1981 (1) TMI 170 - AT - Wealth-tax

Summary

Issues Involved:
1. Status of the assessee as an individual or HUF.
2. Validity of reopening assessments under section 17(1)(b) of the Wealth-tax Act, 1957.

Detailed Analysis:

1. Status of the Assessee:
The primary issue was whether the assessee should be assessed as an individual or as a Hindu Undivided Family (HUF). The assessee was a coparcener of an HUF which was partitioned on Diwali 1969. He was unmarried at the time of partition and got married on 2-5-1976. Initially, he filed wealth-tax returns for the assessment years 1973-74 to 1975-76 in the status of HUF. The Wealth-tax Officer (WTO) reopened the assessments, asserting that the correct status of the assessee should be individual, relying on the Supreme Court decision in C. Krishna Prasad v. CIT [1974] 97 ITR 493, which held that an unmarried coparcener should be assessed as an individual.

The Tribunal upheld the WTO's decision, stating that the partition of the HUF in which the assessee was a coparcener took place on Diwali 1969, and he was married on 2-5-1976. Therefore, he was to be assessed in the status of an individual as per the Supreme Court decision in Krishna Prasad.

2. Validity of Reopening Assessments:
The second issue was the validity of reopening the assessments under section 17(1)(b). The WTO reopened the assessments based on the Supreme Court decision in Krishna Prasad, which was delivered on 12-11-1974. The original assessments for the years 1974-75 and 1975-76 were made on 15-1-1975 and 25-11-1975, respectively. The WTO recorded his reasons for reopening the assessments on 7-10-1977, stating that the assessee's correct status was individual, not HUF.

The Tribunal found that the reopening of assessments was justified as the Supreme Court decision constituted 'information' within the meaning of section 17(1)(b). It was held that the decision of the Supreme Court is an information on the basis of which the WTO has reopened the assessments, based on subsequent facts and material of the original assessment.

Dissenting Opinion:
The Accountant Member disagreed with the majority view for the assessment years 1974-75 and 1975-76. He argued that the WTO should have taken judicial notice of the Supreme Court decision while making the original assessments. Since the decision was available before the original assessments were made, the reopening under section 17(1)(b) was not justified for these years.

Third Member Decision:
The Third Member agreed with the Judicial Member, holding that the reopening of the assessment proceedings for the assessment years 1974-75 and 1975-76 was valid. It was concluded that the Supreme Court decision in Krishna Prasad constituted valid 'information' for the purposes of section 17(1)(b), and the reopening of the assessments was justified.

Conclusion:
The Tribunal, by majority, upheld the reopening of the assessments and confirmed that the correct status of the assessee for the assessment years 1973-74 to 1975-76 was individual, not HUF. The appeals were dismissed, and the action of the WTO and the AAC was upheld.