COMMISSIONER OF WEALTH TAX Vs. SUBAKARAN GANGABHISHAN

JUDGEMENT

(1.) THE WTO issued a notice under Section 17(1)(a) of the W.T. Act to the assessee on the ground that the assessee failed to disclose fully and truly all material facts necessary for assessment of his net wealth chargeable to tax for the assessment years 1963-64 to 1967-68. That notice was issued in December, 1971. THE notice has specified that the assessee failed to include 81/2 acres of land in Maredpalli in his wealth-tax returns for all the relevant assessment years. It so happened that when the WTO reopened the assessments he found that the Begumpet house property of the assessee was under-valued in all the assessment years and a bad debt of Rs. 2,36,985 for the assessment years 1966-67 and 1967-68 was wrongly allowed. An objection was taken by the assessee before the AAC and before the Appellate Tribunal that, in so far as the two items, viz., the house property in Begumpet and the bad debt are concerned, the WTO was not competent to reopen the assessment proceedings for the first four years, as the time prescribed for taking action in respect of cases falling under Clause (b) of Section 17(1) is at any time within four years of the end of that assessment year. This contention of his was negatived throughout.

(2.) MR. T. Ramachandra Rao's contention is that, while it is open to the WTO, when he issues a notice under Section 17(1)(a), to also consider matters falling under Section 17(1)(b), viz., whether the net wealth chargeable to tax has escaped assessment for any year, whether by reason of under-assessment or assessment at too low a rate or otherwise, he cannot exercise the jurisdiction vested in him under Section 17(1)(b) after the expiry of the period of limitation of four years prescribed for proceedings under Section 17(1)(b). In support of his contention, he relied upon a decision of the Madras High Court in A.L. VR. ST. Veemppa Chettiar v. CIT . That was a case where the ITO initiated reassessment proceedings by issuing a notice under Section 34(1)(a) of the Indian I.T. Act, 1922, in respect of a particular item. While so reopening he also sought to reopen the assessment under Section 34(1)(b). The Madras High Court, after referring to the decision in V. Jaganmohan Rao v. CIT , observed that the ITO cannot directly issue a notice for reassessment in cases falling under Clause (b) after the four year period. But those cases can be brought in indirectly by issuing a notice purporting to be under Clause (a). It was further observed at page 126 of the report:

(3.) THE Income-tax Appellate Tribunal, Hyderabad Bench, submitted a statement of case and referred under Section 27(1) of the Wealth-tax Act, 1957 (hereinafter called "the Act"), the following three questions of law, the first two at the instance of the assessee and the third at the instance of the revenue, for the opinion of this court: