Assessments in such cases should be reopened u/s.17(1)(b). - Income Tax - 184/CBDT

INSTRUCTION NO 184/CBDT, Dated: June 22, 1970 Section(s) Referred: 17(1)(a) Statute: Wealth Tax Act, 1957 Attention is invited to Board's circular F.NO.6/9/69-WT dated 3rd May 1969 in which instructions regarding reopening of earlier years assessments in the light of a valuer's certificate since filed by the assessee for a later year, were issued. 2. The matter has been reconsidered and the following instructions are issued in suppression of those contained in the said circular.: (a) Where the assessee files his wealth-tax return for the first time on the basis of a valuer's certificate disclosing a taxable net wealth, an enquiry should be made in regard to the possession of wealth in earlier year and if it is revealed that the assessee was liable for earlier years also, action u/s.17(1)(a) should be taken to reopen the earlier assessments. b) In cases where the assessee has already been assessed to wealth-tax for the earlier years and the valuation arrived at in the valuer's certificate for any later year, since filed by the assessee exceeds that adopted in the Wealth-tax assessments for the earlier years and the difference is due to the assessee having furnished incorrect particulars of his wealth, such as the area of the land and the building, its situation, etc., action should be taken to reopen the past assessments. c) In cases where the valuation arrived at by the valuer for any later year since filed by the assessee exceeds that adopted in the wealth-tax assessments for the earlier years, the difference having arisen on account of a different basis of valuation adopted by the valuer, and such a difference exceeds 25% of the value adopted for the earlier years, the WTOs should examine whether or not the assessee can plausibly explain the variation in value. For instance, if the valuation had been made in the earlier years on the basis of capitalisation of the net rent and the valuer has now determined the valuation on the basis of land and building method, it may not be possible to argue that the assessee did not have sufficient reasons to explain the variation in value. In the absence of any plausible explanation, the earlier assessments in such cases should be reopened u/s.17(1)(b). 3. In cases which are reopened under para 2(c) above, no action should be initiated u/s.18 of the W.T.Act, in view of the assurance given by the Deputy Minister referred to in the Board's circular dated 3rd May, 1969 mentioned above.