TMI Blog2011 (2) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... Ms. Rashmi Chopra for the Appellant. O.S. Bajpai and V.N. Jha for the Respondent. JUDGMENT M.L. Mehta, J. These two appeals are filed by the revenue against the common order dated 29-12-2006 of the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal") whereby the appeals of the revenue against the common order dated 19-8-2005 of the Commissioner of Wealth-tax (Appeals) [hereinafter referred to as "CWT(A)"] for assessment years 1997-98 and 1998-99 were dismissed. 2. The respondent-assessee filed Income-tax returns for the assessment year 1997-98 and 1998-99 and during the course of scrutiny, the Assessing Officer (AO) found that the assessee is in receipt of amount from various properties and had shown rental receipts of Rs. 6,14,36,188 (AY-1997-98) and Rs. 2,34,18,846 (AY-1998-99). Since the assessee had not filed wealth-tax returns for these years and there being taxable wealth, the Assessing Officer issued notice under section 17 of the Wealth-tax Act, 1957 (hereinafter referred to as "the Act") on 9-6-2000, which was duly served upon the assessee on 25-6-2000. The AR of the assessee submitted a letter dated 3-7-2000 to the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Wealth-tax Act. The matter cannot be straight away decided in view of the second proviso to sub-section (5) of section 16 of the Act which states that it shall not be necessary to give such an opportunity under sub-section (4) were not notices as provided under second proviso to sub-section (5) of Wealth-tax Act. As notices issued under the above sub-section are required to be considered to record a filing, we have refrained from making any comments on the said notices." 3. In the aforesaid manner, the Tribunal remanded the case to the CWT(A) for fresh consideration in accordance with law. No other ground raised in the memo of appeal was pressed by the assessee before the Tribunal. 4. On remand, the CWT(A) called for the report of the Assessing Officer. According to the Assessing Officer, since the assessee did not file return of wealth for assessment years 1997-98 and 1998-99, notice under section 17 of the Act was issued and since assessee still failed to comply, another opportunity was given by issuing notice under section 16(4) of the Act on 13-3-2000. In response to this notice, AR of the assessee attended the proceedings on 22-3-2002 and 26-3-2002 and filed written submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admission, the learned counsel, Mr. Bajpai, appearing for the respondent-assessee also submitted that in the first round of litigation, the Tribunal has already held that service of the aforesaid notice [under section 16(5) of the Act] is mandatory and that order of the Tribunal is not challenged by the Revenue. While recording that this question does not arise in the present appeal, we proposed to deal with this aspect of the submission as well. 8. The submissions of Mr. Bajpai, learned counsel appearing for the assessee, before us are the same which are noticed in the order of the Tribunal. He submits that under first proviso to sub-section (5) of section 16 of the Act, a notice was required to be issued by the revenue for affording an opportunity before making best judgment assessment. He submits that this was mandatory, but as per second proviso it could be dispensed if a notice under clause (ii) of sub-section (4) had been issued to the assessee prior to the making of the best judgment assessment. He submits that since no such notice was given under the first proviso and the notice which was given being under clause (i) and not clause (ii) of sub-section (4), the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 30 and all the provisions of this Act shall apply accordingly; and (ii) if any refund is due on the basis of such return, it shall be granted to the assessee and an intimation to this effect shall be sent to the assessee : Provided that except as otherwise provided in this sub-section, the acknowledgement of the return shall be deemed to be intimation under this sub-section where either no sum is payable by the assessee or no refund is due to him : Provided further that no intimation under this sub-section shall be sent after the expiry of two years from the end of the assessment year in which the net wealth was first assessable. (1A) Omitted. (1B) Omitted. (2) Where a return has been made under section 14 or section 15, or in response to a notice under clause (i) of sub-section (4) of this section, the Assessing Officer shall, if he considers it necessary or expedient to ensure that the assessee has not understated the net wealth or has not under-paid the tax in any manner serve on the assessee a notice requiring him, on a date to be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re no return filed and time allowed under sub-section (1) of section 14 for furnishing return has expired. Both clauses (i) and (ii) deal with different situations of the operative part of sub-section (4) namely (i) where return filed under section 14 or 15 and (ii) Where no return filed within time prescribed in section 14(1). Clause (i) provide for issue of notice calling upon to file return where no return has been filed by him in time allowed in sub-section (1) of section 14. Clause (ii) does not talk about filing of return but only notice requiring production of record, accounts, documents, etc., as Assessing Officer may require. 13. The word in between two clauses is or and not and . The plain reading of sub-section (4) would clarify that when the return had been filed under section 14 or 15, a notice under clause (ii) may be issued by the Assessing Officer for production of record, documents as may be required. No notice under clause (ii) is contemplated in a situation where return has not been filed at all inasmuch as in the absence of return no documents or records may be required. 14. Sub-section (5) makes a provision for best judgment assessment in two situations; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make best judgment assessment. Where the return itself was not filed there was no need of any notice under clause (ii) of sub-section (4). In between clauses (a) and (b) of sub-section (5) also the word used is or which means that in either of the two situations noticed above, the Assessing Officer was entitled to proceed for making best judgment assessment. It may be noticed that there is no mention of clause (i) or (ii) after sub-section (4) in clause (b ). It means that even where the assessee has failed to comply with the terms of the notice issued under clause (i) or (ii) of sub-section (4), the Assessing Officer was entitled to proceed with framing best judgment assessment. 17. What is provided under the second proviso to sub-section (5) is a notice under sub-section (4) without any qualification of clause (i) or (ii ). It means that if a notice under clause (i) in the case where return was not filed or a notice under clause (ii) calling upon to file documents, etc., had been issued, that was enough to dispense with issue of another notice of hearing opportunity contemplated in the first proviso of sub-section (5). We may clarify that if notice has been issued in claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public had interest in the company and so no wealth return was required to be filed by it. 20. Where the Assessing Officer had reasons to believe that the wealth chargeable to tax has escaped assessment whether by reasons of non-assessment or assessment at low rate or otherwise he may issue a notice under section 17 calling upon to furnish the return and may proceed to assess or reassess and the return so filed was to be treated as return required to be furnished under section 14. We do not see as to on what basis the learned counsel tries to argue that if notice was issued under section 17, a subsequent notice under section 16(4) was invalid. We have seen notices dated 13-3-2002 which are apparently under section 16(4). Vide these notices, the assessee was called upon to furnish the return for the assessment years 1997-98 and 1998-99. Since the notices had also been issued under section 17, the assessee was also informed that clarification, if any, may be sought on notices under section 17. In any case, assuming that notices under section 17 were not required, the issue of notice under section 16(4) was not to prejudice the assessee in any manner. This irregularity if at all it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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