KALIDAS CHOWDHURY Vs. WEALTH TAX OFFICER G WARD

JUDGEMENT

(1.) This rule is directed against the notice under Section 17 of the Wealth-tax Act, 1957, by which the petitioner was asked to file a return as the Wealth-tax Officer has reason to believe that net wealth chargeable to tax for the assessment years 1963-64 to 1966-67 has escaped assessment within the meaning of Section 17 of the Wealth-tax Act, 1957. The facts leading to the case are that the petitioner is the owner of softie properties including 12/1, Nather Bagan Street, Calcutta-5, and 2, Sovabazar Street, Calcutta. By a deed of trust executed in writing on 6th April, 1957, and registered, the petitioner settled the properties in favour of the trustees, Sri Ajit Kumar Chowdhury and Arun Kumar Chowdhury. Under the said trust deed the wife and sons of the petitioner were the beneficiaries in respect of the income out of the trust properties. The petitioner paid gift-tax to the extent of Rs. 17,019.20 as per notice of demand, dated 19th September, 1959. After the settlement was executed in 1957, the petitioner did not file any return for the assessment years 1957-58 and 1958-59. On 16th February, 1960, the Wealth-tax Officer, "A" Ward, Calcutta, wrote to the petitioner to file a return under the Wealth-tax Act whereupon the petitioner replied that as the properties had been transferred to the trustees, the petitioner is no longer liable to pay any wealth-tax. Thereafter, on the basis of the letter and the return filed, the Wealth-tax Officer made a nil assessment and issued a notice of demand, dated 3rd March, 1960, under section 30 of the Wealth-tax Act showing nil assessment for the year 1959-60. Thereafter, all on a sudden, it is alleged, the petitioner received a notice on 29th August, 1970, issued under Section 17 of the Wealth-tax Act, 1957, whereby the petitioner was called upon to submit return of net wealth chargeable to wealth-tax for the assessment years 1962-63 to 1966-67. Being aggrieved by the said notice, the petitioner moved this court and obtained the present rule. The petitioner's contention is that there was no omission on the part of the petitioner to submit fully and truly all the materials for the assessment of net wealth in respect of which he is assessable under the Act, and, secondly, that there was no information upon which the respondents can act. In other words, the case of the petitioner is that the condition precedent for the exercise of powers under Section 17 is absent and as such the notice is without jurisdiction and, prima facie, void. Mr. Bhattacharjee on behalf of the petitioner contended that there was no omission on the part of the petitioner to disclose the material facts before nil assessment was made by the officer concerned. 'There is no doubt that there is a trust deed upon which the nil assessment was made by the Wealth-tax Officer, By the trust deed it is clear that the property has been transferred to the trustees for the benefit of the sons and the wife of the petitioner. At the present moment, therefore, it does not appear to me that there is omission on the part of the assessee in respect of the trust to place all the materials before the authorities concerned for the purpose of assessment. If there is no such omission on the part of the petitioner the notice under Section 17(1)(a) of the Wealth-tax Act cannot be issued in view of the fact that there was no omission on the part of the assessee to disclose the material facts.

(2.) Mr. Bhattacharjee contended further, that there was further no information in the record upon which the respondents can issue notice under Section 17(1)(b) of the Act. It appears, however, that before the Income-tax Officer the assessee conceded the point that the income-tax in respect of the income of the property can be added to the income of the petitioner under Section 16(3) of the Indian Income-tax Act, 1922, On that basis income-tax was assessed against the petitioner and refund was allowed to the trustees in respect of the income from the trust properties. This information was passed on to the Wealth-tax Officer who on the basis of the said information initiated the proceedings under Section 17 of the Act. In that view of the matter, in my opinion, it cannot be said that there is no information upon which the respondent, Wealth-tax Officer, can initiate proceedings under Section 17 of the Act. Mr. Bhattacharjee further contended that if this is a notice under Section 17(1)(b) then the period of limitation is only four years and the assessment can be reopened in respect of four years only and not beyond that, and it is stated that except for the year 1966-67, reopening in respect of other assessment years is patently barred by limitation. Mr. Sen on behalf of the respondents contended that if it is under Section 17(1)(b) the assessment ior any year beyond four years cannot be reopened. In view of the fact that, in my opinion, the respondent has reason to believe that, under Section 17(1)(b) of the Wealth-tax Act, 1957, in consequence of information in his possession, the net wealth chargeable to tax has escaped assessment, the notice, in so far as the assessment year 1966-67 is concerned, is a valid one. The other notices for the assessment years 1962-63, 1963-64 and 1965-66 under Section 17(lXa) are barred and must be set aside, as, in my opinion, the Wealth-tax Officer has no reason to believe that by reason of the omission or failure on the part of the assessee to make the return, the condition precedent for the exercise of power is not satisfied and as such the notices cannot stand.

(3.) In the result, the rule is made absolute to the extent indicated above and discharged in so far as the assessment year 1966-67, is concerned. The petitioner, however, is given liberty to raise all the points taken in the petition before the Wealth-tax Officer including the point that under the proviso to Section 4(1)(a) wealth-tax is not chargeable in respect of the property where gift-tax has already been paid. I make it clear that I have not decided this point in this proceeding and I have left it open.