1987 (1) TMI 156 - AT - Wealth-tax

Issues Involved:
1. Validity of assessments for the years 1964-65 to 1974-75.
2. Jurisdiction of the WTO to assess returns filed on 26-3-1979.
3. Exemption in respect of the value of shares.
4. Deduction under section 5(1)(iv) of the Wealth-tax Act.
5. Reduction of 10% out of market value due to the big size of the property.
6. Addition of Rs. 1,04,805 on account of jagir compensation.

Detailed Analysis:

1. Validity of Assessments for the Years 1964-65 to 1974-75:
The main dispute in these appeals is the validity of assessments for the years 1964-65 to 1974-75. The returns for these years were filed on various dates, with revised returns filed on 26-3-1979. The WTO initially completed the assessments on 31-3-1979 in the status of a HUF instead of an individual. The AAC quashed these assessments following the decision of the Rajasthan High Court in CWT v. Ridhkaran. The WTO proceeded under section 16(2) of the Wealth-tax Act, 1957, but the assessee objected, claiming the WTO had no jurisdiction to reassess returns already considered and disposed of. The WTO argued that the time limit for completion of the assessment laid down by section 17A(1) was one year from the date of filing of a return or revised return under section 15. The assessments were made within one year of the date of filing these returns on 26-3-1979. The AAC overruled the assessee's objection, leading to second appeals before the Tribunal.

2. Jurisdiction of the WTO to Assess Returns Filed on 26-3-1979:
The representative of the assessee argued that a revised return under section 139(5) of the Income-tax Act, 1961 could only be filed if the original return was filed under sub-section (1) or sub-section (2). Returns filed under sub-section (4) could not be revised under sub-section (5) to extend the period of limitation for making the assessment. The Tribunal considered various judgments, including those from the Delhi and Rajasthan High Courts, which supported the assessee's view. However, the Tribunal noted that there was a divergence of authorities on the subject, with contrary judgments from the Calcutta High Court. The Special Bench of the Tribunal in Bohra Film Finance's case observed that successive returns under section 139(4) could be filed as long as they were within the prescribed time. The Tribunal concluded that the returns filed on 26-3-1979 were valid, and the assessments made on 17-3-1980 were within the prescribed period of limitation.

3. Exemption in Respect of the Value of Shares:
The assessee raised a ground against the AAC's failure to grant exemption for the value of shares at Rs. 9,500. The Tribunal found that although the exemption was not claimed before the AAC, shares are exempt up to certain limits under clause (xxiii) of section 5(1) of the Act. The Tribunal directed the WTO to grant the exemption accordingly.

4. Deduction under Section 5(1)(iv) of the Wealth-tax Act:
The assessee also contested the AAC's failure to grant a deduction under section 5(1)(iv) of the Act. The Tribunal directed that the claim should be allowed straightaway for some years and considered for other years if the house property was actually occupied by the assessee.

5. Reduction of 10% Out of Market Value Due to the Big Size of the Property:
The assessee claimed a 10% deduction on account of the big size of the property. The Tribunal noted that the AAC had already disturbed the figures taken by the Valuation Officer and proceeded to estimate the value in accordance with the rental method prescribed by rule 1BB of the Wealth-tax Rules, 1957. The Tribunal held that there was no provision for further deduction for joint ownership or big size of the property and rejected the assessee's claim on this ground.

6. Addition of Rs. 1,04,805 on Account of Jagir Compensation:
For the years 1968-69 onwards, the assessee raised a ground against the AAC's upholding of the addition of Rs. 1,04,805 on account of jagir compensation. The AAC rejected the assessee's contention that the money had been invested in a firm and subsequently lost, due to a lack of evidence. The Tribunal directed the WTO to look into the matter afresh and ascertain what happened to the jagir compensation, granting appropriate relief in the year it was due.

Separate Judgment by Accountant Member:
The Accountant Member disagreed with the conclusion that the belated return filed would extend the time beyond the limit prescribed under the statute. He emphasized that a return filed under section 139(4) could not be revised under section 139(5) to extend the period of limitation. He argued that allowing further extension based on a return filed to correct a belated return would grant undue power to the income-tax authorities, which was not intended by the Legislature. He concluded that the assessments were barred by time and therefore illegal.

Third Member's Decision:
The Third Member agreed with the Accountant Member's view, noting that the Rajasthan High Court's decision in Vimalchand's case was binding and directly applicable. The Third Member concluded that the returns filed on 26-3-1979 should be regarded as non est in law, making the assessments made on 17-3-1980 invalid. The matter was referred back to the original Bench for a decision according to the majority view.

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