1978 (2) TMI 73 - HC - Wealth-tax

Appeal To AAC Assessment Order Original Assessment Original Order Subject Matter Wealth Tax

Summary

Issues Involved:
1. Assessment of Wealth-Tax for the years 1965-66, 1966-67, and 1967-68.
2. Rectification of Wealth-Tax assessment orders under Section 35 of the Wealth-Tax Act.
3. Limitation period for rectification under Section 35(7) of the Wealth-Tax Act.
4. Jurisdiction of the Wealth-Tax Officer in rectification proceedings.

Issue-wise Detailed Analysis:

1. Assessment of Wealth-Tax for the years 1965-66, 1966-67, and 1967-68:
The petitioner, assessed as a Hindu undivided family, was subjected to wealth-tax for the assessment years 1965-66, 1966-67, and 1967-68. The Wealth-Tax Officer passed the assessment orders on February 22, 1971, determining the immovable property values and net wealth for each year. Notices of demand were issued, and the petitioner paid the requisite amounts after adjustments. The petitioner appealed against these assessments, and the Appellate Assistant Commissioner reduced the net wealth by Rs. 15,000 for each year, leading to refunds.

2. Rectification of Wealth-Tax assessment orders under Section 35 of the Wealth-Tax Act:
On January 15, 1976, the Wealth-Tax Officer issued notices for rectification under Section 35, citing a mistake in the calculation of tax due to the omission of additional wealth-tax on immovable property. The petitioner objected, but the Wealth-Tax Officer proceeded with rectification, leading to the current challenge by the petitioner.

3. Limitation period for rectification under Section 35(7) of the Wealth-Tax Act:
The petitioner contended that the rectification proceedings were time-barred under Section 35(7) of the Act, which stipulates a four-year limitation period from the date of the original assessment orders (February 22, 1971). The court focused on this limitation aspect, noting that the rectification should have been initiated within four years from the original orders.

4. Jurisdiction of the Wealth-Tax Officer in rectification proceedings:
The court examined whether the rectification pertained to the original assessment orders or the consequential orders post-appeal. It was determined that the Appellate Assistant Commissioner had only addressed specific points (exemption of jewelry value and tax liability deduction) and did not review the omission of additional wealth-tax. Therefore, the original assessment orders remained relevant for rectification purposes.

Conclusion:
The court concluded that the rectification proceedings initiated by the Wealth-Tax Officer were time-barred as they were based on the original assessment orders dated February 22, 1971, and the four-year limitation period had expired by the time the show-cause notices were issued on January 15, 1976. Consequently, the rectification orders and subsequent notices of demand were quashed and set aside due to lack of jurisdiction.

Final Judgment:
The special civil application was allowed, and the rectification orders for the three assessment years, along with the consequential notices of demand, were quashed. The rule was made absolute, and the respondent was ordered to pay the costs of the special civil application to the petitioner.