2010 (4) TMI 440 - HC - Wealth-tax

Reassessment The Deputy Commissioner issued notice under section 148 of the Income tax Act, proposing to reopen the assessments for the assessment year 1989-90 and 1990-91, both under the Act as well as Wealth tax Act. Realizing the mistake, the Assistant Commissioner issued notice u/s 16(2) of the Wealth Tax Act, 1957 for the assessment year 1989-90 and 1990-91. The petitioner raised an objection to the notice which was rejected. On writ petition court, holding that the proceedings initiated apparently under the provisions of the Income tax Act for the purpose of revising the wealth tax assessment could not be sustained, set aside the notice with liberty to the Department to issue proper notice under the Wealth Tax Act to proceed further. Held that- the order passed by the court in the earlier writ petition quashing the orders and directing that it was open to the department to proceed afresh, did not meant that limitation provided for under section 17 of the wealth tax act was served for the purpose of issuing fresh notice.

Issues:
1. Jurisdiction to reopen assessment after the lapse of time under the Wealth-tax Act.
2. Validity of notices issued under section 17 of the Wealth-tax Act for assessment years 1990-91 and 1989-90.
3. Compliance with court directions regarding issuance of proper notice under the Wealth-tax Act.

Analysis:

Issue 1: Jurisdiction to reopen assessment after the lapse of time under the Wealth-tax Act
The petitioner sought a writ of certiorari to quash notices issued under section 17 of the Wealth-tax Act for assessment years 1990-91 and 1989-90, claiming that the reopening of assessment after the lapse of time was barred by limitation. The petitioner argued that the time limit provided under section 11 of the Wealth-tax Act is only 10 years, and as notices were issued long after the expiry of the time limit, there was no jurisdiction for the respondents to reopen the assessment.

Issue 2: Validity of notices issued under section 17 of the Wealth-tax Act for assessment years 1990-91 and 1989-90
The court observed that the Deputy Commissioner of Income-tax had initially proposed to reopen the assessment for the mentioned years under both the Income-tax Act and the Wealth-tax Act. However, a notice was mistakenly issued under section 148 of the Income-tax Act instead of under the Wealth-tax Act. Following court directions, the respondent subsequently issued notices under section 17 of the Wealth-tax Act. The court emphasized that proper notice under the Wealth-tax Act was necessary before proceeding with the assessment, and the failure to issue such notice rendered the proceedings initiated under the Income-tax Act invalid.

Issue 3: Compliance with court directions regarding issuance of proper notice under the Wealth-tax Act
In a previous order, the court had quashed earlier notices and directed the Department to proceed afresh if advised. However, the court clarified that this did not save the limitation provided under section 17 of the Wealth-tax Act for issuing fresh notices. As the notices were issued long after the time limit had expired, the court found them without jurisdiction due to limitation and subsequently allowed the writ petitions, closing the related motions.

This detailed analysis of the judgment highlights the issues regarding jurisdiction, validity of notices, and compliance with court directions in the context of the Wealth-tax Act assessment for the mentioned years.

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