1983 (2) TMI 131 - AT - Wealth-tax

Summary

Issues:
- Validity of reassessments made under section 17 of the WT Act based on audit objections.
- Interpretation of law by the audit party as constituting valid information for reassessment proceedings.
- Application of Supreme Court decisions in determining the validity of reassessment proceedings.
- Evaluation of law by the WTO and its nexus with the belief of escapement of wealth.

Analysis:

The appeals by the revenue were directed against the orders of the AAC canceling reassessments made under section 17 of the WT Act. The AAC canceled the reassessments based on the contention that the reopening was made on the basis of certain audit objections, which were considered by the Tribunal in previous cases and did not constitute valid information. The revenue argued that the audit report provided valid information to the WTO regarding the exemption under section 5(1)(iv)(b) and the valuation of shares, justifying the initiation of reassessment proceedings. The revenue also cited various Supreme Court decisions and argued that the audit report was valid information for initiating reassessment proceedings.

Upon consideration of the rival submissions, the Tribunal held that the revenue was entitled to succeed. The main issue was whether the WTO had reason to believe that there was escapement of wealth, requiring valid information to support this belief. The Tribunal referred to the Supreme Court's decision, emphasizing that the audit report must provide information on the law that escaped the notice of the assessing officer. The Tribunal concluded that the evaluation of law by the WTO with reference to the audit note constituted valid information, supporting the belief of escapement of wealth. Therefore, the initiation of reassessment proceedings was deemed valid, and the orders of the AAC were set aside for fresh disposal on merits.

In summary, the Tribunal upheld the validity of the reassessments made under section 17 of the WT Act, emphasizing the importance of valid information supporting the belief of escapement of wealth. The evaluation of law by the WTO based on the audit report was considered sufficient grounds for initiating reassessment proceedings, overriding the AAC's decision. The appeals by the revenue were treated as allowed, and the orders were restored for fresh disposal in accordance with the law.