R RANGASWAMI GOUNDER Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE appellants in all these appeals are partner of a firm known under the name and style of M/s. Velumani Engineering Industry. THE partnership firm manufacture electrical switches, starters, pumps, etc. THE total value of the plant and machinery, as disclosed in the books of account, was Rs. 4, 52, 256 as on March 31, 1976. THE WTO had reason to believe that the value of the value of the machinery disclosed in the books did not reflect the correct value of the plant and machinery and by a letter dated November 12, 1979, he directed the second respondents herein to value the plant and machinery and air-conditioning machines installed in the factory, for purposes of wealth-tax assessment for the assessment year 1976-77. THE appellant, who are partners of the firm, filed Writ Petition Nos. 2606 to 2609 of 1980 challenging the direction given by the first respondent to the second respondent to value the plant and machinery and other electrical installations for purposes of making wealth-tax assessment for the assessment year 1976-77. THE main contention of the appellants in the writ petitions is that the firm is not an assessee under the W.T. Act and s. 16A cannot be made applicable in the case of a partnership firm and no notice can be issued to the fir for the purposes of valuation of its assets and the direction by the first respondent to the second respondent to value the assets of the assets of the partnership firm for purposes of wealth-tax assessment should be quashed. During the pendency of the writ petitions, the appellants file W.M.P. Nos. 3718 to 3721 of 1980 for issue of an injunction restraining the respondents form proceedings with the valuation of the assets of e partnership firm.

(2.) THE learned single judge of this court held that after the disposal of the writ petitions the period available for the Revenue to complete the assessment would be only two months and there was no need to restrain the respondents from proceedings with the valuation of the assets of e partnership firm. THE learned single judge, however, held that there would be a stay of the assessment proceedings pending disposal of the writ petitions. Against is order of the learned single judge, the present writ appeals have been filed.THE learned counsel for the appellants contended that the legal validity of the directors given by the first respondents to the second respondent to value the assets of e partnership firm is the main dispute in the writ petitions and permitting the second respondents to proceed with the valuation of the assets of the partnership firm during the pendency of the writ petitions tantamounts to virtually denying relief claimed in the writ petitions and no prejudice would be causes to the respondents by not permitting them to proceed with the valuation of the assets of the partnership firm pending an adjudication of the issue raised in all these writ petitions.THE learned counsel for the respondents contended that on May 2, 1980, a telegram was received from the appellants stating that a writ petition had been filed challenging the reference to the valued under s. 16A of the W.T. Act and requesting the Department to stay all further proceedings and on enquiry it was learnt that though the writ petitions were admitted, there was no order of stay, and in view of s. 17A(1)(b) of the W.T. Act, the wealth-tax assessment for the assessment year 1976-77 should be completed on or before March 31, 1981 and as the valuation process itself would take several months, there should be no injunction restraining the second respondent from proceedings with the valuation of the assets of e partnership firm.Under s. 17A(1)(b) of the W.T. Act, the wealth-tax assessment for the assessment year 1976-77 should be completed on or before March 31, 1981. Under Explanation I to s. 17A(4) of the W. T. Act, in computing the period of limitation of the purposes of making wealth-tax assessment, the period during which the assessment proceedings were stayed by an order or injunction of any court should be excluded. In the instant case, the learned single judge has himself passed an order staying the completion of the assessment proceedings.