High Court Of Allahabad
Dr. Gaur Hari Singhania (Individual) vs. Commissioner Of Wealth Tax
Sections WT 17(1)(a)
Asst. Year 1969-70, 1971-72
M. Katju & Prakash Krishna, JJ.
WT Ref. No. 128 of 1982
16th January, 2003
Vikram Gulati, for the Assessee : Bharat Ji Agarwal & A.N. Mahajan, for the Revenue
By the court :
The following question has been referred to this Court at the instance of the assessee under s. 27 (1) : “Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the reopening of the assessment under s. 17(1)(a) was valid in law ?” The dispute relates to the two assessment years, namely, 1969-70 & 1971-72. The original assessment of the assessee, who is an individual, was reopened under s. 17(1)(a) of the WT Act, 1957, on the ground that in the net wealth earlier assessed, the wealth of Rs. 20,500 escaped assessment. The facts lie in a narrow compass : The assessee took a loan of Rs. 20,500 from the LIC on the security of a life policy on 23rd March, 1966, which was deposited in the fixed deposit with Hindustan Commercial Bank. He claimed exemption on the said amount in his WT return, which was allowed by the WTO. However, the said assessment was reopened and an addition was made of Rs. 20,500 in the net wealth of the assessee by the WTO by the order dt. 28th Feb., 1979, in respect of both the assessment years by separate orders on identical pleas. The aforesaid reassessment orders were set aside in appeal by the AAC of Wealth-tax by order dt. 20th March, 1980, on the finding that it was not a case of non-disclosure of material facts and as such the notice under s. 17(1)(a) of the WT Act was held bad. The Department filed two appeals before the Tribunal for the aforesaid two assessment years which were allowed by a common order dt. 29th Jan., 1981. Aggrieved against the order of the Tribunal at the instance of the assessee, the above reference was made to the High Court.
We have heard Sri Vikram Gulati, advocate, for the assessee, and Sri Bharat Ji Agarwal, senior advocate assisted by Sri A. N. Mahajan, for the IT Department. The Tribunal has found that mere mention that the amount of Rs. 20,500 was a loan from the LIC does not amount to disclosure of the fact that this loan was secured against the life policy of the assessee which was exempt from wealth-tax. In the WT return there was a specific requirement that such debt should not be claimed as deduction. If the assessee claims such a deduction without mentioning the relevant fact that the debt was secured against the life policy of the assessee, it amounts to nondisclosure of the relevant materials for the purposes of assessment. Sri Bharat Ji Agarwal has placed reliance upon the judgment of the Supreme Court Sri Krishna (P) Ltd. vs. ITO (1996) 135 CTR (SC) 75 : (1996) 221 ITR 538 (SC). It has been held by the Supreme Court that every disclosure is not and cannot be treated to be a true and full disclosure. A disclosure may be a false one or a true one. It may be a full disclosure or it may not be. A partial disclosure may very often be a misleading one. What is required is a full and true disclosure of all material facts necessary for making assessment for that year. The Tribunal has recorded a specific finding that the loan was secured against the life policy of the assessee which was exempt from the wealth-tax but this was not disclosed in the wealth-tax return. Only this much was mentioned in the return that the amount of Rs. 20,500 was a loan from the LIC. Till the asst. yr. 1988-89, if the AO had reason to believe that net wealth of a person has escaped assessment due to non-disclosure fully and truly of all material facts necessary for the assessment of his net wealth, he could issue the notice for reassessment. In the present case, all the conditions for reassessing of the assessee as prescribed under s. 17(1)(a) of the WT Act existed. Hence in our opinion the reassessment notice was fully justified. In view of the above, we answer the above question in the affirmative, i.e., against the assessee and in favour of the Department.
[Citation : 263 ITR 8]