TMI Blog2004 (12) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that the Joint Commissioner of Wealth Tax, Special Range-18, New Delhi validly exercised jurisdiction to the exclusion of Joint Commissioner, Special Range-10, New Delhi, exercising jurisdiction over the appellant on the date of issue of notice under section 17 of the Act. 1.3 That the Commissioner of Wealth-tax (Appeals) erred on facts and in law in holding that the notice issued under section 17 of the Wealth Tax Act to the erstwhile Triveni Engineering Industries Limited, which was non existent as on the date of notice, was bad in law and the assessment framed pursuant to issue of such notice was void ab initio. 1.4 That the Commissioner of Wealth-tax (Appeals) erred on facts and in law in holding that the appellant could not, in terms of section 124(3) of the Act, seek to challenge the jurisdiction for the first time in the appellate proceedings. 2. That the Commissioner of Wealth-tax (Appeals) erred on facts and in law in holding that the reassessment was bad in law, being based on mere change of opinion. 3. That in the facts and circumstances of the case, the Commissioner of Wealth-tax (Appeals) erred in not treating the premises let out to Joint Venture companie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of immovable properties:- (1) Triveni Flexi Box Limited, Bangalore Rs. 12 lakhs (2) GEC Alstham Triveni Naini Rs. 60,000. (3) GEC Alstham Triveni, Bangalore, Rs. 3,10,000. (4) Rent received from employees in respect of residential premises at Khathavli Rs. 63,093. 5. The Assessing Officer (J.C., W.T., S.R. 18, New Delhi) issued notice dated 4-10-2000 under section 17 of the W.T. Act as assessment was reopened on the ground that as per Wealth Tax provisions of Schedule-III read with section 2(ea)(i) of W.T. Act, 1957 the capitalized value of rented properties are includable in the net wealth of the assessee. The assessee company did not file return in response to the notice under section 17 of the W.T. Act issued on 4-10-2000. The Assessing Officer issued notice under section 16(4) for the purpose of completion of the assessment. The assessee vide letter dated 12-12-2000 informed the Assessing Officer that the rent received from parties mentioned above does not fall under the mischief of section 2(ea)(i) because the above three companies are joint ventures in which the assessee is a major stake holder which leads to inference that the above premises have been used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istent entity. On merits, the same submissions were reiterated which were made before the Assessing Officer claiming that joint venture companies are part of the assessee and that the rent received from the employees using the property of the assessee are exempt from tax. The CWT(A) rejected both the contentions of the assessee and rejected the appeal of the assessee on both the issues. However, CWT(A) directed the Assessing Officer to make certain corrections as regards arithmetical mistakes in the assessment order by which excess addition is made. The CWT(A) also directed the Assessing Officer to allow relief to the assessee as regards the rent received from some of the employees. The Assessing Officer was directed to make addition in respect of residential accommodation allotted to four employees who were drawing salary more than Rs. 2 lakhs. The appeal of the assessee was therefore allowed partly. The assessee is in appeal before us on the grounds mentioned above. 6. On consideration of the submission of the parties and facts available on record, the three issues arise for consideration are:- (i) Whether the Assessing Officer has jurisdiction to issue notice dated 4-10-2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee relied upon decision of Madras High Court in the matter of CIT v. Express Newspapers Ltd. [1960] 40 ITR 38 and Order of Bombay Bench of ITAT in the matter of Makers Development Services Ltd. v. Dy. CIT [1992] 40 ITD 185. The learned representative of the assessee further submitted that section 124 of the I.T. Act defined territorial jurisdiction and transfer of file under section 127 of the I.T. Act can be made in the case of existing assessee, but, in this case amalgamating ceased to exist. Therefore, there cannot be transfer of file. The learned representative of the assessee further submitted that jurisdiction by acquiescence is not valid in law. He has relied upon decision of the Delhi High Court in Swaran Yash v. CIT [1982] 138 ITR 734. 9. On the other hand, the learned Departmental Representative reiterated the findings of the authorities below and submitted that the Registrar of Companies changed the name of both the companies after amalgamation vide letter dated 31-3-2000. He has further submitted that since the name of amalgamated company starts with the same alphabet, therefore, the same Assessing Officer having jurisdiction of name starting with T-series ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of the every individual, Hindu undivided family and company at the rate or rates specified in Schedule-I. The definition of the net wealth is provided in section 2(m) of the W.T. Act and provides - "net wealth means, the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets; wherever located; belonging to the assessee on the valuation date; including assets required to be included in his net wealth as on that date under this act; is in excess of the aggregate value of all the debts owed by the assessee on the available date which have been incurred in relation to the said asset." Section 2(ea)(i) of the Wealth Tax Act as is relevant for the purpose of disposal of this appeal provides the definition of asset (immovable property) and provides as under: [w.e.f. 1-4-1997] "(ea) "assets", in relating to the Assessment Year commencing on the 1st day of April, 1993, or any subsequent assessment year, means - (i) any building or land appurtenant thereto (hereinafter referred to as "house"), whether used for residential or commercial purposes or for the purpose of maintaining a guest house or otherwise including a farm house s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This fact was brought to his notice by the internal audit party and the Assessing Officer duly recorded the reasons for the same and issued notice under section 17 of the W.T. Act to the assessee. The show-cause notice dated 4-10-2000 under section 17 shows that it was issued and addressed to the assessee-company M/s. Triveni Engineering and Industries Limited, "Kailash", 2nd floor, 26, K.G. Market, New Delhi. The assessee-company very well responded the show-cause notice though no return was filed within 35 days of the receipt of this notice. The assessee filed reply dated 4-12-2000 before the Assessing Officer (JCIT, S.R. 18, New Delhi) which reads as under (copy of which is filed at page 75 of the paper book)- "Triveni Engineering Industries Ltd. {Formed by the Amalgamation of Triveni Engineering Industries Ltd., with Gangeshwar Ltd.} Corporate Office: 'Kailash' (2nd floor), 26, Kasturba Gandhi Marg, New Delhi- 110001, India Dated 4-12-2000. To The Joint Commissioner of Income Tax Special Range-18, New Delhi. Madam, Re: Notice under section 17 of Wealth Tax Act-Assessment Year 1997-98 We are in receipt of your notice issued under section 17 of the W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er at page 5 has specifically mentioned that the assessee company was assessed with JCIT, S.R. 18, New Delhi. After reorganization of the department, the proceedings were transferred to DCIT, Circle 16(1), New Delhi. According to the CWT(A), DCIT, Cir. 16(1), New Delhi is also having jurisdiction in respect of amalgamated company that is M/s. Triveni Engineering and Industries Ltd., form ed after merger. The CWT(A) was also of the view that as regards the pending matters of the erstwhile company after merger, the same had to be handled by the successor company. The CWT(A) was also of the view that it is not correct to say that notice cannot be issued to the erstwhile company after merger. The finding of the CWT(A) about reorganization of the department have not been rebutted by the assessee by any material. The show-cause notice under section 17 of the W.T. Act is addressed to the successor company and was served upon the successor company. Therefore, CWT(A) rightly justified the issue of the notice for reassessment in the matter. Even the reassessment is also framed in the same name. The assessee has not produced any material on record to show that the notice was addressed to amal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t challenged the jurisdiction of the Assessing Officer at any stage of the assessment proceedings. Therefore, CWT(A) rightly held that at the appeal stage the plea of the assessee cannot be entertained. We may also mention that section 127 is meant for transfer of the case, but, it is not such a case before us. Since the name of erstwhile amalgamating company and amalgamated/successor company starts with the same alphabet, therefore, same Assessing Officer could have jurisdiction over the successor company. Even as per finding of this CWT(A) after re-structuring of the department the proceedings before JCIT, S.R. 18, New Delhi were transferred to DCIT, S.R. 16(1), New Delhi. Therefore, the provisions contained in section 127 would not be helpful to the assessee. The learned counsel for the assessee submitted that the jurisdiction can be challenged at any stage. We do not agree with the submission of the assessee, as after insertion of section 124(3) in the I.T. Act, it could be challenged during the specified period mentioned above. The record also shows that the appeal before the CWT(A) as well as before us has been filed by the successor company. The learned representative of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further held:- "Being an enactment aimed at collecting revenue, the Legislature did not intend collection of revenue to be bogged down on account of technical plea of jurisdiction. It has, therefore, prescribed the limit up to which the plea of jurisdiction may be raised. As provided in section 124(5)(a), the right is lost as soon as the assessment has been completed. Even where the right is exercised before the assessment is completed, the question is to be decided by the Commissioner or by the Board. Courts do not come into the picture. From the above provisions of the Act, it is apparent that the Act does not treat the allocation of functions to various authorities or officers as one of substance. It treats the matter as one of procedure and a defect of procedure does not invalidate the end action. The answer to the first question, therefore, is that the power is administrative and procedural and is to be exercised in the interest of exigencies of tax collection and the answer to the second question is that, under the Act, a defect arising from allocation of functions is a mere irregularity which does not affect the resultant action." Considering the above discussion, we a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted out that even no discussion had taken place at the original stage in respect of rent received of the immovable properties. Therefore, there is no question of change of opinion in the aforesaid case by the Assessing Officer and Assessing Officer has rightly initiated the proceedings under section 17 of the W.T. Act. The learned Departmental Representative pointed out that the internal audit party pointed out factual mistake and error upon which Assessing Officer properly formed his opinion and recorded reasons for the same and initiated the re-assessment proceedings. The learned Departmental Representative relied upon decision of Hon'ble Supreme Court in CIT v. PVS Beedies (P.) Ltd. [1999] 237 ITR 13, in which it was held that reopening on the basis of factual information given by internal audit party is valid reopening of assessment. 16. We have considered the rival submissions and material available on record. In this case, the assessee in the original return of income has disclosed the value of the motor vehicles for the purpose of wealth tax. Assessee has not filed any detail with regard to rent received from rented properties. Even in the audited balance sheet only rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of value of immovable assets? 20. On this issue, it was submitted that three joint ventures from whom rent has been received are separate entities. According to the assessee, erstwhile M/s. Triveni Engineering and Industries Limited in terms of memorandum of articles of association was authorized to enter into partnership and other forms of occupation that any person or persons engaged in the similar area of business or enter into transaction with other companies engaged in any business or transaction capable of being conducted to the benefit of the assessee. The assessee stated to have entered into collaboration agreement that the companies mentioned above. It was also stated that the object of the collaboration was, to expand activities of the assessee company. Therefore, the premises were used by the assessee for business purposes. The CWT(A) did not accept the submission of the assessee as the premises were let out to joint venture companies cannot be treated to have been used for the purpose of business of the assessee company. As far as addition of the value of the residential premises allotted to its employees, the Assessing Officer was of the view that the provisions to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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