1985 (7) TMI 163 - AT - Wealth-tax

Summary

Issues:
1. Validity of notice under section 17 served on the assessee.
2. Reassessment proceedings initiated by the WTO.
3. Validity of penalty orders imposed by the WTO.
4. Authority of Shri D.C. Sharma to receive notices on behalf of the assessee.
5. Interpretation of Section 41(1) of the WT Act, 1957.
6. Application of Order 5, Rule 12 of the CPC for service of notices.
7. Justification of the AAC in cancelling reassessment and penalty orders.
8. Comparison with the case of Smt. Indu Barua.
9. Cross objections filed by the assessee.

Detailed Analysis:

1. The appeals filed by the Department and the cross objections by the assessee were heard together due to a common issue arising from the consolidated orders of the AAC. The Department's appeals challenged the cancellation of assessments made by the WTO under sections 16(5)/17 of the WT Act for the assessment years 1963-64 to 1967-68. The assessee's objections related to the cancellation of penalty orders imposed by the WTO under section 18(1)(a) for the same years.

2. The WTO reopened the assessments for the assessee as the value of land owned by the assessee had not been disclosed in the original returns. The AAC cancelled the reassessments and penalty orders based on the argument that the notice under section 17 was not validly served on the competent person to receive such notices, rendering the reassessment proceedings void ab initio.

3. The WTO imposed penalties for the assessment years, which were cancelled by the AAC in view of the invalidated reassessment proceedings. The Revenue appealed the AAC's decision, contending that Shri D.C. Sharma was authorized to receive notices on behalf of the assessee, thus validating the service of notice under section 17.

4. The assessee argued that Shri D.C. Sharma was not empowered to receive notices on their behalf, leading to the invalidation of the reassessment proceedings. The Tribunal found that the onus was on the assessee to prove that notice under section 17 did not reach them, which was not discharged.

5. The Tribunal analyzed Section 41(1) of the WT Act, 1957, and Order 5, Rule 12 of the CPC, concluding that service of notices on Shri D.C. Sharma was not sufficient unless it was established that he was authorized to receive notices on behalf of the assessee. As such, the reassessment and penalty orders were rightly cancelled by the AAC.

6. The Tribunal distinguished the case of Smt. Indu Barua, where service of notice on a family member was deemed invalid, unlike the present case where the contention was service through an agent. The cross objections by the assessee were dismissed as the cancellation of reassessment and penalty orders stood justified based on the invalid service of notices under section 17.