Section 17 - Wealth escaping assessment - Wealth Tax Act, 1957

Wealth escaping assessment. 17. 1 [(1) If the Assessing Officer 2 [has reason to believe] that the net wealth chargeable to tax in respect of which any person is assessable under this Act has escaped assessment for any assessment year (whether by reason of under- assessment or assessment at too low a rate or otherwise), he may, subject to the other provisions of this section and section 17A, serve on such person a notice requiring him to furnish within such period, 3 [***] as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth the net wealth in respect of which such person is assessable as on the valuation date men tioned in the notice, along with such other particulars as may be required by the notice, and may proceed to assess or reassess such net wealth and also any other net wealth chargeable to tax in respect of which such person is assessable, which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section for the assessment year concerned (hereafter in this section referred to as the relevant assessment year), and the provisions of this Act shall, so far as may be, apply as if the return were a return required to be furnished under section 14 : Provided that where an assessment under sub-section (3) of sec tion 16 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any net wealth chargeable to tax has escaped assess ment for such assessment year by reason of the failure on the part of the assessee to make a return under section 14 or section 15 or in response to a notice issued under sub-section (4) of section 16 or this section or to disclose fully and truly all material facts necessary for his assessment for that assessment year : 4 [ Provided further that the Assessing Officer shall, before issuing any notice under this sub-section, record his reasons for doing so. ] 5 [Provided also that nothing contained in the first proviso shall apply in a case where any net wealth in relation to any asset (including financial interest in any entity) located outside India chargeable to tax, has escaped assessment for any assessment year ] : 6 [Provided also that the Assessing Officer may assess or reassess such net wealth, other than the net wealth which is the subject matter of any appeal, reference or revision, which is chargeable to tax and has escaped assessment."; ] Explanation . Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. (1A) No notice under sub-section (1) shall be issued for the relevant assessment year, 7 [( a ) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause ( b ) 8 [ or clause (c ] ) ; ( b ) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the net wealth chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees ten lakhs or more for that year.] 9 [ ( c ) if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the net wealth in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year. ] 10 [Explanation . 1 ] For the purposes of sub-section (1) and sub-section (1A), the following shall also be deemed to be cases where net wealth chargeable to tax has escaped assessment, namely : ( a ) where no return of net wealth has been furnished by the assessee although his net wealth or the net wealth of any other person in respect of which he is assessable under this Act on the valuation date exceeded the maximum amount which is not chargeable to wealth-tax ; ( b ) where a return of net wealth has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the net wealth or has claimed excessive exemption or deduction in the return. 11 [ ( c ) where a person is found to have any asset (including financial interest in any entity) located outside India. ] 12 [ Explanation 2. For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012. ]] (1B) ( a ) In a case where an assessment under sub-section (3) of section 16 or sub-section (1) of this section has been made for the relevant assessment year, no notice shall be issued under sub-section (1) 13 [by an Assessing Officer, who is below the rank of Assistant Commissioner 14 [or Deputy Commissioner], unless the 15 [Joint] Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice] : Provided that, after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, that it is a fit case for the issue of such notice. ( b ) In a case other than a case falling under clause ( a ), no notice shall be issued under sub-section (1) by an Assessing Officer, who is below the rank of 16 [Joint] Commissioner, after the expiry of four years from the end of the relevant assessment year, unless the 16 [Joint] Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice.] 17 [Explanation. For the removal of doubts, it is hereby declared that the Joint Commissioner, the Commissioner or the Chief Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice, need not issue such notice himself. ] 18 [(2) Nothing contained in this section limiting the time within which any proceeding for assessment or reassessment may be com menced, shall apply to an assessment or reassessment to be made on such person in consequence of or to give effect to any finding or direction contained in an order under section 23, 24, 25, 27 or 29 19 [or by a Court in any proceedings under any other law]: Provided that the provisions of this sub-section shall not apply in any case where any such assessment or reassessment relates to an assessment year in respect of which an assessment or reassess ment could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any provision limiting the time within which any action for assessment or reassessment may be taken.] ------------------------------------- Notes: 1. Substituted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Before substitution, sub-section (1), as amended by the Wealth-tax (Amendment) Act, 1964, w.e.f. 1-4-1965, stood as under: "(1) If the Assessing Officer ( a ) has reason to believe that by reason of the omission or failure on the part of any person to make a return under section 14 of his net wealth or the net wealth of any other person in respect of which he is assessable under this Act for any assessment year or to disclose fully and truly all material facts necessary for assessment of his net wealth or the net wealth of such other person for that year, the net wealth chargeable to tax has escaped assessment for that year, whether by reason of underassessment or assessment at too low a rate or otherwise ; or ( b ) has, in consequence of any information in his possession, reason to believe, notwithstanding that there has been no such omission or failure as is referred to in clause ( a ), that the net wealth chargeable to tax has escaped assessment for any year, whether by reason of underassessment or assessment at too low a rate or otherwise, he may, in cases falling under clause ( a ) at any time within eight years and in cases falling under clause ( b ) at any time within four years of the end of that assessment year, serve on such person a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 14, and may proceed to assess or reassess such net wealth, and the provisions of this Act shall, so far as may be, apply as if the notice had issued under that sub-section." 2. Substituted vide the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Before it was read as;- "for reasons to be recorded by him in writing, is of the opinion" 3. Omitted vide the Finance Act, 2003, w.r.e.f. 1-4-1989. Before it was read as:- "not being less than thirty days," 4. Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. 5. Inserted vide Finance Act, 2012, w.e.f. 01-07-2012. 6. Inserted by Finance Act, 2008, w.e.f.1.4.2008. 7. Clauses ( a ) and ( b ) substituted by the Finance Act, 2001, w.e.f. 1-6-2001. Prior to their substitution, clauses ( a ) and ( b ) read as under: "( a ) in a case where an assessment under sub-section (3) of section 16 or sub-section (1) of this section has been made for such assessment year, ( i ) if four years have elapsed from the end of the relevant assessment year, unless the case falls under sub-clause ( ii ) or sub-clause ( iii ) ; ( ii ) if four years, but not more than seven years, have elapsed from the end of the relevant assessment year, unless the net wealth chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees five lakhs or more for that year ; ( iii ) if seven years, but not more than ten years, have elapsed from the end of the relevant assessment year, unless the net wealth chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees ten lakhs or more for that year ; ( b ) in any other case, ( i ) if four years have elapsed from the end of the relevant assessment year, unless the case falls under sub-clause ( ii ) or sub-clause ( iii ) ; ( ii ) if four years, but not more than seven years, have elapsed from the end of the relevant assessment year, unless the net wealth chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees two lakhs and fifty thousand or more for that year ; ( iii ) if seven years, but not more than ten years, have elapsed from the end of the relevant assessment year, unless the net wealth chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees five lakhs or more for that year." 8. Inserted by the Finance Act, 2012, w.e.f. 1-7-2012. 9. Inserted by the Finance Act, 2012, w.e.f. 1-7-2012. 10. Inserted by Finance Act, 2008, w.e.f.1.10.1998. Further Explanation has been numbered as Explanation 1 thereof, and after Explanation 1 as so numbered, the following Explanation has been inserted Finance Act, 2012, w.e.f. 01-07-2012. 11. Inserted by the Finance Act, 2012, w.e.f. 1-7-2012. 12. Inserted by the Finance Act, 2012, w.e.f. 1-7-2012. 13. Substituted vide the Finance Act, 1990, w.e.f. 1-4-1990. Before it was read as:- "except by an Assessing Officer of the rank of Assistant Commissioner or Deputy Commissioner" 14. Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998. 15. Substituted vide the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998. Before it was read as;- "Deputy" 16. Substituted vide the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998. Before it was read as;- "Deputy" 17. Inserted by the Finance Act, 2008, w.r.e.f. 1-10-1998. 18. Inserted by the Wealth-tax (Amendment) Act, 1964, w.e.f. 1-4-1965. 19. Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.