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Issues involved: Assessment of wealth-tax, reopening of assessment u/s 17(1)(b) of the W.T. Act, 1957.
Assessment of wealth-tax: The petitioner, assessed for wealth-tax since 1957, filed returns for assessment years 1966-67 to 1969-70, including properties he co-owned with his brothers. The respondent accepted the valuation report for the properties and completed assessments for the four years. Subsequently, notices were issued to reopen assessments for 1968-69 and 1969-70 without specifying reasons, leading to a legal challenge under art. 226 of the Constitution. Reopening of assessment u/s 17(1)(b) of the W.T. Act, 1957: The respondent sought to reopen assessments based on a valuation report indicating undervaluation of properties, alleging that the earlier assessments had escaped proper assessment. However, the petitioner argued that the action to reopen assessments was illegal and misconceived, citing the provision of s. 17(1)(b) which requires a valid reason to believe that net wealth has escaped assessment. The petitioner contended that the mere change of opinion by the officer does not confer jurisdiction to reopen assessments, especially when the correctness of statements could have been verified earlier. The Court agreed with the petitioner, finding the respondent's actions to be erroneous and assuming jurisdiction illegally and irregularly. The interim notices to reopen assessments were deemed invalid and struck down, ruling in favor of the petitioner. In conclusion, the Court held in favor of the petitioner, making the rule absolute and invalidating the interim notices to reopen assessments, with no order as to costs in the circumstances of the case.
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