2009 (4) TMI 181 - HC - Wealth-tax

Petition is against the notice, whereby the Wealth-tax Officer has issued a notice under section 17 of the Wealth-tax Act, 1957, on the ground that he has reason to believe that the net wealth chargeable to tax for the assessment year 1978-79 has escaped assessment. - In our opinion, the absence of any material before us to show what is the reason to believe for the Wealth-tax Officer to issue the notice under section 17(1) the said notice would be without jurisdiction and consequently liable to be set aside.

Summary

Issues:
1. Validity of notice issued under section 17 of the Wealth-tax Act.
2. Disclosure of reasons for issuing the notice.
3. Bar on notice issuance under section 17(1)(b) due to limitation.
4. Requirement of reasons to believe for the Wealth-tax Officer.
5. Lack of material regarding the nature of the notice issued.

Analysis:
1. The petitioner challenged a notice issued under section 17 of the Wealth-tax Act, alleging that the net wealth for the assessment year 1978-79 had escaped assessment. The petitioner had previously filed returns and undergone assessment procedures, including appeals resulting in directions to redetermine the value of shares.

2. The petitioner requested reasons for the notice but received no response. The absence of disclosure regarding whether the notice was issued under section 17(1)(a) or 17(1)(b) raised concerns about the validity of the notice and its compliance with legal requirements.

3. The petitioner argued that if the notice was issued under section 17(1)(b), it would be time-barred. The court noted the lack of clarity on the nature of the notice and emphasized the importance of adherence to statutory limitations.

4. Emphasizing the necessity of the Wealth-tax Officer having valid reasons to believe that wealth-tax liability had escaped assessment, the court highlighted the absence of evidence supporting the reasons for issuing the notice. Referring to legal precedents, the court stressed the significance of providing such reasons to maintain the jurisdiction of the notice.

5. The court highlighted the absence of material clarifying the basis for the notice, underscoring the lack of information necessary to assess the validity and jurisdiction of the notice. Citing a previous judgment related to the same assessee under the Gift-tax Act, the court underscored the importance of reasons to believe in such proceedings.

In conclusion, the court found the notice lacking in essential details and reasons to believe, leading to the decision to make the petition absolute in favor of the petitioner. The judgment highlighted the critical requirement of valid reasons for issuing notices under the Wealth-tax Act to ensure procedural compliance and safeguard against arbitrary actions.