ACCHUT KUMAR S INAMDAR Vs. P R HAJARNAVIS

JUDGEMENT

(1.) THE petitioner is the Karta of an HUF consisting of his wife, his son and his daughter. The HUF was assessed to income tax for several years and so also under the provisions of the WT Act. The HUF of the petitioner owned 1/3rd share in the lands situated at Valnai, near Malad, Greater Bombay. The petitioner and his two brothers had inherited the lands at Valnai from their ancestors and each one of the three brothers held 1/3rd share in respect of the Valnai lands. The Valnai lands are situated in the low lying area adjoining the Malad Creek. The three brothers and their mother entered into an agreement of partnership on 9th April, 1963, whereby the parties agreed to carry on business of land contractors and dealers in immovable properties, mining and quarrying undertakings. The partnership was registered in the name and style of Associated Lands and Development Corporation. As a part of the capital of the partnership, the petitioner and his two brothers brought into the firm their share in the lands at Valnai, while their mother brought certain lands situated at Wedhwan belonging to her. The partnership concern entered into a certain agreement of lease dt. 22nd April, 1963, in favour of United Investment Corporation, after securing the requisite permission from the Municipal Corporation for bifurcating the land at Valnai and also securing the permission of converting its use to non agriculture. The firm filed an application in this Court seeking permission to enter into a contract of lease as one of the members of the petitioners HUF was a minor. The petitioner valued the lands after valuing it by an authorised valuer and this Court granted permission to enter into a lease. The agreement of lease could not be gone through for certain reasons and a fresh application was made subsequently in the year 1969, supported by fresh valuation and the requisite permission was secured for entering into an agreement of lease, from this Court.

(2.) THE HUF of the petitioner was assessed to income tax and wealth tax and the petitioner filed returns for the relevant years, i.e., asst. year 1965 66 to asst. year 1970 71. The WT return filed by the petitioner for the years 1965 66, inter alia, stated that the assets of the petitioner's HUF included a share in the firm of Associated Lands and Developments Corporation. The petitioner stated that the principal asset of the said firm consisted of open lands which were originally waste lands and now being slowly developed. It was further stated that the title to these lands is subject to various acquisition notices and municipal requisitions. The petitioner stated that the lands due to this fact had neither free nor open market. The next statement made by the petitioner should be stated in the exact words and it is as follows :

(3.) THE petitioner received a notice on 30th Nov., 1972, calling upon the petitioner to show cause why the assessment orders in respect of the WT returns filed by the petitioner for the asst. yr. 1965 66 to asst. year 1970 71 should not be cancelled. The notice was issued under the provisions of S. 17 of the WT Act. The notice, inter alia, stated that the officer had reason to believe that the income of the petitioner had escaped assessment within the meaning of S. 17 of the WT Act and that the officer proposed to reassess the net wealth that had escaped the assessment. The petitioner was called upon to file a fresh return within 35 days of the receipt of the notice. The notices were served upon the petitioner in respect of each assessment year, commencing from asst. year 1965 66 to asst. year 1970 71. It is also necessary to state at this juncture that the petitioner was also served with notices under s.148 of the IT Act, 1961, for reopening the assessment made in respect of the asst. year 1967 68 to asst. year 1970 71. The petitioner has filed the present proceedings to challenge the validity and legality of these notices issued under the provisions of S. 148 of the IT Act and S. 17 of the WT Act.