TMI Blog1990 (6) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... time or for any period or periods during his lifetime. The trust also provides that all monies shall be applied by the trustees in their absolute discretion and their action shall not be questioned by any party in any manner. It is also provided that the trustees shall not be accountable or responsible for the amount so expended or applied by them or the manner in which and the purpose for which the same is applied by them. For the assessment year 1957-58, which was the first year of assessment under the Wealth-tax Act, Hemant, in the status of an individual, submitted before the Wealth-tax Officer that his beneficial interest in the trust fund was indeterminate. Hence, no wealth-tax in respect of his beneficial interest under the trust should be levied in his hands as an individual. He submitted that wealth-tax was leviable in respect of the whole trust property in the hands of the trustees of the trust. The Wealth-tax Officer, however, rejected this contention of Hemant. He held that Hemant had life interest in the trust fund. He further held that the assessee being the sole beneficiary for life, the present value of his life interest was includible in his net wealth. Being a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then in force. Similarly by notices dated October 16, 1964, the Wealth-tax Officer also reopened the assessment of the trustees for the assessment years 1960-61 and 1961-62 under section 17(1)(b) of the Wealth-tax Act as then in force. On reassessments, the Wealth-tax Officer included the full value of the trust property in the net wealth of the trust for these years. In appeals by the trustees for the assessment years 1958-59 to 1961-62, the Appellate Assistant Commissioner rejected the contention of the trustees that the reassessments under section 17(1)(b) of the Wealth-tax Act were not valid. He also held that Hemant's interest in the trust property, was indeterminate and not taxable in his hands. He confirmed the assessment on the trustees in respect of the entire value of the trust property. The Revenue filed appeals against the orders of the Appellate Assistant Commissioner excluding the value of the beneficial interest of Hemant from his net wealth. The trustees, on the other hand, filed appeals against the inclusion of the entire value of the trust property in their net wealth. They also challenged the reassessment under section 17(1)(b) of the Wealth-tax Act. The Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e upon and recoverable from an individual for the purposes of this Act. In view of the decision of the Supreme Court in the case of CWT v. Trustees of H. E. H. Nizam's Family (Remainder Wealth) Trust [1977] 108 ITR 555, there is now no doubt that section 3 of the Wealth-tax Act, 1957, must yield to section 21 in so far as section 21 makes special provisions for the assessment of trustees of a trust. Therefore, whenever an assessment is made in respect of a trust, it must be made in accordance with the provisions of section 21. Hence, section 21 has to be applied in the present case. The question is whether, in the present case, the interest of Hemant in the trust fund under the trust deed is indeterminate and hence attracts the application of section 21, sub-section (4), or whether his interest can be valued for the purposes of wealth-tax under section 21 (1). The provisions of this very trust deed were construed in connection with the levy of income-tax in the case of CIT v. Hemant Bhagubhai Mafatlal [1982] 135 ITR 768 (Bom). Under the proviso to section 41 (1) of the Indian Income-tax Act, 1922, where any income is not specifically receivable for the benefit of any one pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 ?" It seems that counsel for both sides stated before the Division Bench that the question was concluded by the decisions of the Supreme Court in (Purshottam N. Amarsay v. C WT [1973] 88 ITR 417 and C WT v. Arundhati Balkrishna [1970] 77 ITR 505). Both counsel submitted before the Bench that, in view of these decisions, the question must be answered in the affirmative. The court, accordingly, answered the question in the affirmative. The terms of the trust deed, therefore, were not analysed or construed by the learned judges. We have seen the decision of the Supreme Court in the case of Purshottam N. Amarsay v. CWT [1973] 88 ITR 417. In that case, under trust deed executed by the settlor, the trustees were to apply the net income of the trust fund for the support, maintenance and advancement in life and otherwise for the benefit of the settlor and his wife in such manner as to enable the settlor to live as far as possible with the same comforts and to enjoy life in the same manner as he was accustomed to. The reference initially came up before the Bombay High Court (CWT v. Purshottam N. Amersey [1969] 71 ITR 180). The question before the Bombay High Court was whether the life ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to note that (1) for the assessment year 1958-59, the original order of assessment is dated April 3, 1959. By notice dated February 16, 1963, this assessment was reopened by the Wealth-tax Officer. (2) For the assessment year 1959-60, the original assessment order is dated February 24, 1960. This was reopened by notice dated February 16, 1963, issued by the Wealth-tax Officer. (3) For the assessment year 1960-61, the original assessment order is dated March 20, 1961. It was reopened by notice dated October 16, 1964. (4) For the assessment year 1961-62, the original assessment order is dated January 12, 1962. It was reopened by a notice dated October 16, 1964. Under section 17(1)(b) of the Wealth-tax Act, as applicable at the relevant time, "If the Assessing Officer . . . has, in consequence of, any information in his possession, reason to believe, . . that net wealth chargeable to tax has escaped assessment for any year .", he may at any time within four years of the end of that assessment year serve on such person a notice 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 ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, the Supreme Court was required to consider whether the opinion of an internal audit party of the income-tax department on a point of law can be regarded as "information" within the meaning of section 147(b) of the Income-tax Act, 1961, as then in force. The court was required to consider when instruction or knowledge as to law can be considered as information. The court said that, in every case, a declaration or exposition to be law, must be pronouncement from a formal source either legislative or judicial. statement by a person or body incompetent to create or define the law cannot be regarded as law. It said (at p. 1002), "It is law, we must remember which, because it issues from a competent Legislature or competent judicial or quasi-judicial authority, influences the course of the, assessment and decides any one or more of those matters which determine the assessee's tax liability". In the present case, therefore, we have to consider whether the order of the Appellate Assistant Commissioner dated June 24, 1959, in respect of the assessment year 1957-58 constitutes information as to law in this sense. There is no doubt that the order of the Appellate Assistant Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant Commissioner under the Wealth-tax Act of its character of "information as to law". The powers of the Appellate Assistant Commissioner under the Wealth-tax Act under section 23(5) are as wide as the powers of the Appellate Assistant Commissioner under section 251 (1) (b) of the Incometax Act. The Appellate Assistant Commissioner, under the Wealth-tax Act, can also, in disposing of an appeal, pass such orders as he thinks fit which may include an order enhancing the assessment or penalty. An appeal lies from the order of the Appellate Assistant Commissioner under the Wealthtax Act to the Tribunal both at the instance of the assessee and at the instance the Department. The order of the Appellate Assistant Commissioner in wealth-tax proceedings is binding on the parties unless reversed by a higher authority. It is as much a quasi-judicial pronouncement of law which will affect the assessment of the assessee as an order of the Appellate Assistant Commissioner under the Income-tax Act. In our view, therefore, the Appellate Assistant Commissioner's order dated June 24, 1959, constitutes information within the meaning of section 17(1)(b) of the Wealth-tax Act. In the case of Jawa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly indicates that the Wealth-tax Officer was aware of the view taken by the Appellate Assistant Commissioner in his order of June 24, 1959. In any view of the matter, there is no material before us which would indicate anything to the contrary. In these circumstances, it is not possible for us to hold that the Wealth-tax Officer came into possession of any fresh information after the original assessment orders for these assessment years which would entitle him to reopen the assessment for these three years (1959-60 to 1961-62). Mr. Jetley, however, submitted that the Appellate Assistant Commissioner's order of June 24, 1959, was upheld in appeal by the Tribunal by its order dated October 17, 1962. This order of the Tribunal is subsequent to the dates of the original assessments for these three years. The order of the Tribunal, therefore, can constitute fresh information on a point of law coming into the hands of the Wealth-tax Officer after the original assessments. Mr. Jetley, therefore, submitted that reopening of assessments for these three years is also valid in law. There is no doubt that a Tribunal's order would constitute information as to law as much as an order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of June 24, 1959, was already available to the Income-tax Officer. A subsequent order of the Appellate Assistant Commissioner giving the same information cannot entitle the Income-tax Officer to reopen the assessment. In the present case also, the Wealth-tax Officer, when he assessed the assessee for the years 1959-60 to 1961-62, had before him the view taken by the Appellate Assistant Commissioner, a higher authority, in proceedings for the assessment year 1957-58. He however, chose to take a different dew. Subsequently, he sought to reopen the proceedings on the basis of the Tribunal's order which took the same view as the Appellate Assistant Commissioner. This would not, in our view, amount to reopening of an assessment on the basis of any fresh information as to law. It is possible that the Wealth-tax Officer may have taken a chance in ignoring the decision of the Appellate Assistant Commissioner as an appeal was pending from the Appellate Assistant Commissioner's order before the Tribunal at the time of his making the original assessments for these three assessment years. That, however, does not entitle him to reopen assessments after the receipt of the Tribunal's order on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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