2004 (3) TMI 33 - HC - Wealth-tax

Notice for reassessment of the petitioner-company s wealth u/s 17 of the Wealth-tax Act, 1957 Procedure for reassessment objections speaking order - Assessing Officer is required to decide the preliminary objections lodged by the petitioner to the notice for reassessment and pass a speaking order. Until such speaking order is passed, obviously the Assessing Officer cannot undertake reassessment. Hence, it is only after the Assessing Officer passes a speaking order deciding the petitioner s preliminary objections against the notice for reassessment that any cause of action would arise for the petitioner.

Summary

Issues:
Challenge to notice for reassessment of wealth for the assessment year 1997-98 under Wealth-tax Act, 1957.

Analysis:
The judgment delivered by M.S. Shah J. addressed the challenge in the petition under article 226 of the Constitution regarding the notice for reassessment of the petitioner-company's wealth for the assessment year 1997-98 under section 17 of the Wealth-tax Act, 1957. The court noted that although the challenge to the notice dated March 26, 2002 might seem belated, it was not so due to the recent communication of reasons on January 28, 2004. The petitioner had already filed a return and submitted objections to the notice for reassessment after receiving the reasons. The court referenced the GKN Driveshafts (India) Ltd. v. ITO case, stating that the noticee is entitled to file objections upon receiving reasons for the notice and the Assessing Officer must dispose of them by passing a speaking order.

The court emphasized that the principle laid down for notice under the Income-tax Act applies to notice for reassessment under the Wealth-tax Act as well. The petitioner had filed its return, requested reasons, submitted objections, and now the Assessing Officer must pass a speaking order on the objections. Until this order is passed, reassessment cannot proceed. The court ruled that any cause of action for the petitioner arises only after the Assessing Officer passes a speaking order on the preliminary objections against the notice for reassessment.

Consequently, the court rejected the petition as premature, with the direction that if the Assessing Officer rejects the petitioner's preliminary objections, a speaking order must be passed, allowing the petitioner to challenge it. The petition was rejected with liberty to apply in case of difficulty, and direct service was permitted as per the court's observations.