9911796707
TMI Blog1996 (12) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... , declaring the total value of the wealth which amongst others included foreign shares and stocks, etc., of the value of $, 3,96,388 and its value in rupees were shown at Rs. 75,31,372. Along with the return, a statement received from Grindlays bank Ltd., London, was filed showing the face value of the shares and stocks, etc., and in the last column the market value of the shares was also shown. According to the petitioner, a true copy of the statement of foreign shares and stocks and the statements which were filed are annexures A and B. The Wealth-tax Officer, after making due enquiries, assessed the total wealth of the petitioner at Rs. 2,04,56,955 accepting the value of foreign shares and stocks at Rs. 75,31,372 vide order dated March 17, 1980. The assessment order is on record as annexure-C. The petitioner submits that for the assessment years 1976-77, 1977-78 and 1978-79, he filed the returns of wealth before the Wealth-tax Officer, A-Ward, Satna, on August 16, 1976, August 31, 1977 and July 3, 1978, declaring total wealth at Rs. 1,20,74,198, Rs. 1,63,75,703 and Rs, 1,48,93,856. According to the petitioner, with the returns similar statements of foreign shares and stocks wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copy of the reasons recorded cannot be communicated and that the appellate authorities could see the reasons from his record if they so wanted. According to the petitioner, he is not in a position to know exactly why the reassessment proceedings have been initiated, but on the basis of the notices under section 16(4) it appears that the reassessment proceedings have been taken so as to reassess the value of foreign shares and stocks. The petitioner submits that he had filed the returns of wealth and the material particulars of wealth were duly disclosed, the original assessments were made after due enquiry and verification. The reassessment proceedings have been initiated with the issue of notice dated March 29, 1985, served on the petitioner on March 30, 1985, are without jurisdiction, barred by limitation, illegal and void in law. According to him, section 17 of the Wealth-tax Act authorised taking up of the reassessment to assess or reassess wealth which has escaped assessment or full assessment. According to him, the finality of the order cannot be disturbed unless the requirements of law are satisfied, unless the Wealth-tax Officer has reason to believe that the wealth charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fails to comply with the terms of any notice issued under sub section (2) or sub-section (4), the Wealth tax Officer after taking into account all relevant material which he has gathered, shall estimate the net wealth to the best of his judgment and determine the amount of wealth-tax payable by the person or the amount refundable to him on the basis of such assessment." According to section 16A for the purposes of making an assessment, under the Act, the Wealth-tax Officer may refer the valuation of any asset to a Valuation Officer. Section 17, which is relevant for the purpose of this petition provides as under : "17. (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 nuclei, 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 underassessment or assessment at too ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw inferences from the primary facts. If the officer draws an inference, which subsequently appears to be erroneous then a mere change of opinion with regard to the inference would not justify initiation of action for reopening the assessment. The court further observed that the assessee could in no way be held guilty of not disclosing the material facts fully and truly to the officer when it filed their respective returns. The officer accepted the valuation report filed along with the returns, therefore, the assessment made by the officer could not be reopened merely because another officer has some suspicion about the concealment of wealth and the report of the Departmental Valuer was different from that of the approved valuer. In the matter of ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC), considering the questions relating to sections 147(a) and 148 of the Income-tax Act, 1961, the Supreme Court has observed that the reasons for the formation of the belief contemplated by section 147(a) of the Income-tax Act, for the reopening of an assessment must have a rational connection or relevant bearing on the formation of the belief. Rational connection postulates that there must b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been discovered by the Income-tax Officer will not necessarily amount to disclosure contemplated by law, The duty of the assessee in any case does not extend beyond making a true and full disclosure of primary facts. Once he has done that his duty ends. It is for the Income-tax Officer to draw the correct inference from the primary facts. It is no responsibility of the assessee to advise the Income-tax Officer with regard to the inference which he should draw from the primary facts. If an Income-tax Officer draws an inference which appears subsequently to be erroneous, mere change of opinion with regard to that inference would not justify initiation of action for reopening assessment. In the matter of CWT v. Malhar Rao Tatya Saheb Holkar [1996] 220 ITR 466 (MP), the question regarding interpretation of section 17(1) came up for consideration before this court. In the said case the Assessing Officer completed the assessment of the assessee for the assessment years 1971-72 to 1973-74 under section 16 of the Wealth-tax Act. After completion of the assessment, the Assessing Officer referred the valuation of assets to the Valuation Officer to ascertain the value of agricultural land and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for assessment of his net wealth, the net wealth charge able to fix has escaped assessment for that year. In the instant case, there is no material on record to show or suggest that there was any material available with the Wealth-tax Officer to form an opinion or any reason to believe that the net wealth chargeable to tax has escaped assessment for that year. For attraction of clause (b) of section 17(1) if the Wealth-tax Officer 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 charge able to tax has escaped assessment for any year, whether by reason of underassessment or assessment at too low a rate or otherwise, he may issue notice within four years of the end of that assessment year containing all or any of the requirements which may be included in a notice under sub-section (2) of section 14 and may proceed to assess or reassess such net wealth. According to section 14 every person whose net wealth is of such an amount which renders him liable to wealth-tax under the Act shall furnish to the Wealth-tax Officer a return in the prescribed f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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