2001 (2) TMI 264 - AT - Income Tax

Issues Involved:
1. Justification of levying interest under section 17B of the WT Act, 1957.
2. Applicability of section 35 for rectification in levying interest under section 17B.
3. Interpretation of section 17B in context with sections 14, 15, 16, and 17 of the WT Act.
4. Validity of returns filed and their treatment under section 17.
5. Mandatory nature of conditions under section 23(2A).

Detailed Analysis:

1. Justification of Levying Interest under Section 17B

The central issue in this case is whether the assessees are liable to interest under section 17B of the WT Act, 1957, for the delay in filing the return of net wealth. The argument presented by the learned counsel for the assessees was that the provisions of section 17B are not applicable to the facts of the case. Conversely, the learned DR argued that there was a delay in filing the return of net wealth, thereby justifying the levying of interest under section 17B. It was concluded that interest under section 17B is attracted when the return of net wealth is furnished after the due date or when no such return is filed before the completion of the assessment. In this case, the returns were filed on 15-2-1994 against the due date of 30th June, 1991, thus constituting a delay.

2. Applicability of Section 35 for Rectification in Levying Interest under Section 17B

The Assessing Officer initially did not levy interest under section 17B in the assessment orders passed on 28-2-1997. However, realizing the omission, the Assessing Officer issued a notice under section 35 for rectification of the assessment orders and subsequently levied interest under section 17B in the proceedings dated 2-9-1998. The Tribunal upheld that the Assessing Officer rightly invoked his jurisdiction under section 35 in levying the interest under section 17B, which is mandatory under the provisions of the Act.

3. Interpretation of Section 17B in Context with Sections 14, 15, 16, and 17 of the WT Act

Section 17B(1) applies to cases where the return of net wealth is furnished after the due date under sub-section (1) of section 14, section 15, or in response to a notice under clause (I) of sub-section (4) of section 16. The Tribunal noted that section 17 inter alia provides that the provisions of the WT Act, 1957 shall, so far as may be, apply as if the return filed under the section were a return required to be furnished under section 14. Explanation 3 under section 17B(1) clarifies that where an assessment is made for the first time under section 17, it shall be regarded as a regular assessment for the purposes of this section.

4. Validity of Returns Filed and Their Treatment under Section 17

The returns filed by the assessees on 15-2-1994 were treated as non est in law as they were filed beyond time. However, upon receipt of notices under section 17, the assessees requested the Assessing Officer to treat the returns already filed as pursuant to the notices under section 17. The Tribunal concluded that since the assessments were made for the first time under section 17, they are regular assessments made under the Act. Consequently, the delay in filing the returns justified the levy of interest under section 17B.

5. Mandatory Nature of Conditions under Section 23(2A)

The CWT(A) dismissed the appeal in limine under section 23(2A) on the ground that the admitted tax on the returned net wealth had not been paid by the assessees. The Tribunal upheld this dismissal, noting that section 23(2A) is mandatory and does not admit of any discretion on the part of the CWT(A) to waive this condition.

Conclusion:

The Tribunal upheld the orders of the CWT(A) and the Assessing Officer. It concluded that the levy of interest under section 17B was justified due to the delay in filing the returns. The Assessing Officer's invocation of section 35 for rectification was also upheld. The appeals were dismissed, affirming the mandatory nature of the conditions under section 23(2A) and the applicability of section 17B to the facts of the case.

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