Commissioner of Wealth-tax vs Smt. Savitri Devi and Another (L/R of Nemi Chand Jain)

Surinder Singh, J.—Tenacity may be a virtue but not for resisting a proposition which is apparent like broad daylight. The present petition u/s 27(3) of the W.T. Act, 1957 (hereinafter referred to as "the Act"), has been initiated by the Revenue, in the circumstances which are these. The predecessor-in-interest of the respondents, Shri Nemi Chand Jain, owned movable and immovable assets and after filing his return for the assessment year 1968-69, died on March 18, 1968. The assessment was completed by the WTO on August 31, 1969, on a net wealth of Rs. 7,48,112. In the meantime, proceedings for levy of estate duty in respect of the estate of Shri Nemi Chand Jain, deceased, were initiated. Subsequently, there was an audit objection by the audit party that an interest amount of Rs. 12,825 on the mortgage money of Rs. 1,83,825 had escaped assessment in the estate duty case of the deceased. The audit party also noted that the value of the land and building of the Punjab Potteries was accepted at book value, whereas the value ought to have been assessed at market price. The under-assessment was worked out in the case of the land and the building at Rs. 1,40,000 and Rs. 1,16,148 respectively. On the basis of this note of the audit party, the WTO re-opened the assessment for the year 1968-69, and after doing so, completed the fresh assessment on a net wealth of Rs. 11,86,820 by enhancing the value of the land as well as the building.

The assessee having died, his legal representatives filed an appeal before the AAC, who found that it was not a case of escaped assessment u/s 17(1)(a) of the Act, as the assessee had duly disclosed the interest amount of Rs. 12,825. It was further held that reassessment u/s 17(1)(b) of the Act was barred, as limitation of four years had expired. The AAC thus cancelled the fresh assessment, The Department went up in appeal against the aforesaid decision before the Income Tax Appellate Tribunal, which dismissed . the appeal, upholding the finding of the AAC. The Revenue, however, persisted in their stand and filed a reference before the Tribunal with a prayer for stating certain proposed questions of law for the opinion of this court. This reference was also declined by the Tribunal. The present petition u/s 27(3) of the Act has now been filed praying that a mandamus be issued to the Tribunal to refer the questions of law referred to above, to this court.

We have heard the learned counsel for the parties in this matter. The sole question which falls for consideration is, as to whether for the purpose of justifying a reassessment the case would fall within the provisions of Section 17(1)(a) of the Act. On facts, it cannot be controverted at this stage that the reassessment was based upon the note of the audit party on the question of including the interest amount in the taxable turn over. It is further not in dispute, and this fact finds mention in the impugned orders, that the assessee had duly disclosed the interest amount in his return. That being so, the application of Section 17(1)(a) is immediately ousted, as that provision would come into play only in the case of omission or failure on the part of the assessee to make a return. In so far as the note of the audit party is concerned, it has been rightly considered by the authorities below, that in view of Indian and Eastern Newspaper Society, New Delhi Vs. Commissioner of Income Tax, New Delhi, , such a note could not be deemed to be "information" as postulated in Section 17(1)(b) of the Act. Even if the note may be deemed to be so, the petitioner would be faced with the main hurdle regarding limitation which for the purpose of the said Sub-section is only four years. The first assessment having been completed on August 31, 1969, a reassessment after the expiry of four years, was not permissible u/s 17(1)(b) of the Act. There being no other provision enabling the Department to reopen the case, the finding of the authorities below that the reassessment was incompetent, is quite correct and is affirmed.

In the result, the prayer for the, issue of mandamus to the Tribunal to refer the questions of law to this court is declined. The respondents shall be entitled to the costs of these proceedings.