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TMI Blog2011 (7) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... e instance of the Revenue, challenging the order of the Income Tax Appellate Tribunal, Madras "D" Bench, Chennai, raising the following questions of law:- "1. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in holding that the reassessments made for the assessment year 1985-86 were valid under Section 17 of the Wealth Tax Act? 2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in not considering Section 17(1)(b) which clearly mentions that any information in possession of the wealth tax officer for initiating reassessment proceedings and the valuation officer's report would constitute an information for validly reopening the assessment? 3. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in not considering the judgments of the Full Bench of the Kerala High Court in the case of CWT Vs. V.Cleetus, 213 ITR 14?" 2. The assessment year in question is 1985-1986. In respect of the said assessment year, the assessment was originally completed under Section 16(3) of the Wealth Tax Act on 13.3.199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not be revised. Citing the decision of the Supreme Court in the case of CIT ANOTHER Vs. FORAMER FRANCE reported in 264 ITR 566, the Revenue's appeal was dismissed by the Income Tax Appellate Tribunal Chennai Bench 'D'. Hence, the present appeal. 5. Learned standing counsel appearing on behalf of the Revenue placed reliance on the decision of the Bombay High Court in the case of COMMISSIONER OF WEALTH TAX Vs. SONA PROPERTIES P. LTD., reported in (2010) 327 ITR 592 (BOM), to contend that when the reference to the Valuation Officer under Section 16A was well before the completion of the assessment and that the original assessment had to be completed within the period of limitation, on receipt of the valuation report, rightly the assessment was reopened. Going by Section 17(1)(b) of the Wealth Tax Act, as it then stood, reopening was based on materials. Thus even though there was no omission or failure on the part of the assessee in disclosing the details of net value, taking the valuation report as a good information in possession of the Wealth Tax Officer, the reassessment done, was in order. 6. Per contra, learned counsel appearing on behalf of the assessee pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt, the Officer had to complete the assessment on account of the limitation. Hence, only after passing the assessment on 13.3.1990, the valuation report dated 12.3.1991 was received. Thereafter, a notice under Section 17 was issued on 16.3.1993. 10. The provision of law relating to assessment on the wealth escaping assessment, as it then stood during the material assessment year 1985-86, reads as follows: "17. Wealth escaping assessment (i) If the Wealth-tax 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 under-assessment 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, the failure to disclose the material particulars fully and truly had led the Officer to believe that there was an escapement of tax either by reason of under-assessment or assessment at too low a rate. As far as sub-clause (b) is concerned, notwithstanding that there was no omission or failure on the part of the assessee, the Officer must have information in his possession to result in a reopening of the assessment. 12. It is an admitted fact that the assessee had returned its income and the materials were also placed before the Wealth Tax Officer at the time of the original assessment; thereby there is nothing to suggest that the assessee had withheld the material facts or that the facts placed before the Officer are not truly and fully disclosed, necessary for assessment. Hence, we do not find any ground for this Court to accept the case of the Revenue that the Officer had exercised his jurisdiction under Section 17(1)(a) of the Wealth Tax Act to reopen the assessment. The second proviso to Section 17(1), which was introduced with effect from 1.4.1989, is not available during the relevant assessment year. 13. In the decision reported in 264 ITR 566 (Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er pointed out that it was unnecessary to express any opinion as regards the jurisdiction of the Wealth Tax Officer to obtain the valuation report under Section 16-A of the Act. In the light of the findings under Section 17(1)(a), this Court rejected the plea of the Revenue. 16. The reassessment proceedings were initiated in respect of the assessment year 1985-86 by issuing a notice on 16.3.1993. When the case is to fall under Section 17(1)(b), then the proceedings should have been taken to serve the notice within four years of the end of that assessment year. Going by the above dates, the proceedings taken under Section 17 of the Act, would not fall under 17(1)(b) of the Act. Hence, necessarily, the same has to be considered with reference to the provisions under Section 17(1)(b) of the Wealth Tax Act. Even here, to sustain the proceedings, the twin conditions, namely, that the Officer had reason to believe that by reason of omission or failure to disclose fully and truly all material facts necessary for assessment had resulted in an escapement of tax and that there was under-assessment in the assessee's case, must be present to justify a reopening under Section 17(1)(a) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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