9911796707
TMI Blog2001 (5) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year 1982-83. The facts of the case are that the Hindu undivided family, viz., Sewalal Gafarlal, was disrupted by a total partition on November 16, 1982 and order under section 20 of the Wealth-tax Act, 1957, to that effect was recorded on October 3, 1986. The properties were distributed in the hands of the members of the erstwhile Hindu undivided family. Out of seven members, Shri Bhupatilal is being assessed to wealth-tax at Kota. Smt. Durga Devi expired after November 16, 1982, and she transferred her interest to her daughter through a will. The other five co-parceners are being assessed to wealth-tax at Banswara from 1984-85 in the status of their respective Hindu undivided families. Assessment of wealth-tax for the assessment year 1982-83 of the then existing Hindu undivided family was completed on February 7, 1986, by valuing the net wealth of the Hindu undivided family as on the valuation date relevant to the assessment year 1982-83 at Rs.14,92,000 as against the net wealth of Rs.4,75,495 returned by the Hindu undivided family. In the case of assessment of (i) Shri Indra Kumar Sewalal, (ii) Durlabhlal Sewalal, (iii) Shri Govind Lal Sewalal, (iv) Shri Bharatlal Sew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he initiation of proceedings under section 17 were found to be time-barred in all the above three assessment years under appeal. It is in the aforesaid circumstances, the Revenue has filed these three appeals suggesting the following substantial questions of law said to be arising for consideration in these appeals: "(i) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in holding that initiation of proceedings under section 17 of the Wealth-tax Act was barred by limitation, which finding was arrived at by ignoring the amended provisions of law? (ii) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in holding that after the partition of the Hindu undivided family, notices need to be served on all the erstwhile members of the Hindu undivided family, when service of notice upon a karta of the erstwhile Hindu undivided family was sufficient compliance to the requirements of law?" It has been contended by learned counsel for the appellant that the Tribunal has seriously erred in considering the unamended provisions of section 17 enabling the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , before issuing any notice under this sub-section, record his reasons for doing so." For the purpose of clarity we may also reproduce hereunder section 17(1) as it existed prior to the substitution of the aforesaid provision: "17. Wealth escaping assessment.--(1) If the Wealth-tax Officer- (a) has reason to believe that by reason of the omission or failure on the part of any person to make a return under section 14 of his net wealth or the net wealth of any other person in respect of which he is assessable under this Act for any assessment year or to disclose fully and truly all material facts necessary for assessment of his net wealth or the net wealth of such other person for that year, the net wealth chargeable to tax has escaped assessment for that year, whether by reason of under assessment or assessment at too low a rate or otherwise; or (b) has, in consequence of any information in his possession, reason to believe, notwithstanding that there has been no such omission or failure as is referred to in clause (a), that the net wealth chargeable to tax has escaped assessment for any year, whether by reason of underassessment or assessment at too low a rate or otherwise; h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e escapement of assessment was believed to be as a result of any failure on the part of the assessee in filing returns, or responding to notice or in disclosing truly and correctly all material facts necessary for assessment fell under clause (a) and time for initiating proceedings under section 17 was larger than in cases falling under clause (b), which governed cases other than those where escapement was believed to be for failures on the part of the assessee. Like in the amended section 17, proviso to section 17(1), the period for initiating proceedings under section 17(1)(b) was also four years from the end of the relevant assessment year. Thus, in spite of the fact that the Tribunal has wrongly mentioned section 17(1)(b) in its orders, it remains a case of mere wrong mention of provision without making any difference in conclusion. Another important provision safeguarding against arbitrary exercise of powers under section 17 is that the Assessing Officer shall, before issuing any notice under that sub-section, record his reasons for doing so. Before he takes action under section 17 he is required to record his reasons which have some nexus for holding the opinion about the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on might be exposed to inference, unless the existence of circumstances is made out. Since under section 17 the reason for holding the belief has to be recorded in writing, such existence of circumstances must demonstrably appear from the reasons so recorded. From the facts narrated above, it is apparent that the Assessing Officer who had held the belief that the net wealth chargeable to tax in respect of the respondent-assessee has escaped assessment for the assessment years in question is not founded on the fact that the net wealth chargeable to tax has escaped assessment for such assessment year by reason of any failure on the part of the assessee to make a return under section 14 or section 15 or in response to a notice issued under sub-section (4) of section 16 or this section or to disclose fully and truly all material facts necessary for his assessment for that assessment year. It is solely on the basis of the material which has come into existence in 1991, only after the original assessments were completed in 1986 or prior thereto, the Assessing Officer has drawn the inference that net wealth has escaped assessment only because of the valuation report by the Departmenta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 17(1) as per newly substituted provision. Both operate on the same field, as will appear from a comparative reading of the two provisos. The conclusion of the Tribunal, viz., that there is no satisfaction about the alleged escapement of net wealth from assessment because of any failure on the part of the assessee to file return, or furnish material facts truly and correctly, as are necessary for the assessment is a finding of fact and does not give rise to a question of law. As the reassessment proceeding stands vitiated for want of necessary jurisdiction the second question becomes of academic importance and does not require further consideration. Suffice it to say that after disruption of the Hindu undivided family Sewalal Gafarlal in 1983, it did not exist as such. Hence, there could not be any karta of the Hindu undivided family Sewalal Gafarlal. Therefore, service of notice on only one of the members of the erstwhile Hindu undivided family, alone would not be sufficient to proceed against all the members of the erstwhile Hindu undivided family so as to bind them and affect property held by them. In such a case the only question that could, prima facie, fall for consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
