TMI Blog2022 (1) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... tional material or document unearthed by the Assessing Officer, which the assessee failed to disclose; and the sub section, under which assessment was reopened. Thus, one of the basic requirements to initiate the reassessment proceedings under Section 17 of the Act, has not been satisfied by the Assessing Officer. In such circumstances, we do not find any justification on the part of the assessing officer to reopen the assessment and pass the reassessment orders dated 26.03.2002. In Commissioner of Income-Tax and another v. Foramer France [ 2003 (1) TMI 101 - SC ORDER] arising under Income Tax Act relating to Sections 147 and 148 of the Income Tax Act, the supreme court pointed out that 'when there was no failure on the part of the assessee to disclose fully and truly all material facts for assessment, the assessment could not be reopened on the basis of change of opinion'. Placing reliance on the same, the learned single Judge has concluded that on a mere change of opinion on the part of assessing officer, there cannot be reopening of the assessment. We are in full agreement with such a conclusion reached by the learned single Judge. As regards the plea of alternat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereas, in respect of the other assessment years, she filed her replies requesting to treat the returns originally filed as having filed in response to the said notices. After conduct of enquiry and upon perusal of the documents placed, the assessing officer proposed to revise the assessment with a view to adopt the value of the said property by changing its nature from agricultural land to commercial land, for the assessment years 1990-91 to 1995-96. Having regard to the fact that the assessee sold the said property before the valuation date and the sale consideration received by her was invested in the Park Town Benefit Fund in the name of her husband, the assessing officer estimated the total deposit held by her on the valuation date viz., 31st March, 1996 at ₹ 1,00,00,000/- and determined the same assessable to tax, for the year 1996- 97. The assessee filed her objections to the proposed revision of assessment. Without considering the same, the assessing officer confirmed the proposed revision by assessment orders dated 26.03.2002. Aggrieved over the said reassessment orders passed by the assessing officer, the assessee filed WP.Nos.13948 to 13954 of 2002. 5. After hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidering the said aspects in a proper perspective, the learned single Judge allowed the writ petitions by the order impugned herein, which is liable to be set aside, as it is illegal and contrary to law. 7. Per contra, the learned counsel for the respondent / assessee would contend that the sale of the property on 03.06.1995 for a higher price cannot be the basis for initiating the reassessment proceedings, especially when the value of the property was truly and correctly disclosed in the returns filed by the assessee. Further, there was no additional material made available requiring the assessing officer to resort to the provision under section 17 of the Wealth Tax Act. Having found so, the learned single Judge has set aside the reassessment orders passed by the assessing officer, which does not call for any interference at the hands of this court. In support of his contentions, the learned counsel relied on the following decisions of the supreme court as well as this court: (i) Commissioner of Income Tax and another v. Foramer France, (2003) 264 ITR 566 (SC); (ii) Commissioner of Wealth Tax v. V.Vatsala, (1989) 177 ITR 120 (Mad); and (iii) Commissioner of Wealth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. 11. On the other hand, the Revenue pleaded that the subject property was not used for agricultural activities; it was developed to be a commercial property as on 01.04.1981; and the same was sold for a higher price of ₹ 1,33,00,000/- during the year 1995. Therefore, the assessee failed to disclose the true and correct value of the property assessable to tax. Accordingly, the assessing officer reopened the assessment and passed the reassessment orders on 26.03.2002, for the assessment years in question, in accordance with law. 12. At this juncture, it would be relevant to refer to section 17 of the Act, which reads as follows:- 17. Wealth escaping assessment (1) If the Assessing Officer has reason to believe that the net wealth chargeable to tax in respect of which any person is assessable under this Act has escaped assessment, for any assessment year (whether by reason of under-assessment or assessment at too low a rate or otherwise), he may, subject to the other provisions of this section and section 17A, serve on such person a notice requiring him to furnish within such period as may be specified in the notice, a return in the prescribed form and verified i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imiting the time within which any action for assessment or reassessment may be taken. The aforesaid provisions postulate that for invoking Section 17 of the Act, it must be shown that (i) there are reasons to believe that certain income earned by the assessee has not been subjected to assessment or (ii) the assessee should have defaulted in filing of the return. In other words, the proceedings for reassessment should be based on the failure of the assessee to have made full and true disclosure of income, wilfully. Thus, based on certain omissions or misrepresentation or suppression of certain material particulars at the time of filing the return of wealth, by the assessee, the Assessment Officer can initiate proceedings under Section 17 of The Act. Such a power conferred on the Assessing Officer is akin to the power conferred upon the Assessing Officer under Section 147 of The Income Tax Act, 1961. In this case, the assessing officer had invoked the provisions of Section 17 of the Act and passed the reassessment orders dated 26.03.2002 against the assessee, based on the sale consideration of the subject property subsequent to the assessment years under consideration and hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not at all permissible to the Assessing Officer or for that matter the Tribunal to rely upon an event of sale which takes place subsequent to the assessment year in question to determine the value of the property as in the relevant assessment year. Such a method is not known in the field of income capitalisation method. On the contrary, the value is worked out from the event of sale that takes place till the assessment year if that assessment year happens to be subsequent to the year of sale. In addition to this the Tribunal cannot be held to have committed an error in law in relying upon Circular No. 326 (see (1982) 134 ITR (St.) 167) dated 6th Feb., 1982 as that circular is issued for the purpose of determining the value of the lands by following the income capitalisation method. The circular lays down the guidelines for the purpose of determining the valuation so that different methods are not followed by the Department for the purpose of determining the value of the property. In order to ensure uniformity in the manner and mode of determining the value of the property, the wealth-tax circular in question has been issued under s.10 of the WT Act. In this regard, we may use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer was of the view that the value of the property shown in the return as ₹ 38,000/- cannot be accepted as the assessee had sold it for ₹ 70,000/- during January 1974. Therefore, the Wealth Tax Officer initiated penalty proceedings for the balance amount allegedly not declared by the assessee to the tune of ₹ 30,000/-. In such circumstances, the Division Bench of this Court held as follows:- We have carefully considered the rival submissions. We are of the view that it is unnecessary, on the facts and circumstances of this case, to consider and decide the question whether inaccuracy in the value declared would amount to concealment of particulars or furnishing of inaccurate particulars of an asset. It is seen that the property in question was a single storeyed house in an area of 4,574 sq.ft. and had been purchased by the assessee from the Bharathi Nagar Co-operative House Construction Society for a sum of ₹ 22,365/- under a document dated 10th June 1971. The property was valued in 1968 at ₹ 38,000 and that really formed the basis of the value as returned by the assessee for the assessment year in question as well as for the prior years and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingle judge rightly held so in the writ petitions filed by the assessee challenging the reassessment proceedings. 17. That apart, in the present case, admittedly, the assessee had filed her returns of wealth along with supportive documents; and there was no allegation that she had withheld the material facts or that the facts placed before the Officer are not truly and fully disclosed for assessment. Further, in the notice issued under Section 17, there was no mention about the additional material or document unearthed by the Assessing Officer, which the assessee failed to disclose; and the sub section, under which assessment was reopened. Thus, one of the basic requirements to initiate the reassessment proceedings under Section 17 of the Act, has not been satisfied by the Assessing Officer. In such circumstances, we do not find any justification on the part of the assessing officer to reopen the assessment and pass the reassessment orders dated 26.03.2002. 18. In Commissioner of Income-Tax and another v. Foramer France, [264 ITR 566] arising under Income Tax Act relating to Sections 147 and 148 of the Income Tax Act, the supreme court pointed out that 'when there was n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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