1993 (3) TMI 63 - HC - Wealth-tax

Summary

Issues:
1. Validity of reassessment proceedings under section 17(1)(b) of the Wealth-tax Act for the assessment years 1970-71 and 1971-72.

Detailed Analysis:

The case involved a question of law arising from the Income-tax Appellate Tribunal's order regarding the validity of reassessment proceedings under section 17(1)(b) of the Wealth-tax Act for the assessment years 1970-71 and 1971-72. The original assessments for these years were made by the Wealth-tax Officer, followed by a reference under section 16A to the Valuation Officer to estimate the fair market value of certain properties. The issue arose when the reassessment proceedings were initiated after the assessments were already completed.

The Appellate Assistant Commissioner allowed the appeals contending that the reference under section 16A should have been made during the pendency of the assessment proceedings and not after their completion. The Income-tax Appellate Tribunal upheld this decision, citing a previous court ruling and concluding that the reassessment proceedings were null and void due to the timing of the reference to the Valuation Cell.

The court examined the legality of the reassessment proceedings in light of the Wealth-tax Act and relevant case law. It was established that the Wealth-tax Officer loses jurisdiction to make a reference under section 16A once the assessment is completed. Referring to the decision in CWT v. Gulnar Marfatia, the court reiterated that the reference to the Valuation Cell cannot be followed by reassessment proceedings, especially when no proceedings were pending before the Wealth-tax Officer.

In line with the precedent set by various High Courts, including the Calcutta High Court, Bombay High Court, and Karnataka High Court, the court affirmed the Income-tax Appellate Tribunal's decision to uphold the Appellate Assistant Commissioner's order quashing the reassessment proceedings under section 17(1)(b) of the Wealth-tax Act for the assessment years in question. The court emphasized that even a mistake committed by the authorities cannot provide an excuse for the assessee to evade tax liabilities.