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TMI Blog2004 (12) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... void ab initio. 1.21 That in the facts and circumstances of the case, the Commissioner of Wealth Tax (Appeals) erred in holding that the Joint Commissioner of Wealth Tax, Special Range-18, New Delhi (who exercised jurisdiction over the erstwhile Triveni Engineering Industries Limited) had valid jurisdiction to reopen the completed assessment, even after the said company had merged with the appellant and ceased to exist. 1.22 That the Commissioner of Wealth-tax (Appeals) erred on facts and in holding that the Joint Commissioner of Wealth Tax, Special Range-18, New Delhi validly exercised jurisdiction to the exclusion of Joint Commissioner, Special Range-10, New Delhi, exercising jurisdiction over the appellant on the date of issue of notice under section 17 of the Act. 1.3 That the Commissioner of Wealth-tax (Appeals) erred on facts and in law in holding that the notice issued under section 17 of the Wealth Tax Act to the erstwhile Triveni Engineering Industries Limited, which was non existent as on the date of notice, was bad in law and the assessment framed pursuant to issue of such notice was void ab initio. 1.4 That the Commissioner of Wealth-tax (Appeals) erred on facts and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leted accepting the return of wealth vide order dated 4-2-2000. We may mention that in this Assessment Year only the movable assets that is value of motor vehicles was shown assessed and accepted at the same value which was filed by the assessee in the valuation report filed along with the return of wealth. The appointed date of merger is 1-10-1997. Subsequently, it was noticed that the assessee was in receipt of rental income of Rs. 16,23,093 from the following persons in respect of immovable properties:- (1) Triveni Flexi Box Limited, Bangalore Rs. 12 lakhs (2) GEC Alstham Triveni Naini Rs. 60,000. (3) GEC Alstham Triveni, Bangalore, Rs. 3,10,000. (4) Rent received from employees in respect of residential premises at Khathavli Rs. 63,093. 5. The Assessing Officer (J.C., W.T., S.R. 18, New Delhi) issued notice dated 4-10-2000 under section 17 of the W.T. Act as assessment was reopened on the ground that as per Wealth Tax provisions of Schedule-III read with section 2(ea)(i) of W.T. Act, 1957 the capitalized value of rented properties are includable in the net wealth of the assessee. The assessee company did not file return in response to the notice under section 17 of the W.T. Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver M/s. Gangeshwar Limited which is known as Triveni Engineering and Industries Ltd., after the merger. It was also submitted that intimation of the merger was given to Assessing Officer (JCIT, S.R. 18 as well as to JCIT, SR 10). It was not appreciated by the JCIT, S.R. 18, New Delhi that on merger the erstwhile Triveni Engineering and Industries Limited had ceased to exist as a legal entity and no notice could have been validly issued and served to such a non existent entity. On merits, the same submissions were reiterated which were made before the Assessing Officer claiming that joint venture companies are part of the assessee and that the rent received from the employees using the property of the assessee are exempt from tax. The CWT(A) rejected both the contentions of the assessee and rejected the appeal of the assessee on both the issues. However, CWT(A) directed the Assessing Officer to make certain corrections as regards arithmetical mistakes in the assessment order by which excess addition is made. The CWT(A) also directed the Assessing Officer to allow relief to the assessee as regards the rent received from some of the employees. The Assessing Officer was directed to ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T v. Surendra Kumar Bhadani [1987] 164 ITR 323 (Pat.) (5) CIT v. Fatelal [1996] 88 Taxman 320 (MP) (6) CIT v. Kumari Prabhavati Gupta [1997] 142 CTR (MP) 72 (7) R.C. Jain v. CIT [2004] 140 Taxman 379 (Delhi). The learned representative of the assessee also argued that the issue of notice to the amalgamating company subsequent to the amalgamation become effective is bad in law and void ab initio. The learned representative of the assessee relied upon decision of Madras High Court in the matter of CIT v. Express Newspapers Ltd. [1960] 40 ITR 38 and Order of Bombay Bench of ITAT in the matter of Makers Development Services Ltd. v. Dy. CIT [1992] 40 ITD 185. The learned representative of the assessee further submitted that section 124 of the I.T. Act defined territorial jurisdiction and transfer of file under section 127 of the I.T. Act can be made in the case of existing assessee, but, in this case amalgamating ceased to exist. Therefore, there cannot be transfer of file. The learned representative of the assessee further submitted that jurisdiction by acquiescence is not valid in law. He has relied upon decision of the Delhi High Court in Swaran Yash v. CIT [1982] 138 ITR 734. 9. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon by the counsel for the assessee are not applicable to the present case as they pertain to older law. 10. We have considered rival submissions and material pointed out by learned representative of the parties and observations of the authorities below. 11. According to section 3 of the Wealth Tax Act, there shall be charged for every Assessment Year, a tax in respect of net wealth on the corresponding valuation date of the every individual, Hindu undivided family and company at the rate or rates specified in Schedule-I. The definition of the net wealth is provided in section 2(m) of the W.T. Act and provides - "net wealth means, the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets; wherever located; belonging to the assessee on the valuation date; including assets required to be included in his net wealth as on that date under this act; is in excess of the aggregate value of all the debts owed by the assessee on the available date which have been incurred in relation to the said asset." Section 2(ea)(i) of the Wealth Tax Act as is relevant for the purpose of disposal of this appeal provides the definition of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of wealth tax. The Assessing Officer accepted the value of motor vehicles as per valuation report and completed the assessment vide order dated 4-2-2000. The Assessing Officer reopened the assessment on the ground that as per wealth tax provisions of Schedule-III read with section 2(ea)(i) of the Wealth Tax Act the capitalized value of the rented property are includable in the net wealth of the assessee. This fact was brought to his notice by the internal audit party and the Assessing Officer duly recorded the reasons for the same and issued notice under section 17 of the W.T. Act to the assessee. The show-cause notice dated 4-10-2000 under section 17 shows that it was issued and addressed to the assessee-company M/s. Triveni Engineering and Industries Limited, "Kailash", 2nd floor, 26, K.G. Market, New Delhi. The assessee-company very well responded the show-cause notice though no return was filed within 35 days of the receipt of this notice. The assessee filed reply dated 4-12-2000 before the Assessing Officer (JCIT, S.R. 18, New Delhi) which reads as under (copy of which is filed at page 75 of the paper book)- "Triveni Engineering Industries Ltd. {Formed by the Amalgamation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was also properly responded, which also proved that notice was served on the amalgamated/successor company having the same name and address as of the erstwhile company. Admittedly, Assessing Officer can proceed against amalgamated/successor company and could pass order also in respect of matters of erstwhile amalgamating company. The CWT(A) in the impugned order at page 5 has specifically mentioned that the assessee company was assessed with JCIT, S.R. 18, New Delhi. After reorganization of the department, the proceedings were transferred to DCIT, Circle 16(1), New Delhi. According to the CWT(A), DCIT, Cir. 16(1), New Delhi is also having jurisdiction in respect of amalgamated company that is M/s. Triveni Engineering and Industries Ltd., form ed after merger. The CWT(A) was also of the view that as regards the pending matters of the erstwhile company after merger, the same had to be handled by the successor company. The CWT(A) was also of the view that it is not correct to say that notice cannot be issued to the erstwhile company after merger. The finding of the CWT(A) about reorganization of the department have not been rebutted by the assessee by any material. The show-cause noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of income in response to notice under section 17 of the W.T. Act within the time allowed by the Assessing Officer. The CWT(A) was therefore justified in holding that the time limit for calling in question and dispute the jurisdiction of the Assessing Officer is lost as soon as the assessment has been completed. It is an admitted fact that the assessee has not challenged the jurisdiction of the Assessing Officer at any stage of the assessment proceedings. Therefore, CWT(A) rightly held that at the appeal stage the plea of the assessee cannot be entertained. We may also mention that section 127 is meant for transfer of the case, but, it is not such a case before us. Since the name of erstwhile amalgamating company and amalgamated/successor company starts with the same alphabet, therefore, same Assessing Officer could have jurisdiction over the successor company. Even as per finding of this CWT(A) after re-structuring of the department the proceedings before JCIT, S.R. 18, New Delhi were transferred to DCIT, S.R. 16(1), New Delhi. Therefore, the provisions contained in section 127 would not be helpful to the assessee. The learned counsel for the assessee submitted that the jurisdict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d (ii) How the Act itself views a defect of the nature involved in the present case? We may mention that the provisions of section 124(5) as were applicable in Assessment Year 1985-86 are almost similar to the provisions contained in section 124(3) of the I.T. Act after amendment which are applicable to the present case. The Hon'ble Allahabad High Court further held:- "Being an enactment aimed at collecting revenue, the Legislature did not intend collection of revenue to be bogged down on account of technical plea of jurisdiction. It has, therefore, prescribed the limit up to which the plea of jurisdiction may be raised. As provided in section 124(5)(a), the right is lost as soon as the assessment has been completed. Even where the right is exercised before the assessment is completed, the question is to be decided by the Commissioner or by the Board. Courts do not come into the picture. From the above provisions of the Act, it is apparent that the Act does not treat the allocation of functions to various authorities or officers as one of substance. It treats the matter as one of procedure and a defect of procedure does not invalidate the end action. The answer to the first questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cific details were mentioned in the audited balance sheet as merely rent is stated to have been received. Assessee has not given any break up of the rented property. Therefore, true and full facts were not disclosed to the Assessing Officer. The learned Departmental Representative filed copy of the order sheet of the original assessment and pointed out that even no discussion had taken place at the original stage in respect of rent received of the immovable properties. Therefore, there is no question of change of opinion in the aforesaid case by the Assessing Officer and Assessing Officer has rightly initiated the proceedings under section 17 of the W.T. Act. The learned Departmental Representative pointed out that the internal audit party pointed out factual mistake and error upon which Assessing Officer properly formed his opinion and recorded reasons for the same and initiated the re-assessment proceedings. The learned Departmental Representative relied upon decision of Hon'ble Supreme Court in CIT v. PVS Beedies (P.) Ltd. [1999] 237 ITR 13, in which it was held that reopening on the basis of factual information given by internal audit party is valid reopening of assessment. 16. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inguishable and is not applicable. Considering the above discussion, we do not find any justification to interfere in the orders of the authorities below. We uphold their finding and dismiss this ground of appeal of the assessee. 19. Whether authorities below were justified in making additions in the net wealth of the assessee in respect of value of immovable assets? 20. On this issue, it was submitted that three joint ventures from whom rent has been received are separate entities. According to the assessee, erstwhile M/s. Triveni Engineering and Industries Limited in terms of memorandum of articles of association was authorized to enter into partnership and other forms of occupation that any person or persons engaged in the similar area of business or enter into transaction with other companies engaged in any business or transaction capable of being conducted to the benefit of the assessee. The assessee stated to have entered into collaboration agreement that the companies mentioned above. It was also stated that the object of the collaboration was, to expand activities of the assessee company. Therefore, the premises were used by the assessee for business purposes. The CWT(A) di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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