COMMISSIONER OF WEALTH TAX Vs. ARUNDHATI BALKRISHNA TRUST

JUDGEMENT

(1.) THE question referred for the opinion of this court by the Income -tax Appellate Tribunal at the instance of the revenue under section 27(1) of the Wealth -tax Act, 1957, is as under :

(2.) FOR determination of the question referred to us, the following are the relevant facts. Smt. Arundhati Balakrishna Trust, Bombay, Shahibag, Ahmedabad, is the assessee. The year of assessment is 1960 -61. The total net wealth was computed at Rs. 10,66,755 by the Wealth -tax Officer by his assessment order dated March 9, 1961, and it was directed that the whole of the net wealth as determined by him was to be assessed in the hands of the beneficiary, Smt. Arundhati Balkrishna. He directed issuance of demand notice accordingly. That led to the beneficiary, Smt. Arundhati Balkrishna, preferring an appeal before the assessing authority protesting against the assessment order. The successor Wealth -tax Officer felt that his predecessor had missed the point by treating the entire trust fund as belonging to Smt. Arundhati Balkrishna. He examined the trust deed and found that she had only a right over the corpus up to a maximum of 50 per cent. and that too after satisfying certain conditions as laid down in sub -clause (e) of clause 3 of the trust deed. He, therefore, revised the assessment made and issued notice under section 17(1)(b) of the Wealth -tax Act to the assessee. Thereafter, a fresh assessment order was passed by the Wealth -tax Officer by his order dated May 24, 1965. In this order the assessing authority held that : 'For the present no deduction in respect of life interest is allowed but the claim for deduction shall be considered when wealth -tax assessment of Smt. Arundhati Balkrishna for 1960 -61 is finalised.' He computed the total wealth of the assessee at Rs. 10,66,755 as determined earlier by the order dated March 9, 1961, and ordered issue of demand notice and challan. That order of the Wealth -tax Officer was carried in appeal and the Appellate Assistant Commissioner allowed the appeal on the ground that the reopening of the assessment under section 17(1)(b) by the successor Wealth -tax Officer was bad. The revenue then unsuccessfully carried the matter in appeal before the Income -tax Appellate Tribunal and on the application made by the revenue under section 27(1), the question has been referred to us for our opinion.

(3.) THE Appellate Assistant Commissioner and the Tribunal in holding that there was no escapement of assessment and the entire 'information' was already in the possession of the Wealth -tax Officer, relied upon a decision of this court in Kasturbhai Lalbhai v. R. K. Malhotra, Income -tax Officer : [1971]80ITR188(Guj) . Mr. G. N. Desai, learned counsel for the revenue, contended that Kasturbhai Lalbhai case : [1971]80ITR188(Guj) has been wrongly applied to the facts of the case and that what governs the facts of the case is the decision of the Supreme Court in Kalyanji Mavji and Co. v. Commissioner of Income -tax : [1976]102ITR287(SC) .