Tamil Nadu Real Estates Ltd. vs Assistant Commissioner of Income Tax and Another

Chitra Venkataraman, J.—The petitioner seeks writ of certiorari to quash the notices issued u/s 17 of the Wealth-tax Act, 1957, dated March 2, 2010 for the assessment years 1990-91 and 1989-90.

The petitioner states that the reopening of the assessment after the lapse of time is clearly barred by limitation. The time limit provided u/s 11 of the Wealth-tax Act is only 10 years. Consequently, there is no jurisdiction for the respondents to reopen the assessment. Hence, the present writ petitions have been filed.

It is seen from the documents produced before this Court that as early as March 24, 2000, the Deputy Commissioner of Income Tax issued notices, proposing to reopen the assessment for the assessment years 1989-90 and 1990-91, both under the Income Tax Act, as well as under Wealth-tax Act. However, in respect of the wealth-tax assessment, instead of issuing notice under the provisions of the Wealth-tax Act, notice was issued u/s 148 of the Income Tax Act. Apparently, realising the mistake, the respondent issued notice u/s 16(2) of the Wealth-tax Act, dated February 4, 2002, for the assessment years 1989-90 and 1990-91 by which the time limitation for reopening the assessment had already expired for both the assessment years as on March 31, 2000 and March 31, 2001. It is further seen that the petitioner objected to the same, however, under proceeding dated February 20, 2002 the same was rejected.

The petitioner filed writ petitions before this Court in W. P. Nos. 8260 and 8261 of 2002. By order dated February 2, 2010 this Court quashed the notices dated February 4, 2002. The writ petitions were however allowed pointing out that before proceeding with the assessment under the Wealth-tax Act, the assessing authority was bound to issue notice u/s 17 of the Wealth-tax Act, instead of initiating proceedings u/s 148 of the Income Tax Act. The Division Bench of this Court pointed out that instead of withdrawing the earlier notice issued under the Income Tax Act and issuing fresh notice under the Wealth-tax Act, no notice was issued u/s 17 of the Wealth-tax Act, consequently the proceedings initiated apparently under the provisions of the Income Tax Act for the purpose of revising the wealth-tax assessment cannot be sustained. In the circumstances, notices issued were set aside with liberty to the respondent to issue proper notice under the Wealth-tax Act to proceed further. Subsequent to that, the respondent had issued notices on March 2, 2010 evidently u/s 17 of the Wealth-tax Act.

On notice learned standing counsel appearing on behalf of the respondents defended the action of the respondents that the proceedings taken u/s 17 of the Wealth-tax Act is in accordance with the directions of this Court.

The order passed by this Court in W. P. Nos. 8260 and 8261of 2002 while quashing the orders directed that if the Department is so advised, it is open to them to proceed afresh. This however, does not mean that limitation provided for u/s 17 of the Wealth-tax Act is saved for the purpose of issuing fresh notice. When on the admitted fact the time limit for initiation is 10 years and for the assessment years 1989-90 and 1990-91, notices were issued long after the expiry of the time limit, satisfied of the case of the petitioner, I am constrained to quash the notices as without jurisdiction on account of limitation. Hence, both the writ petitions are allowed. No costs. Consequently, M. P. Nos. 1 and 1 of 2010 are closed.