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TMI Blog1979 (8) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... due consideration of the returns filed by the petitioner and after examination of all materials disclosed. The net wealth of the said family for the said assessment year was computed at Rs. 23,65,309. On an appeal to the AAC of Wealth-tax, Range-I, Calcutta, the petitioner obtained some relief and the wealth of the family was recomputed at Rs. 20,67,396. On the 3rd April, 1974, the petitioner received a notice dated the 26 th March, 1974, issued by the WTO, 'P' Ward, District I(I), Calcutta, under s. 17 of the W.T. Act, 1957, stating, inter alia, that he had reason to believe that the net wealth of the said family chargeable to tax for the assessment year 1969-70 had escaped assessment within the meaning of s. 17 of the said Act and that he proposed to reassess the same. The petitioner was accordingly directed to file a fresh return for the said assessment year. By his letter dated the 19th April, 1974, the petitioner, denied the allegations and disputed the contentions in the said notice contending that the WTO had no jurisdiction to issue the said notice and that the same was illegal and void and should be withdrawn and cancelled. The petitioner obtained the rule nis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... W.T. Act. (j) The WTO did not record any reasons for the issue of the said impugned notice as required in law. This application is opposed. An affidavit of Radha Krishna Saba, the ITO, District, I(l), 'P' Ward, Calcutta, affirmed on the 10th November, 1975, has been filed in opposition to the petition. It is, inter alia, stated in the said affidavit as follows : (a) The wealth-tax assessment for the said assessment year was reopened under s. 17 of the W.T. Act on information received that in the original assessment the wealth had been underassessed. (b) Such information was conveyed to the WTO concerned by the ITO, Special Intelligence Branch, West Bengal-VI, Calcutta, by his letter dated the 26th March, 1974, enclosing the following : (i) A letter dated the 22nd March, 1974, from the Deputy Director, Directorate of Inspection (Investigation), Special Cell, New Delhi, to the Commissioner of Income-tax (Central), Calcutta. (ii) A letter dated the 23rd March, 1974, from the Commissioner (Central), Calcutta, to the Commissioner, West Bengal VI, Calcutta. (iii) A letter dated the 23rd March, 1974, from the Deputy Director, Directorate of Inspection (Investigation) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Deputy Director, Directorate of Inspection (Investigation), Special Cell, the only information recorded was that shares of the said company were being transferred. " probably within the Bangur group " at values below their fair market value. It was further recorded that the IAC, Jodhpur, under whose jurisdiction the said company had its registered office had been requested to value the shares of the said corn any as on the 31st March 1969, by the break up method, as also by the profit method and communicate such information to the Deputy Director at Calcutta. The learned advocate submitted that there was nothing in this letter to show that apart from mere suspicion there was any information that the said shares had been undervalued or that there had been any suppression by the petitioner of any material fact. From the next letter dated the 23rd March, 1974, written by the Commissioner (Central), Calcutta, to the Commissioner, West Bengal VI, Calcutta, it appears that directions were being given to have the matters examined by the ITO and or the IAC concerned so that action, if necessary, might be taken within the period of limitation. Learned advocate submitted that this letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and transferees for taking necessary action under the Wealth-tax, Income-tax and Gift-tax Acts for the relevant cases. Please note that discussions on the matter were held by you with Shri S. M. Bagai, D.D.I., (Inv.), Special Cell and detailed instructions have been given as to the actions to be taken, sections to be applied of the relevant Acts and the manner in which reasons for reopening the assessments are to be recorded and this should be followed strictly and compliance report therefor sent through your range I.A.C. immediately so that no action can become time-barred by the provisions of limitations in the several Acts specially because actions both under sections 17(1)(a) and 17(1)(b) of the Wealth-tax Act as well as u/s. 147(a) and 147(b) of the Income-tax Act and, if necessary, corresponding provisions of the Gift-tax Act have to be taken and the limitations prescribed are shorter for action under the sections named second in each case. " The learned advocate for the petitioner contended that apart from some assertions there was nothing in this letter to show that the quotation of the said shares was below their market price. Up to that stage no one had computed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Secretary (Food and Agriculture), Government of Andhra Pradesh, [1977] 4 SCC 337, AIR 1977 SC 2313. This decision of the Supreme Court was cited for the following observation of the Supreme Court (p. 2318 of AIR) : " Any 'request' of the Government to a subordinate authority is tantamount to a positive direction or order and it will be difficult for the subordinate authority to disregard the same. " The learned advocate also cited an unreported decision of this court in Civil Rule No. 3 312 (W) of 1974 entitled Smt. Rajeswari Birla v. WTO [since reported in [1979] 119 ITR 629]. In this case a wealth-tax assessment for the assessment year 1968-69 was sought to be reopened under s. 17 of the W.T. Act, 1957, on the basis of a letter from the IAC, Survey Range, Calcutta and a report of the Directorate concerned which was impugned on the ground that the officer concerned had acted only on the basis of the report and recommendation and did not apply his mind or form his opinion independently. The contentions of the assessee were accepted by a single Bench of this court which held that the reasons on which the assessment was sought to be reopened as recorded were different from the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated against the trust and the WTO completed the assessment for the year 1968-69, accepting the quotations of the Indore Stock Exchange as to the valuation of the disputed shares. Long after the completion of such assessment the Directorate of Inspection (Investigation) of Special Cell addressed a letter to the Commissioner and on the 28th March, 1973, the IAC endorsed this letter to all the I.T. and W.T. Officers for information and necessary action directing that if any action involved was likely to be timebarred the same may be taken within the limitation period. Pursuant thereto on the 29th March, 1973, the WTO issued notice to the trust under s. 17 of the W.T. Act. On these facts, the Division Bench held that the report of the Special Cell of the Directorate of Inspection revealed that the transactions in the shares of the Central India Industries Ltd., as quoted in the Indore Stock Exchange were manipulated and collusive and made with the purpose of evading wealth-tax liabilities and there was a difference between the quoted value and the break-up value of the shares in dispute. It was also held that in the facts the WTO did not act on the command of his superior officers in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the said letters which passed between the officers of the revenue in March, 1974, to which I have already referred. From the records and proceedings of the instant case the following facts are undisputed and stand admitted. The shares in dispute in the instant case had not been valued by any of the authorities at any stage on any basis. Initially the matter was left to the IAC, jodhpur, to make the said valuation but the same appears not to have been done. No doubt, in recording his reasons the WTO concerned had quoted the figure of Rs. 258.43 but there is no explanation nor any record to show how he arrived at this figure and by following what method. It is not clarified in his affidavit whether he followed any particular method of valuation in arriving at that figure. There is no finding by any of the authorities concerned that the shares of the said mill were not regularly quoted in the recognised stock exchange within the meaning of r. 1A of the W.T. Rules. The correspondence disclosed the only record that the quotations are infrequent. It is not found or established that the quotations were not regular, The authorities seem to have equated the terms " frequent " with the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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