9911796707
TMI Blog1977 (4) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... at the whole of the net wealth as determined by him was to be assessed in the hands of the beneficiary, Smt. Arundhati Balkrishna. He directed issuance of demand notice accordingly. That led to the beneficiary, Smt. Arundhati Balkrishna, preferring an appeal before the assessing authority protesting against the assessment order. The successor Wealth-tax Officer felt that his predecessor had missed the point by treating the entire trust fund as belonging to Smt. Arundhati Balkrishna. He examined the trust deed and found that she had only a right over the corpus up to a maximum of 50 per cent. and that too after satisfying certain conditions as laid down in sub-clause (e) of clause 3 of the trust deed. He, therefore, revised the assessment made and issued notice under section 17(1)(b) of the Wealth-tax Act to the assessee. Thereafter, a fresh assessment order was passed by the Wealth-tax Officer by his order dated May 24, 1965. In this order the assessing authority held that : " For the present no deduction in respect of life interest is allowed but the claim for deduction shall be considered when wealth-tax assessment of Smt. Arundhati Balkrishna for 1960-61 is finalised. He compute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1971] 80 ITR 188 (Guj) has been wrongly applied to the facts of the case and that what governs the facts of the case is the decision of the Supreme Court in Kalyanji Mavji Co. v. Commissioner of Income-tax [1976] 102 ITR 287 (SC). The learned Advocate-General appearing for the respondent-assessee contended that the first assessment order made by the Wealth-tax Officer discloses that he had applied his mind to all the primary facts placed before him and also the relevant clauses of the trust deed and then held that the total net wealth should be assessed in the hands of the beneficiary, Smt. Arundhati Balkrishna and, therefore, on the same facts without any further " information " whatsoever, it is not open to the successor Wealth-tax Officer to revise the assessment on the ground that it is a case of escaped assessment. We may, therefore, notice the relevant clauses (3)(b) and (3)(e), which read as under: " (3) IT IS HEREBY AGREED AND DECLARED between the parties to these presents that the trustees shall stand and be possessed of the said shares described in the schedule hereunder written (and which shares and such stocks, funds, and securities which may under the trusts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This finding of the Wealth-tax Officer is strongly relied upon by the learned Advocate-General to contend that on a consideration of the relevant clauses the Wealth-tax Officer had made the order and such an order cannot be revised by taking recourse to section 17(1)(b) of the Act. What constitutes " information " and " escaped assessment " has been the topic for discussion in several decisions of the High Courts and the Supreme Court. The meaning of the expression " information " was considered in Kasturbhai Lalbhai's case [1971] 80 ITR 188 (Guj). Bhagwati C.J., as he then was of this court, speaking for the court, was of the opinion that : " ' Information ', in the context in which it occurs in section 147(b) of the Income-tax Act, 1961, must mean ' instruction or knowledge derived from an external source concerning facts or particulars, or as to law relating to a matter bearing on the assessment'. Mere change of opinion on the part of the Income-tax Officer cannot constitute ' information ' so as to entitle him to initiate proceedings under section 147(b)." In that case the learned judges were of the view that two conditions must be satisfied before the Income-tax Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may discover an error apparent on the face of the record from further enquiry or research into facts and law. The expression " information " is of wider amplitude than construed by this court in Kasturbhai Lalbhai's case [1971] 80 ITR 188 (Guj), the only limitation or restriction on the authority of the Income-tax Officer being that he must have reason to believe that it is a case of escaped assessment. It would then be open to the Wealth-tax Officer to proceed under section 17(1)(b). What has to be considered in a case like this is, whether it is a case of mere change of opinion on the same set of facts or whether the first Wealth-tax Officer committed an error apparent on the face of the record justifying reopening of the assessment under section 17(1)(b). In Commissioner of Income-tax v. Kelukutty [1972] 85 ITR 102 (Ker), the Kerala High Court held that the note put up by the audit to the effect that the assessment ought to have been made on the reconstituted firm for the entire income of the two periods and, therefore, the Income-tax Officer committed an error, was instruction or knowledge derived from an external source and so it would constitute " information " within the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. The learned Advocate-General, however, invited our attention to the decision of the Bombay High Court in Commissioner of income-tax v. Bai Savitagouri [1975] 100 ITR 680 (Bom). In that case there was a trust deed as in this case which was also before the Income-tax Officer. The discovery by the Income-tax Officer that the beneficiaries would get the rights only from a later date and assessment should have been made under section 3 at the rate applicable to the total income was held to be not " information " coming within the requirements of section 34(1)(b) of the Indian Income-tax Act, 1922. The learned judges were of the view that all the material for correct assessment was already on record even at the original assessment. Therefore, the reopening of the assessment by issuing a notice under section 34(1)(b) was not valid. That was a case where the officer was aware of the fact that there were two sons and that the younger son would attain 21 years of age only in 1964. The contention of the revenue that the Income-tax Officer received information that the younger son would complete 21 years only in 1961 was not accepted in view of the fact that the recitals in the trust deed ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
