COMMISSIONER OF WEALTH TAX Vs. C RAVINDRAN

JUDGEMENT

(1.) The Income Tax Appellate Tribunal, Cochin Bench, has drawn up a statement of the case and sent up the following question for opinion of the High Court, under S.27 of the Wealth Tax Act.

(2.) The Assessee is one Late Shri C. Koru. After his death, proceedings had been taken against his legal representatives by the Wealth Tax Officer. The deceased was a partner in a firm by name C. C. Transport Co., which owned an agricultural property by name Mangundimala Estate In the books of the firm there were accounts of the capital account of the Assessee as well as the current account. The balances in the capital account and the current account were shown as the value of interest from the partnership in the return filed by the Assessee for the assessment year 1968-69 which is the relevant assessment year for the purpose of this case. The figures were accepted and the original assessment was completed by including the value of the interest in the agricultural property also in the net wealth of the Assessee. The Wealth Tax Officer subsequently reopened the assessment under S.17 of the Wealth Tax Act. The ground for reassessment was that the land acquisition compensation awarded by the Sub Court in respect of the 'West Hill property' on 30-11-1967 had not been included in the return. The amount was Rs. 2,01987/-. The Assessee's stand was that the amount was actually received from court only on 4-1-1969, viz., beyond the valuation date. It was held by all the three authorities that the right to the amount accrued on 30-11-1967, although it was actually paid only on 4-1-1969, and that the wealth was assessable during the year 1968-69. In the reassessment proceedings, on behalf of the legal representatives it was contended that the value of the interest of the deceased in the partnership firm as computed in the original assessment was wrong, inasmuch as the value of the agricultural property owned by the firm became automatically included when the Assessee had shown the entire credit balance in the capital account and the current account. As the assets of the firm consisted of agricultural and non agricultural items, it was claimed that the Wealth Tax Officer should recompute the interest in the firm by applying R.2 the Wealth tax Rules and excluding the Agricultural assets of the firm. The assessee accordingly, claimed a deduction of Rs. 51,596 representing the Assessee's share in the value of the agricultural estate owned by the firm. The Wealth Tax Officer, rejected the claim (vide Annexure - A) On appeal to the Appellate Assistant Commissioner, that Officer held that the Assessee himself had not claimed any such deduction in the original assessment, that the said assessment had become final, and it was therefore not open to the Assessee to take up this new claim when the Wealth Tax Officer reopened the assessment to net in some other items of wealth which had escaped assessment (vide Annexure 'B").

(3.) The assessee took the matter in further appeal before the Income Tax Appellate Tribunal. The Tribunal pointed out the nature and concept of net wealth as an integral feature of the Act The Tribunal then pointed out what it considered to be the difference between S.147 of the Income Tax Act 1961 and S.17 of the Wealth Tax Act. It was of the view that under S.17 of the Wealth Tax Act, the Wealth Tax Officer had to assess or to reassess the "net wealth" under the provisions of the Act The Officer was therefore bound to recompute the taxable wealth of the Assessee according to the provisions of the Act in the reassessment proceedings also, and it was not enough if he merely adds to the original figure of assessment, the items, which, according to him, had escaped assessment. According to the Tribunal it was open to the Assessee in reassessment proceedings to point out to the Officer to reassess the "net wealth" according to the Act. In this view, the Tribunal held that the Assessee was justified in asking for exclusion of the value of the agricultural estate. The Tribunal has, on the above facts, formulated the question of law and sent up the same for the opinion of this Court.