NAVINCHANDRA MOHANLAL PARIKH Vs. WEALTH TAX OFFICER

JUDGEMENT

(1.) THE petitioner in these proceedings have challenged notices issued under S. 17(1) of the WT Act seeking to reopen the wealth tax assessments of the petitioner for the asst. yrs. 1971 72, 1972 73 and 1973 74. The notices are in respect of two plots of land owned by the petitioner in Krishnanagar area in Bhavnagar. He was the owner of plot No. 147 for all the three assessment years in question and another plot No. 1939A, was purchased after the valuation date relevant to the asst. year 1971 72 was passed and we are concerned with plot No. 1939A only for the asst. yrs. 1972 73 and 1973 74. For each of these three years the assessee, the petitioner herein, had submitted WT returns and along with the WT returns for each of the three assessment years, valuation reports of a registered and approved valuer, who is approved by the Government of India, was submitted to the WTO. The returns were accepted by the WTO and assessment orders were passed in respect of each of these three years. Thereafter, notices under S. 17 of the WT Act were issued on 13th June, 1975, for each of the three years and in each case the notice stated that it had come to light that the valuation of the plot concerned was not made on the basis of the market value of land prevailing in the relevant year. The undervaluation proceeded from the fact that in the case of plot No. 147 for two of the assessment years, valuation was taken at Rs. 17 per square yard whereas, according to these impugned notices, the plot was worth Rs. 45 per square yard. In the case of plot No. 1939A, valuation was taken on the basis of Rs. 25 per square yard which was actually the purchase price paid by the petitioner at the time when he purchased this plot of land, but, according to the WTO, in the impugned notices, plot No. 1939A was also worth Rs. 45 per square yard. In each of the three notices the WTO stated :

(2.) IN the impugned notices the ground for reopening the assessments was not the ground of information received by the WTO but it was on the footing of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Thus, the ground which was sought to be made out in the impugned notices was under S. 17(1)(a) of the WT Act and not under S. 17(1)(b) of the WT Act. However, when the notices were challenged and the writ petition was admitted, in the affidavit in reply by the WTO, in paragraph 6, it has been stated that it had come to the notice of the WTO that the prevailing market value of the land in the area was Rs. 45 per square yard and on this basis the matter was sought to be reopened. In paragraph 11 it has been stated that the challenge of the petitioner was misconceived inasmuch as the respondent had invoked the provisions of S. 17(1)(b) of the WT Act and not S. 17(1)(a) as was contended. The WTO came to know the understatement of valuation only through the means of audit objections and in the course of assessment proceedings. The information thus being available after completing the assessment, the WTO was perfectly justified in law in reopening the assessment. These are the grounds on which the WTO sought to reopen the assessment for the three years in question. Under S. 17(1)(a) :

(3.) THE language of S. 16(1)(b) of the GT Act is identical with and in pari materia with the language of s. 17(1)(b) of the WT Act and what has been stated in the context of gift tax would apply with equal force in the context of the WT Act. In ITO vs. Lakhmani Mewal Das 1976 CTR (SC) 220 : (1976) 103 ITR 437 (SC) : TC51R.598, the Supreme Court was concerned with a notice under S. 147 of the IT Act and Khanna, J., speaking for the Supreme Court, has pointed out at p. 448 of the report :