High Court Of Calcutta
Commissioner Of Wealth Tax vs. Sandeep Jajodia
Sections WT 25(2)
Asst. Year 1984-85, 1985-86
Altamas Kabir & Alok Kumar Basu, JJ.
Matter No. 2028 of 1992
24th April, 2002
Counsel Appeared
Sunil Kumar Mitra, for the Petitioner
JUDGMENT
Altamas Kabir, J. :
The assessments for the asst. yrs. 1984-85 and 1985-86 in respect of the respondent/assessee were computed under s. 16(3) of the WT Act, 1957, on 29th April, 1986 and 22nd Aug., 1986, at a net wealth of Rs. 12,57,100 and Rs. 12,35,900 respectively. The wealth assessed included the value of a flat situated at 1, Arcade, Nariman Point, Bombay, accepted by the WTO at Rs. 2,50,000. Subsequently, the assessee filed returns of wealth for the aforesaid years under the Amnesty Scheme on 29th April, 1986, disclosing certain additional wealth in the shape of jewellery, silver utensils, ornaments and a half share of a house property at 1/17, Shantiniketan, New Delhi. Pursuant thereto, notices were issued under s. 17 of the WT Act and fresh assessments were completed on net wealth of Rs. 18,60,800 and Rs. 18,94,200 respectively on 19th Nov., 1986. Subsequently, the CWT, West Bengal IX, Calcutta, initiated action under s. 25(2) of the above Act to revise the assessments made on 29th April, 1986 and 22nd Aug., 1986, since in his view, the said assessments were erroneous and against the interest of the Revenue. The said CWT set aside the assessments and directed the AO to take into account the gross and net annual rent of the property at Bombay and to determine the value of the property on yield basis.
Being aggrieved by the order of the CWT under s. 25(2) of the above Act, the assessee moved the Tribunal contending that the proceedings under s. 25(2) were without jurisdiction as the original assessment made on 29th April, 1986 and 22nd Aug., 1986, were no longer in existence having been replaced by the fresh assessments made on 19th Nov., 1986.
The Tribunal accepted the above contention made on behalf of the assessee and vacated the order of the CWT upon observing that the assessee might have made disclosure of wealth under the Amnesty Scheme, but the AO took action under s. 17 of the WT Act and made reassessments and that the view that reassessment proceedings superseded and set aside the original assessments can be taken at well-established in view of certain decisions of the Hon’ble Supreme Court and the Kerala High Court referred to in its order. Thereafter, pursuant to the directions given by this Court on 7th Jan., 1992, in Matter Nos. 2997 and 2992 of 1991, the following questions were referred by the Tribunal to this Court for its opinion, namely :
(i) Whether, on the facts and in the circumstances of the case, when in the reassessment proceedings the assessment of the flat at Bombay was not interfered with the Tribunal was justified in law in holding that the reassessment proceedings superseded and set aside the original assessment in its entirety?
(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in not sustaining the order passed by the CWT under s. 25(2) of the WT Act, 1957?
Despite service of notice of the reference, no one appeared on behalf of the assessee. Appearing for the Revenue, Mr. Sunil Kumar Mitra, learned senior counsel, submitted that pursuant to the Amnesty Scheme the assessee submitted a return of higher wealth on 29th Sept., 1986, on the basis whereof proceedings were taken under s. 17 of the WT Act only in respect of the additional wealth disclosed and without disturbing the assessment originally made in respect of the flat at Bombay. It was urged that the same did not have the effect of reopening of the entire assessment made under s. 16 and would have to be confined to the assessments made on the additional wealth declared by the assessee under the Amnesty Scheme and the original assessment did not stand replaced by the subsequent assessment made under s. 17 and the Tribunal erred in law in holding otherwise and coming to a finding that the order of the CWT under s. 25(2) of the above Act could not be sustained in respect of assessments which were no longer in existence.
In support of his submission Mr. Mitra relied on the decision of the Hon’ble Supreme Court in CIT vs. Sun Engg. Works (P) Ltd. (1992) 107 CTR (SC) 209 : (1992) 198 ITR 297 (SC), which involved reassessment of an original assessment under the IT Act, 1961. Mr. Mitra pointed out that the Hon’ble Supreme Court had observed that in proceeding under s. 147 of the IT Act, the ITO’s may bring to charge items of income which had escaped assessment or in addition to items which led to the issuance of notice under s. 148, and where reassessment is made under s. 147 in respect of income which had escaped tax. The ITO’s jurisdiction is confined only to such income which had escaped tax or had been underassessed and does not extend to revising, reopening or reconsidering the whole assessment or permitting the assessee to re-agitate the question which had been decided in the original assessment proceedings. It is only the underassessment which is set aside and not the entire assessment in the reassessment proceedings.
Mr. Mitra urged that applying the same principle in the instant case, the reassessment proceedings under s. 17 must be held to have been confined to the additional wealth declared by the assessee under the Amnesty Scheme and did not amount to reopening of the entire assessment made under s. 17 and the questions referred to this Court were required to be answered in the negative. While allowing the appeals preferred by the assessee, the learned Tribunal observed that the question as to whether on initiation of reassessment proceedings the original orders of assessment are vacated and do not survive in any manner is no longer res integra having been decided by the Hon’ble Supreme Court in Dy. Commr. of Commercial Taxes vs. H.R. Sri Ramulu 1977 CTR (SC) 118 : (1977) 39 STC 177 (SC). Reference was also made to the decision of the Kerala High Court in CIT vs. K. Kesava Reddiar (1989) 76 CTR (Ker) 111 : (1989) 178 ITR 457 (Ker) rendered in the light of the aforesaid decision of the Hon’ble Supreme Court.
11. As against the aforesaid decision, Mr. Mitra relied on the decision of the Hon’ble Supreme Court in the Sun Engg. Works (P) Ltd.’s case (supra) relating to reassessment of an original assessment made under the IT Act, 1961. The said decision was rendered by a two Judges’ Bench, but it appears that another two Judges’ Bench took a different view in ITO vs. Mewalal Dwarka Prasad (1989) 76 CTR (SC) 40 : (1989) 176 ITR 529 (SC). Having regard to the divergent views taken in the two matters, certain SLPs were directed to be placed before a three Judges’ Bench—ITO vs. K.L. Srihari (HUF) & Ors. (2002) 176 CTR (SC) 99 : (2001) 250 ITR 193 (SC) to resolve the difference. On considering the two views the Hon’ble Supreme Court held that the reassessment order amounted to a fresh assessment of the entire income. In other words, the original assessment made under s. 16 was replaced by the order of reassessment made under s. 17 of the WT Act, 1957. While it is no doubt true that in the instant case the notice under s. 17 of the above Act was issued on the basis of the additional wealth disclosed by the assessee under the Amnesty Scheme and at the time of reassessment the original assessment with regard to the flat at Bombay was not disturbed, the effect of the reassessment was that the entire assessment made under s. 16 stood reopened and the order of assessment made under s. 16 stood replaced by the subsequent order passed on reassessment on the basis of the additional disclosure of wealth by the assessee.
In that view of the matter, both the questions in this reference are answered in the affirmative against the Revenue. There will be no order as to costs.
Alok Kumar Basu, J. :
I agree.
[Citation : 268 ITR 494]
