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TMI Blog1986 (9) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... same wealth. For the assessment year 1980-81, the assessee had filed her return showing net wealth of Rs. 2,10,947 and the WTO completed the assessment on 28-10-1980 on the same wealth as shown by the assessee. The assessee had owned certain agricultural land. In respect of both the years, the assessee had shown the value of this agricultural land at Rs. 62,300. While completing the assessments, the WTO adopted the same value. Subsequently, the WTO found that the assessee had sold a portion of that agricultural land on 25-2-1982 and 3-7-1982 for a total consideration of Rs. 8,50,000. In view of this, the WTO felt that the value of the agricultural land, as disclosed by the assessee for Rs. 62,300 on the valuation dates 31-3-1979 and 31-3-1980, was low. The WTO, hence, came to believe that by reason of failure on the part of the assessee to disclose truly the value of the agricultural land, the net wealth chargeable to tax had escaped assessment. The WTO initiated proceedings under section 17(1)(a) of the Wealth-tax Act, 1957 ('the Act') to assess the wealth that had escaped assessment. The reassessment for both the years were completed by the WTO on 19-5-1984. In these reassessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uation of land had not been properly made. He hence set aside the assessments with a direction to the WTO to make the assessments afresh after referring the matter of valuation of land to the departmental valuer. Being aggrieved with the decision of the AAC, the assessee has now come up in appeal before us. The contention of the assessee is that the AAC had erred in holding that the provisions of section 17(1)(b) were applicable to the facts of the case. It is further contended that, in any event, since the WTO had proceeded under section 17(1)(a), the AAC was not justified to convert those proceedings into proceedings under section 17(1)(b). It was stated that the AAC, after having held that the proceedings under section 17(1)(a) were not justified, should have proceeded to cancel the reassessment proceedings. The submission of the assessee before us is that the reassessment proceedings, should be struck down as being illegal and void ab initio. 6. First of all, we will examine whether the provisions of section 17(1)(b) can be considered to be applicable to the facts of the present case or not. The AAC has held that the provisions of section 17(1)(b) were applicable in the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in respect of which the notice had been issued. It was contended by the assessee that the circumstances existing in a later year may not exist in a previous year and hence there was no justification to issue a notice for the assessment year 1960-61 on the basis of some information which pertained to the assessment year 1963-64. This contention of the assessee was accepted. 8. But, according to us, this case will not be of any help to the assessee. On the valuation dates 31-3-1979 and 31-3-1980 relevant to the assessment years 1970-80 and 1980-81, the assessee had shown the value of a certain land at Rs. 62,300. Subsequently, it was found that a portion of that land was sold on 25-2-1982 and 3-7-1982 for Rs. 8,50,000. Will this fact of the sale of land for a sum of Rs. 8,50,000 within two to three years of the valuation dates under consideration not lead to a reasonable inference that the value of land as shown by the assessee at Rs. 62,300 for these valuation dates was low ? This fact of the sale of land at a much higher price is definitely information telling that the value of land on the valuation dates under consideration was much more than the mere Rs. 62,300 which had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r such belief. Whether the reason was adequate or sufficient for such a belief is not required to be gone into. We, hence, uphold the action for reassessment. 10. Now the further question whether the reassessment proceedings, which had been initiated under section 17(1)(a), could be sustained by treating the notice as being one under section 17(1)(b), will be examined. The contention of the assessee is that the AAC having found that conditions for initiating reassessment proceedings under section 17(1)(a) were not satisfied, the AAC was not justified to still sustain the reassessment proceedings on the ground that conditions laid down under section 17(1)(b) were satisfied. The assessee has on this behalf relied on the decision of the Bombay High Court in the case of New Kaiser-I-Hind Spg. Wvg. Co. Ltd. v. CIT [1977] 107 ITR 760. The High Court has observed : " The propositions that emerge from a consideration of the above authorities are as follows : (1) If a notice under section 34(1) expressly specifies that it is under clause (a) thereof, no reassessment in respect of any item can be made under clause (b) of that section under the jurisdiction to reassess acquired by tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ITO had initiated reassessment proceedings for the assessment years 1947-48 and 1950-51 under section 34(1)(a). In the reassessments framed by him, he also disallowed the interest payable to V.M. Co. which had been allowed as a deduction in the original assessments. It was observed by the High Court that in the course of making reassessment after having initiated reassessment proceedings under section 34(1)(a) in respect of certain items of escaped income, the ITO could not rope in such items which did not satisfy the conditions of section 34(1)(a), but satisfied the conditions of section 34(1)(b). It was observed that under the jurisdiction to reassess under clause (a) of section 34(1), no reassessment of any item could be made under clause (b). 11. The facts of the case of New Kaiser-I-Hind Spg. Wvg. Co. Ltd. go to show that the proceedings under section 34(1)(a) were, in that case, validly initiated and in the reassessment, it was not only the items which satisfied the conditions of section 34(1)(a) which were brought to tax, but also such items which satisfied the conditions of section 34(1)(b). The question which had arisen in that case was whether under the jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellate authority is of the view that action under clause (a) of section 17(1) has not been validly taken. Hence the question that arises for consideration is whether the action for reassessment, in case it is maintainable under clause (b), should be sustained or not. It is a question different from the one which had been referred to the Bombay High Court in the case of New Kaiser-I-Hind Spg. Wvg. Co. Ltd. 13. We will draw attention of the Gujarat High Court in the case of CWT v. Chhatrshal Sinhji D. Zala [1982] 135 ITR 826. In that case, for the assessment years 1961-62 to 1967-68, the WTO completed the assessments of the assessee accepting the value of the property declared by the assessee at Rs. 1 lakh. For the assessment year 1968-69, the assessee declared the market value of the property at Rs. 3,77,200 on the basis of the valuer's report. In view of the valuation made by the valuer, the WTO reopened the assessments under section 17(1)(a) on the ground that the assessee had failed to disclose fully and truly all material facts necessary for the assessment of his net wealth for the assessment years 1961-62 to 1967-68, and reassessed the net wealth taking into account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions limiting the conditions under which notices under clause (a) or clause (b) of section 147 can be issued and assessment has to be completed do not indicate that clause (a) or clause (b) deal with two separate jurisdictions. It is true that there are separate limitations prescribed for different contingencies but some of the conditions are common and provided the conditions which are common are all fulfilled and the other limitations of the other clause are also fulfilled, then action taken in respect of one might be justified with reference to the powers under the other clause. Even though the ITO might have chosen to make the assessment under the more stringent and onerous provisions of section 147(a), his action might be sustained under section 147(b) provided the conditions precedent are satisfied and are found on record. " 15. Attention is also drawn to the decision of the Delhi High Court in the case of CIT v. Banwari Lal Sons Ltd. [1982] 137 ITR 91. The assessee-company had let its building to the American embassy at a rent of Rs. 3,212. During the accounting year relevant to the assessment year 1961-62, the embassy vacated the building and the building was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to be decided is whether the WTO had correctly assumed jurisdiction to reassess. It may be that under some impression he has chosen to proceed under a clause, which, on examination, is not found to be applicable. But it cannot be denied that he had the competence to assume jurisdiction under the other clause. We fail to understand as to how we can, under the circumstances, say that he has not assumed jurisdiction in accordance with law. The mere mention of a different clause, which in appeal is not considered to be applicable, will not detract from the competence to assume jurisdiction to reassess which the law has conferred on him. The question which we have to consider is whether the law actually confers the jurisdiction, which he has assumed. Looked at thus, we find that the WTO has assumed jurisdiction to reassess properly. We, hence, uphold the order of the AAC and reject the assessee's ground of appeal that the assessments are ab initio invalid. 17. Another contention raised by the assessee was that the AAC was not justified to give a direction in his order that the WTO should refer the matter of the valuation of land to the departmental valuation cell before completing t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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