Commissioner of Wealth Tax vs Mrs. Sati Mulchandani

Ajit K. Sengupta, J.—In this reference u/s 27(1) of the Wealth-tax Act, 1957, for the assessment years 1968-69 and 1969-70, the following question of law has been referred to this court;

"Whether, on the facts and in the circumstances of the case, the assessee is entitled to exemption u/s 5(1)(iv) in the manner claimed by the assessee ?"

The facts shortly stated are that in the original assessments for the assessment years 1968-69 and 1969-70, the share of the assessee in a firm, namely, Mulchandani Radio and Appliances, where she was a partner, had been included. Subsequently, the Income Tax Officer came to know that one of the properties which the said firm was having is a flat which was valued at a lower figure, according to the Wealth-tax Officer as per the assessment of another partner. Consequently, the assessment of the assessee was reopened u/s 17(1)(b) of the Act in order to enhance the share of the assessee in the said partnership firm by taking a higher valuation of the Bombay flat. The market value of the flat was determined at Rs. 1,70,000 and an amount of Rs. 23,495 having been already taken into account in the earlier assessment, the difference was taken (assessee''s share at 1/3rd).

The assessee filed an appeal claiming exemption u/s 5(1)(iv) in respect of the house property. The Appellate Assistant Commissioner rejected the claim on the ground that the assessee did not claim the exemption before the Wealth-tax Officer and that the assessee is otherwise not entitled to make a claim in the reassessment proceedings.

Before the Tribunal, the assessee had contended on the strength of the Madhya Pradesh High Court decision in the case of Narsibhai Patel Vs. Commissioner of Wealth-tax, , that the assessee is entitled to the exemption u/s 5(1)(iv) of the Act. The Tribunal accepted the contention of the assessee and allowed the relief. The question which has been referred to us has two limbs. Firstly, whether the assessee, being a partner of a firm which owns a flat, can, in her own individual assessment, get exemption u/s 5(1)(iv) of the Act. This question is concluded by a decision of this court in the case of Commissioner of Wealth Tax Vs. Mira Mehta, .

The other limb of this question is whether the assessee, not having claimed exemption before the Wealth-tax Officer in the original assessment, was precluded from claiming such benefit in the reassessment proceedings. In our view, when the assessment is validly reopened, then the entire assessment is at large. Accordingly, the assessee is entitled to claim such exemptions and reliefs which are available to the assessee although, in the original assessment, the assessee might not have claimed such reliefs or exemptions.

Reference may be made to the decisions of this court in the case of Sun Engineering Works (P.) Ltd. Vs. Commissioner of Income Tax, , and in the case Commissioner of Income Tax (Central) Vs. Assam Oil Co. Ltd., , where it was held that, although the relief was not claimed in the original assessment, if the assessee is entitled to such relief, such relief should be granted in the reassessment proceedings.

We are, therefore, of the view that the Tribunal is justified in holding that the assessee is entitled to exemption u/s 5(1)(iv) of the Act. We, therefore, answer the question in this reference in the affirmative and in favour of the assessee.

There will be no order as to costs.

Bhagabati Prasad Banerjee, J.

I agree.