1973 (2) TMI 51 - HC - Wealth-tax

Summary

Issues Involved:

1. Discretionary power of the Commissioner under section 18(2A) of the Wealth-tax Act.
2. Timing and validity of notices issued under section 17 of the Wealth-tax Act.
3. Interpretation of the term "issue" in section 18(2A) of the Wealth-tax Act.
4. Requirement of notice under section 14(2) of the Wealth-tax Act.
5. Administrative vs. quasi-judicial nature of the Commissioner's order under section 18(2A).

Comprehensive, Issue-wise Detailed Analysis:

1. Discretionary Power of the Commissioner under Section 18(2A) of the Wealth-tax Act:

The petitioner argued that the Commissioner's power under section 18(2A) is discretionary but must be exercised if the conditions for its exercise exist, as the power is coupled with a duty. The court agreed, stating that the power conferred under section 18(2A) is for the benefit of the assessee, and if the circumstances calling for its exercise exist, the Commissioner cannot refuse to exercise it on the ground that it is discretionary. The court cited several precedents, including Goverdhan Lal Jagadish Kumar v. Commissioner of Income-tax and L. Hirday Narain v. Income-tax Officer, to support this view.

2. Timing and Validity of Notices Issued under Section 17 of the Wealth-tax Act:

The petitioner contended that the notices under section 17 were issued after he had filed his returns and were ante-dated. The court found no material evidence to support this claim and dismissed it. The court emphasized that mere declaration of intention to file returns does not amount to full disclosure of net wealth as required by section 18(2A).

3. Interpretation of the Term "Issue" in Section 18(2A) of the Wealth-tax Act:

The petitioner argued that the term "issue" in section 18(2A) should be interpreted to mean "serve." The court agreed, citing judicial interpretations where "issue" has been held to mean "serve," including Sri Nivas v. Income-tax Officer and Banarsi Debi v. Income-tax Officer. The court reasoned that Parliament must have been aware of these interpretations and used the term in that sense. Consequently, the court concluded that a notice cannot be said to have been issued unless it is served, and if an assessee makes a disclosure before a notice is served, he is entitled to the benefit under section 18(2A).

4. Requirement of Notice under Section 14(2) of the Wealth-tax Act:

The petitioner claimed that no notices under section 14(2) were issued to him. The court found no material difference between a notice under section 17 and a notice under section 14(2), as both require an assessee to file a return. Therefore, this contention was dismissed.

5. Administrative vs. Quasi-judicial Nature of the Commissioner's Order under Section 18(2A):

The department argued that the order under section 18(2A) is administrative and not subject to writ jurisdiction. The court found this contention without merit, stating that even administrative orders are amenable to writ jurisdiction if they are contrary to law. The court noted that the impugned order was passed after an oral hearing, making the distinction between administrative and quasi-judicial orders less relevant in this case.

Conclusion:

The court allowed the writ petition, quashed the Commissioner's order dated September 7, 1972, and directed the Commissioner to restore the petitioner's application under section 18(2A) and decide it afresh in accordance with the law and the court's observations. The petitioner was awarded costs.