. JAYASIMHA BABU, J.

The assessee is aggrieved by the valuation report in respect of the property owned by him and the property being a shopping complex, which was partly under construction as on the date of valuation and situated at 444/8 Main Road, Chalakkudi in the State of Kerala. Prior to the assessment, the WTO having felt the need for a valuation report wrote to the Valuation Officer under s. 16A of the WT Act on 26th Nov., 1989. As the report had not been received even by 26th March, 1990, he completed the assessment for the asst. yr. 1985-86 and he estimated the value of this property at Rs. 40 lakhs. Reference made to the valuer was not only for the asst. yr. 1985-86, but also for subsequent assessment years including the asst. yr. 1988-89. The valuer submitted his report on 18th Jan., 1991. As on the date of submission of his report he found that the building was still incomplete and a portion of the building has been let out and some portion was lying vacant, he valued the portion which has been rented out by adopting rent capitalisation method and valued the remaining portion by adopting the land and building method. He arrived at Rs. 33 lakhs as the value for the entire property. This amount is lower than the amount as estimated by the WTO in wealth-tax assessment for the year 1985-86.

2. Learned counsel for the assessee contended that this report is not in accordance with law and, therefore, cannot be acted upon. His submission was that the reference to the valuer was after the assessment order. That submission is factually incorrect. The valuation report was called for long prior to the making of the assessment order. As the assessment had to be finalised, he proceeded to do so even though the report had not been received. It was open to the assessee to challenge the assessment. It is not clear as to whether the order of assessment was appealed against. So far as the valuation report is concerned, the valuer did not lose jurisdiction on account of the fact that the assessment had been completed for one of the assessment years, even while his report was called for which reference to several assessment years. The reference had been made even before the assessment had been completed in respect of one of the assessment years. Sec. 16A of the WT Act provides for reference by the AO. That section does not provide that the Valuation Officer shall not proceed with the valuation if the assessment is completed before the valuation is completed. Sec. 16A(6) of the Act no doubt provides that the assessment shall be completed in accordance with the valuation made by the Valuation Officer. That provision, however, cannot be read as imposing an embargo on the completion of the assessment, till such time the valuer submits his report. Delay on the part of the valuer, cannot have the effect of deterring the AO from proceeding to complete the assessment, and allow the proceedings to be barred by limitation. It is open to the AO to invoke s. 35 of the Act after the valuation report is received to correct the value stated in the assessment order in conformity with the valuation made by the AO (sic-Valuation Officer). The reference to the 'record' in s. 35 of the Act would include the report of the Valuation Officer when it is received by the AO and is made to form part of the record of assessment. That report being the result of a reference made in the course of the assessment proceedings, the report submitted by the valuer would legitimately be a part of the record. The fact that the valuation report was submitted subsequent to the making of the assessment order for one of the assessment years, 1985-86, therefore, does not in any way invalidate the valuation.

3. The other ground raised by the counsel for the assessee is that the procedure prescribed in Sch. III of the WT Act has not been followed by the valuer. In the valuation report it has been stated by the Valuation Officer that the draft report has been furnished t