1993 (3) TMI 194 - AT - Wealth-tax

Agricultural Land, Assessing Officer, Audit Objection, Guest House, Net Wealth, Original Assessment, Point Of Law, Reopening Assessment

Summary

Issues Involved:
1. Legality of the CWT (Appeals) order.
2. Validity of re-opening assessments without fresh material.
3. Consideration of audit objections as information for re-opening assessments.
4. Evidence regarding the use of guest house and classification of non-agricultural land as stock-in-trade.

Detailed Analysis:

1. Legality of the CWT (Appeals) Order:
The revenue contended that the CWT (Appeals) order was opposed to law and facts. However, the CWT (Appeals) found that the Assessing Officer lacked fresh material to re-open the assessments and that the assets brought to tax would have been exempt under section 40 of the Finance Act, 1983. Consequently, the CWT (Appeals) cancelled the re-assessments for the assessment years 1984-85, 1985-86, and 1986-87, and allowed the appeal for 1987-88.

2. Validity of Re-opening Assessments Without Fresh Material:
The Assessing Officer re-opened assessments for the years 1984-85, 1985-86, and 1986-87, claiming the assessee failed to disclose fully and truly all necessary materials, leading to wealth escaping assessment under section 17(1)(a) of the WT Act. The CWT (Appeals) observed that there was no fresh material justifying re-opening. The Tribunal upheld this view, noting that the Assessing Officer had already considered the balance sheets and other relevant documents during the original assessments.

3. Consideration of Audit Objections as Information for Re-opening Assessments:
The revenue argued that audit objections constituted information enabling the Assessing Officer to re-open assessments. However, relying on the Supreme Court's decision in Indian & Eastern Newspaper Society v. CIT, the Tribunal held that an audit party's opinion on a point of law does not qualify as information for re-opening assessments. The Tribunal found that the re-opening was based on a change of opinion rather than new information.

4. Evidence Regarding the Use of Guest House and Classification of Non-Agricultural Land as Stock-in-Trade:
The assessee contended that the guest house was used as staff quarters for employees earning less than Rs. 18,000 per year and that the non-agricultural land was stock-in-trade. The Tribunal noted that these facts were disclosed in the original returns and supported by contemporaneous income-tax proceedings. The CWT (Appeals) accepted these contentions, and the Tribunal upheld this view, noting that the assets would have been exempt under section 40 of the Finance Act, 1983.

Conclusion:
The Tribunal concluded that the re-assessments were not justified under section 17(1)(a) or 17(1)(b) of the WT Act due to the absence of new material and the improper reliance on audit objections. The Tribunal upheld the CWT (Appeals) order, confirming that the assets in question were exempt and that the re-assessments were based on a mere change of opinion. Consequently, the appeals by the revenue were dismissed.