TMI Blog2004 (8) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... r final disposal today. This petition filed under article 226 of the Constitution challenges notice under section 17 of the Wealth-tax Act, 1957 (hereinafter referred to as "the Act"), dated March 26, 2002, for the assessment year 1997-98 and reassessment order dated February 9, 2004, passed under section 17 read with section 16(3) of the Act for the assessment year 1997-98. The petitioner, a limited company, filed its return of net wealth for the assessment year under consideration disclosing net wealth at Rs. 29,53,100 after deducting the debt which according to the petitioner had arisen as the amount was paid for acquisition of assets out of the cash credit facility enjoyed by the petitioner. After scrutiny of the said return on the dates mentioned in the petition, the respondent-Assessing Officer passed an order under section 16(3) of the Act on March 8, 2000. It is averred in the petition that due to a query raised on November 26, 2001, by the A.G. audit party, the respondent as well as the Joint Commissioner of Wealth-tax, Special Range-1, Ahmedabad, called for an explanation from the petitioner and the petitioner submitted an explanation. On February 19, 2002, the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or before February 9, 2004, at 11.00 a.m. The respondent has recorded in the impugned assessment order dated February 9, 2004, that nobody attended on the said day, namely, February 9, 2004, and as the assessment was getting barred by limitation on March 31, 2004, the assessment order was framed. The petition has been filed in the backdrop of the aforesaid factual scenario. Mr. S.N. Soparkar, the learned senior advocate appearing with Mr. Hemani on behalf of the petitioner, submitted that the impugned notice and the consequential impugned reassessment order are bad in law and are required to be quashed and set aside. It was submitted that the notice issued under section 17 of the Act is without jurisdiction. The reassessment order dated February 9, 2004, is also bad in law not only as a consequence of such notice which is without jurisdiction but also for the reason that the same is passed ignoring the order of the apex court in the case of GKN Driveshafts (India) Ltd. [2003] 259 ITR 19 as well as the order of this court dated March 3, 2004, made in Special Civil Application No. 2736 of 2004 (Arvind Mills Ltd. v. CWT (Asst.)(No.1) [2004] 270 ITR 467). It was submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on record communication dated August 18, 2004, addressed to him by the Assistant Commissioner of Income-tax, Circle-1, Ahmedabad, wherein it is stated that the clarifications sought for by learned standing counsel had been duly communicated to the respondent and thereafter an extract from letter dated August 16, 2004, of the respondent addressed to the Assistant Commissioner of Income-tax, Circle-1, Ahmedabad, has been reproduced. It is stated by the respondent that in the absence of any section in the Act, under which an order on objections to the reassessment could be passed, it was addressed in the reassessment order itself and that has been done under a bona fide belief. In the case of GKN Driveshafts [2003] 259 ITR 19, the hon'ble Supreme Court has laid down an elaborate procedure as to the manner of dealing with objections raised against a notice under section 148 of the Income-tax Act, 1961, in the following words: "However, we clarify that when a notice under section 148 of the Income-tax Act is issued, the proper course of action for the noticee is to file a return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer; (ii) challenging the speaking order of the Assessing Officer under section 148 of the Act." The position in law is thus well settled. After a notice for reassessment has been issued, an assessee is required to file the return and seek reasons for issuance of such notice. The Assessing Officer is then bound to supply the reasons within a reasonable time. On receipt of reasons, the assessee is entitled to file preliminary objections to issuance of notice and the Assessing Officer is under a mandate to dispose of such preliminary objections by passing a speaking order, before proceeding with the assessment in respect of the assessment year for which such notice has been issued. Therefore, the stand of the respondents will have to be tested on application of the aforesaid legal principles. It is apparent from the facts which have come on record that the assessee had been demanding reasons in relation to the notice under section 17 of the Act dated March 26, 2002, but the same came to be supplied to the petitioner only by letter dated January 28, 2004. Immediately thereupon, the petitioner raised preliminary objections vide communication dated February 3, 2004. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised by the petitioner. As can be seen from the aforesaid extracted portion of paragraph No. 6, the respondent merely states that in the letter dated February 3, 2004, filed on behalf of the petitioner, the petitioner has merely objected to the reassessment proceedings and, thereafter, proceeds to discuss the merits of the dispute by reproducing the portion of the petitioner's submissions which commences with the phrase "without prejudice". In the circumstances, the averment in the affidavit-in-reply that "the preliminary objections of the petitioner have been disposed of in the reassessment order itself" is not borne out from the facts and a bare reading of the impugned reassessment order. There is one more aspect of the matter. The order dated March 3, 2004, made by this court in the earlier petition filed by the present petitioner, namely, Special Civil Application No. 2736 of 2004 (Arvind Mills Ltd. v. CWT (Asst.) (No. 1) [2004] 270 ITR 467) directed the respondent to dispose of the objections filed by the petitioner by passing a speaking order as per the aforesaid decision of the hon'ble Supreme Court. It is further laid down in the said order that it is only after the As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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