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2011 (7) TMI 178 - HC - Wealth-taxReassessment u/s 17 of Wealth Tax Act - Reference to Valuation officer - It is an admitted fact that the assessee had returned its income and the materials were also placed before the Wealth Tax Officer at the time of the original assessment; thereby there is nothing to suggest that the assessee had withheld the material facts or that the facts placed before the Officer are not truly and fully disclosed, necessary for assessment - mere fact that the Officer rejects the valuation of the assessee based on the Valuer s Report, obtained under Section 16A in respect of a reference made during the pendency of the assessment, by itself, would not justify the requirements under Section 17(1)(a) to reopen the assessment under Section 17(1)(a) of the Act - Decided in favor of the assessee
Issues Involved:
1. Validity of reassessments under Section 17 of the Wealth Tax Act for the assessment year 1985-86. 2. Consideration of Section 17(1)(b) and the valuation officer's report as valid information for reopening the assessment. 3. Consideration of judgments from other High Courts, specifically the Full Bench of the Kerala High Court in CWT Vs. V.Cleetus. Detailed Analysis: 1. Validity of Reassessments under Section 17 of the Wealth Tax Act: The primary issue was whether the reassessments for the assessment year 1985-86 were valid under Section 17 of the Wealth Tax Act. The original assessment was completed on 13.3.1990. A reference to the Valuation Officer under Section 16A was made before this completion, but due to time constraints, the assessment was finalized without the report. The Valuation Officer's report was received later on 12.3.1991, leading to a reopening notice on 16.3.1993. The Tribunal held that the reassessment could not be revised on a mere change of opinion, and the reopening based on the delayed valuation report was invalid. 2. Consideration of Section 17(1)(b) and Valuation Officer's Report: The Revenue argued that the valuation report constituted valid information under Section 17(1)(b) for reopening the assessment. However, the Tribunal and the Court found that the reopening notice issued on 16.3.1993 was beyond the four-year limitation period specified in Section 17(1)(b). The Court emphasized that the reassessment could only be justified under Section 17(1)(a) if there was a failure by the assessee to fully and truly disclose all material facts necessary for assessment, which was not the case here. The assessee had disclosed all necessary information during the original assessment, negating any grounds for reopening under Section 17(1)(a). 3. Consideration of Judgments from Other High Courts: The Revenue cited the decision of the Bombay High Court in COMMISSIONER OF WEALTH TAX Vs. SONA PROPERTIES P. LTD. and the Full Bench of the Kerala High Court in CWT Vs. V.Cleetus to support their case. However, the Court found these references unpersuasive. The Court highlighted that the facts of the current case did not align with the conditions required under Section 17(1)(a) or 17(1)(b) for reopening the assessment. Additionally, the Supreme Court's decision in CIT & ANOTHER Vs. FORAMER FRANCE was cited, reinforcing that an assessment could not be reopened based on a mere change of opinion when there was no failure to disclose material facts. Conclusion: The Court concluded that the reassessment proceedings initiated for the assessment year 1985-86 were invalid. The reopening notice issued on 16.3.1993 was beyond the permissible period under Section 17(1)(b), and there was no failure on the part of the assessee to disclose material facts under Section 17(1)(a). Therefore, the appeal was dismissed, affirming the Tribunal's order and rejecting the Revenue's case.
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