9911796707
TMI Blog1994 (9) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... Thakur Vijay Bahadur Singh was the assessee to wealth-tax under the provisions of the Wealth-tax Act, 1957 (for short the "Act"). This assessee expired on February 27, 1991. She has executed a will making the petitioner, her daughter, the executor of that will. Respondent No. 2 (Assistant Commissioner of Income-tax), Investigating Circle, issued notice to the petitioner in respect of the aforesaid assessee, as inheritor of the property under section 17 of the Act (annexure "D") proposing to reassess on the linchpin that net wealth has escaped assessment for the assessment year 1981-82 in the aforesaid petition and for subsequent years till 1990-91 in the other connected petitions. The assessment year in each case is from April 1st to March 31st. After issuance of the notice, respondent No. 2 referred the matter to respondent No. 3 (The Valuation Officer, Income-tax Department) for report and respondent No. 3, in turn, issued notice to the petitioner for the purposes of valuation of the property in question under section 16A of the Act for the purpose of completion of proceedings as initiated with the aforesaid notice under section 17 of the Act. Aggrieved by the notice and the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntions so far as the question of reference to respondent No. 3 is concerned. Law first. Section 16A of the Act is inserted by the Taxation Laws (Amendment) Act, 1972, effective from January 1, 1973. The scope is clarified by employing the expression "where under .... assessment", by the Direct Tax Laws (Amendment) Act, 1989, effective from April 1, 1989, and the words "Wealth-tax Officer" have been replaced by the words "Assessing Officer" by the Direct Tax Laws (Amendment) Act, 1987, effective from April 1, 1988. Even section 17 of the Act is altered by the Direct Tax Laws (Amendment) Act, 1987, effective from April 1, 1989. It is profitable to reproduce the relevant parts of sections 16A and 17 of the Act. Section 16A(1) of the Act provides as under : "16A. (1) For the purpose of making an assessment (including an assessment in respect of any assessment year commencing before the date of coming into force of this section) under this Act, where under the provisions of section 7 read with the Rules made under this Act or, as the case may be, the Rules in Schedule III, the market value of any asset is to be taken into account in such assessment, the Assessing Officer may refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Valuation Officer." What emerges then is that on receipt of the order passed under sub-section (3) of section 16A of the Act (holding that the value has been correctly declared in the return made by the assessee) or under sub-section (5) of section 16A of the Act (recording estimation of the value of the asset) by the Valuation Officer, the Assessing Officer shall, so far as the valuation of the asset in question is concerned, proceed to complete the assessment in conformity with the estimate of the Valuation Officer. This exercise manifestly furnishes a good guide and offers assistance in determination of the assessment required to be made in terms of section 16(3) of the Act which provides as under : "16. (3) On the day specified in the notice issued under sub-section (2) or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by order in writing, assess the net wealth of the assessee and determine the sum payable by him on the basis of such assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief and indicator of escapement, is the sine qua non for exercise of the power conferred under the law. The law does not permit retrojection to a previous stage. In Onkarji's case [1982] 135 ITR 188, the Division Bench of this court took the view that the officer had no jurisdiction to make a reference to the Valuation Officer where the assessment for the relevant year was not pending. In K. M. Ramdas's case [1987] 166 ITR 706, the Karnataka High Court held as under : "Section 2(ca) of the Act which defines 'assessment' includes reassessment also. But, the term 'assessment' occurring in section 16A of the Act, in the context, can be given the restricted meaning of assessment only and cannot be given the extended meaning as defined in section 2(ca) of the Act. The extended meaning in the definition section must be applied only when the context demands and not otherwise. In my view, the context of section 16A of the Act demands that the extended meaning in section 2(ca) cannot be given to the term 'assessment' occurring in section 16A of the Act ...... On the foregoing discussion, it follows that the notices issued by the Valuation Officer for the assessment years 1977-78 to 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1975. The Tribunal was not justified in supplanting the reasons recorded by the Wealth-tax Officer and, moreover, the reason so supplied by the Tribunal could not have been in existence on the date when the assessments were reopened. The Tribunal, therefore, was not justified in holding that the Wealth-tax Officer was right in reopening the assessments in question." The respondents have placed reliance on two Supreme Court decisions as cited above. In my view, these are not helpful to them because the validity of the notices under section 17 of the Act is not questioned by the petitioner and no attempt, as recorded above, is made to clip the wings of the Assessing Officer so far as the enabling power under the aforesaid section is concerned. In para 13 of the "return", the respondents have pleaded that-- "That the right to refer under section 16A is very much there because the present proceedings are also assessment proceedings." This contention is contrary to the decision as noted above. The respondents, however, went on to plead further-- "That it is logical to suggest that section 16A is not applicable to reassessment proceedings." If this is so, then the argument ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verify the extent of built-up area, nature of construction, age of building, income fetched or fetchable, valuation of such house in the vicinity, estimate of valuation on relevant date, comparable position, etc., and thus, to decide about the extent of net wealth chargeable to tax vis-a-vis the return. The aforesaid provision, enabling in nature, is to operate in lieu of and not in addition to collection of evidence under section 16A of the Act. Once that is the mode, other modes would appear to be forbidden. The withdrawal of the order of reference thus imposes no hurdle or fetter in the completion of the proper reassessment as envisaged under the law. Some do hold that tax evasion has been the national sport of India, a situation which needs to be sent on holiday. This has to be changed. Jean Monnet, however, observed that "men will only accept change in the face of necessity and they see that necessity only when confronted by crisis". In 1979, Ireland abolished wealth-tax, Germany appreciably lowered it, the U.S.A. reduced capital gains tax and the U.K. slashed its maximum rate of personal tax from 83 to 60 per cent. It seems that our economic efficiency and efficacy still d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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