RAMA SHANKER GUPTA Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) The Tribunal, Allahabad has referred the following questions of law under Section 27(1) of the WT Act, 1957 (hereinafter referred to as "the Act") for opinion to this Court :

(2.) The reference relates to., the asst. yr. 1970-71, for which the relevant valuation date was 31st March, 1970. The respondent is an individual. In the assessment originally made on 16th Dec., 1970, he claimed exemption on the value of the jewellery under Section 5(1)(viii) of the Act, which was accepted by the WTO, on the basis of a decision of the apex Court in the case of CWT v. Arundhati Balkrishna (1970) 77 ITR 505 (SC). The assessment was made on 16th Dec., 1970. Subsequently, Section 5(1)(viii) of the Act was retrospectively amended by the Finance (No. 2) Act, 1971 w.e.f. 1st April, 1963, whereby the exemption on the value of jewellery was withdrawn. In consequence of this retrospective amendment, the WTO had reason to believe that the assessee's net wealth liable to tax, had escaped assessment. The WTO, therefore, reopened the already completed assessment by issue of notice under Section 17 of the Act. In the reopened assessment, the WTO not only included in the assessee's net wealth the value of the jewellery determined at Rs. 66,700 but also redetermined the value of the assessee's partnership interest in the firms New Kanpur Flour Mills, Nagarmal & Co., the value of share in the property at 24/73, Birhana Road, Kanpur, and the value of shares in the companies. The result was that while the net wealth as originally assessed was Rs. 4,16,910 in the reassessment the net wealth was determined at Rs. 14,91,951.

(3.) The assessee went in appeal to the AAC. The AAC, while upholding the reopening of the assessment, held that since the assessment was reopened because of the exclusion of the value of jewellery from the assessee's net wealth at the time of the original assessment, the WTO was not justified in proceeding to make a fresh assessment by revising the value of assets from what was taken in the original assessment on the basis of the report of the Valuation Officer for subsequent years by projecting it backwards to arrive at their value for the year under appeal, since this was a mere change of opinion in regard to the valuation of the assets from what was held at the time of the original assessment. The AAC, therefore, upheld only the addition on account of the value of jewellery to the extent of Rs. 66,700 and held that the other additions by revising the value of the assets from what was determined at the time of making the original assessment were not justified.