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TMI Blog1985 (8) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to the assessment years 1973-74, 1974-75, 1975-76 and 1976-77, allegedly on the round that they were not liable to payment of wealth-tax. In the case of Smt. Gulnar Marfatia, I reference was made to the Valuation Officer on January 21, 1977, in respect of the assessment year 1976-77. The report of the Valuation Officer was received on April 22, 1978. The Valuation Officer assessed the value of the assets of the firm at Rs. 9,92,000. After the report of the Valuation Officer was received, the Wealth-tax Officer issued notices to Naushir Marfatia under section 17(1) of the Wealth-tax Act on the ground that he has reason to believe that on account of the failure on the part of such person to make a return of wealth under section 14 of the Wealthtax Act of his net wealth, the net wealth chargeable to tax under the Act had escaped assessment for the years 1973-74, 1974-75, 1975-76 and 1976-77. Similar notices were issued to Master Kairas Tarapore under section 17(1) of the Wealth-tax Act in respect of the assessment years 1975-76 and 1976-77. The Wealth-tax Officer also issued notices for reassessment to Mst. Gulnar Marfatia in respect of the assessment years 1975-76 and. 1976 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Satyendra Chunder Ghose v. WTO [1980] 126 ITR 102, held that the assessments had not been validly reopened and the orders passed by the Appellate Assistant Commissioner were set aside and the assessments made under section 17 of the Wealth-tax Act were cancelled. It appears, on a reading of the order of the Appellate Tribunal dated February 16, 1981, that it only considered the case of Smt. Gulnar Marfatia as it came to the conclusion that on the basis of the report of the District Valuation Officer under section 16A, the assessments could not have been validly reopened. In the case of Naushir K. Marfatia and Master Kairas Tarapore, assessments had not taken place earlier as neither did the concerned assessee file any returns under section 14(1) of the Wealth-tax Act nor did the Wealth-tax Officer give any notice under section 14(2) of the Act. The question as to whether the report of the District Valuation Officer received in connection with the assessment of Mst. Gulnar Marfatia relating to the assessment year 1976-77 could constitute material for the Wealth-tax Officer for having reason to believe that the net wealth of the assessee chargeable to tax under the Act has escaped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under section 14(1) and were not called upon to file a return under section 14(2) by the Wealth-tax Officer, the report of the Valuation Officer in respect of a partner of the firm would constitute material for having reason to believe that the net wealth of the said assessee had escaped assessment to tax under the Wealth-tax Act, because such a question did not arise in those cases. It was further submitted that the Appellate Tribunal failed to consider this aspect of the matter, as to whether the report of the Valuation Officer in the case of Smt. Gulnar Marfatia could constitute material for the Wealth-tax Officer for having reason to believe within the meaning of section 17(1)(a), in the cases of Naushir K. Marfatia and Mst. Kairas Tarapore on account of the omission on the part of those persons to file returns of their wealth in respect of the assessment years 1973-74 to 1976-77. In Satyendra Chunder Ghose v. WTO [1980] 126 ITR 102, the Calcutta High Court held that a reference could not be made under section 16A(1) of the Wealth-tax Act where assessment has been completed. It was held that the provisions of section 16A authorise the Wealth-tax Officer to make a reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no assessment had taken place on account of the omission of the assessee to file a return of his net wealth and no assessment proceedings under section 14 had taken place and on the basis of the valuation report relating to the same property in another case, the Wealth-tax Officer gave notice for assessment under section 17(1)(a) on the ground that he had reason to believe that by reason of the omission of the assessee to file a return under section 14 of his net wealth, the wealth of such assessee chargeable to tax had escaped assessment for that year and the notices were not proper or valid. In K.G. Kemptur v. Second WTO [1984] 146 ITR 611, the Karnataka High Court held that the report made by the Valuation Officer is information on the basis of which it is open to the Wealth-tax Officer to reopen an assessment. In that case, on the basis of the report of the Valuation Officer in respect of one assessment year, the Wealth-tax Officer sought to reopen the assessments of the assessee relating to other assessment years. The Karnataka High Court distinguished the cases of Brig. B. Lall [1981] 127 ITR 308, and other similar cases holding that the question which arose in those cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the Wealth-tax Officer to have reason to believe within the meaning of section 17(1)(a) of the Wealth-tax Act to initiate proceedings for assessment in those cases where no assessment bad taken place earlier. In view of the above discussion, we are definitely of the view that the following questions of law arise in these cases from the order of the Income-tax Appellate Tribunal, dated February 16, 1981 : " (1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessment proceedings under section 17(1)(a) of the Wealth-tax Act, could not be taken in respect of the assessees and whether the Tribunal was justified in setting aside the order of the Appellate Assistant Commissioner and cancelling the assessments made under section 17 of the Wealth-tax Act ? (2) Whether, on the facts and in the circumstances of the case, the contents of the report of the Valuation Officer obtained in the case of Smt. Gulnar Marfatia could constitute material for the Wealth-tax Officer for having reason to believe that by reason of the omission of the assessees to make return under section 14, the net wealth of the assessees chargeable to ..... 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