1981 (12) TMI 67 - AT - Wealth-tax

Summary

Issues: Levy of interest for non-payment of tax, valuation of jewellery, non-service of assessment order and demand notice

In this judgment by the Appellate Tribunal ITAT DELHI-A, the main contentions revolved around the levy of interest for non-payment of tax and the valuation of jewellery by the WTO, which the assessee deemed excessive. However, a preliminary objection was raised regarding the non-service of the assessment order and demand notice to the assessee for three years, leading to the argument that no assessments had been legally made on the assessee for those years, thereby challenging the imposition of interest for non-payment of tax. The Tribunal observed that although the WTO had completed assessments and prepared demand notices, they were dispatched to the assessee's old address, not the current one. The Tribunal noted the absence of evidence proving the service of notices on the assessee and criticized the lack of effort by the WTO to verify delivery with postal authorities. Consequently, the Tribunal accepted the assessee's claim of non-receipt of assessment orders and demand notices, supporting the contention that interest should not be charged for non-payment of tax without proper demand.

Regarding the legal consequences of the non-service of assessment orders and demand notices, the Tribunal declined to quash the WTO's order entirely but acknowledged the illegality arising post-assessment due to non-delivery of notices. Citing the decision in Guduthur Bros. v. ITO, the Tribunal directed the WTO to re-serve copies of assessment orders and demand notices to the correct address of the assessee, effectively restoring the process to the assessment stage. The Tribunal also instructed the WTO to adjust any tax payments made by the assessee post-assessment before issuing fresh demand notices. Consequently, the Tribunal set aside the impugned orders and remanded the matter to the WTO for compliance with legal requirements.

In light of the directions regarding the non-service issue, the Tribunal refrained from addressing the jewellery valuation concern at present. Concerning the interest charged for non-payment of tax, the Tribunal emphasized that without proper service of the demand notice initially, no default could be attributed to the assessee in tax payment, leading to the inevitable legal consequences of this finding. Ultimately, the appeals were treated as partly allowed for statistical purposes.