1972 (9) TMI 26 - HC - Wealth-tax

This rule is directed against the notice under section 17 of the Wealth-tax Act, 1957, by which the petitioner was asked to file a return as the Wealth-tax Officer has reason to believe that net wealth chargeable to tax for the assessment years 1963-64 to 1966-67 has escaped assessment within the meaning of section 17 of the Wealth-tax Act, 1957

Summary

Issues:
1. Validity of notice under section 17 of the Wealth-tax Act, 1957 for assessment years 1963-64 to 1966-67.
2. Omission by the petitioner to submit fully and truly all materials for assessment.
3. Presence of information for the respondents to issue notice under section 17(1)(b) of the Act.
4. Limitation period for reopening assessments under section 17(1)(b).
5. Validity of notices under section 17(1)(a) for assessment years 1962-63, 1963-64, and 1965-66.
6. Decision on the point regarding wealth-tax chargeability where gift-tax has been paid.

Analysis:
The judgment concerns a rule against a notice issued under section 17 of the Wealth-tax Act, 1957, for the assessment years 1963-64 to 1966-67. The petitioner, who had settled properties in a trust deed, argued that there was no omission on their part to disclose material facts before a nil assessment was made. The court noted that the trust deed clearly showed the transfer of property to trustees for the benefit of the petitioner's family, indicating no omission in providing necessary information for assessment purposes.

Regarding the presence of information for issuing the notice under section 17(1)(b), the court found that the Income-tax Officer had acknowledged the inclusion of property income in the petitioner's income tax assessment, leading to the initiation of Wealth-tax proceedings based on this information. Therefore, the court held that there was sufficient information for the Wealth-tax Officer to act under section 17 of the Act.

The judgment also addressed the limitation period for reopening assessments under section 17(1)(b), stating that assessments beyond four years could not be reopened. The court upheld the validity of the notice for the assessment year 1966-67 under section 17(1)(b) due to the presence of reasons to believe that wealth had escaped assessment. However, notices under section 17(1)(a) for other years were deemed invalid and set aside as the Wealth-tax Officer lacked sufficient reason to believe in those instances.

In conclusion, the court made the rule absolute in part and discharged it in part, allowing the petitioner to raise all points before the Wealth-tax Officer, including the issue of wealth-tax chargeability where gift-tax had been paid. The court granted a stay of operation of the order for two weeks after reopening.