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First Wealth-tax Officer Vs. P.A.T. Ramaswamy Chettiar - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Madras
Decided On
Judge
Reported in(1985)12ITD40(Mad.)
AppellantFirst Wealth-tax Officer
RespondentP.A.T. Ramaswamy Chettiar
Excerpt:
.....question for consideration. they are, therefore, disposed of by a common order.2. for each of the assessment years 1976-77 and 1977-78, the assessee declared the value of his property situated abroad, i.e., no. 38, jalan tharasu, at $ 10,000. the wto accepted the same and completed the assessments accordingly.3. later on, in the course of assessment proceedings for the assessment year 1978-79, the wto found that the auctioneers had valued the property in question at $ 40,000 and $ 50,000, as in january 1978 and january 1979, respectively. accordingly, the wto reopened the assessments for the assessment years 1976-77 and 1977-78 under section 17(l)(a) of the wealth-tax act, 1957 ('the act') and reassessed the value of the property at $ 25,000 and $ 30,000.4. in the course of appellate.....
Judgment:
1. These two appeals, filed by the department, involves a common question for consideration. They are, therefore, disposed of by a common order.

2. For each of the assessment years 1976-77 and 1977-78, the assessee declared the value of his property situated abroad, i.e., No. 38, Jalan Tharasu, at $ 10,000. The WTO accepted the same and completed the assessments accordingly.

3. Later on, in the course of assessment proceedings for the assessment year 1978-79, the WTO found that the auctioneers had valued the property in question at $ 40,000 and $ 50,000, as in January 1978 and January 1979, respectively. Accordingly, the WTO reopened the assessments for the assessment years 1976-77 and 1977-78 under Section 17(l)(a) of the Wealth-tax Act, 1957 ('the Act') and reassessed the value of the property at $ 25,000 and $ 30,000.

4. In the course of appellate proceedings before the AAC the assessee submitted that he had given all the details and particulars of the property along with its value, that WTO could have made necessary enquiries about the valuation of the property and that this having not been done, the WTO was not legally competent to reopen the assessments under Section 17(l)(a) on the basis of change of his opinion. The AAC accepted this contention and cancelled the assessments. Aggrieved by the consolidated order of the AAC, the department has filed the present appeals.

5. On the date of hearing, no one appeared on behalf of the assessee.

The appeals were, therefore, heard ex parte.

6. After going through the record and hearing the learned representative of the department, we do not find any substance in these appeals. The assessee disclosed fully and truly all the material facts necessary for his assessment. He gave the particulars of the property and the value thereof. As held by the Supreme Court in the case of Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191, the duty of the assessee was only to disclose primary facts. He was not bound to indicate what factual or legal inferences should be drawn from the primary facts. Since the assessee gave all the relevant details of the property, it was for the WTO to either refer the matter to the departmental valuer or to get the value of the property assessed in some other way. This having not been done by the WTO he was not justified in reopening the assessments under Section 17(1)(a) simply on the ground that the value of the property was declared and assessed at a higher figure in the subsequent years. According to the principle laid down by the Supreme Court in Gemini Leather Stores v. ITO [1975] 100 ITR 1 the WTO could not take recourse to Section 17(l)(a) to remedy the error resulting from his failure to apply his mind and omission to make the necessary enquiries.

7. The learned representative of the department prays that the reassessments under consideration should be considered as valid under Section 17(1)(b). In support of his plea he relies upon CWT v.Chhatrshal Sinhji D. Zala [1982] 135 ITR 826 (Guj.) and K.G. Kemptur v.Second WTO [1984] 146 ITR 611 (Kar.). We are unable to accept his contention. In the first instance it is doubtful if, in view of the decision of the Supreme Court in Johri Lal (HUF) v. CIT [1973] 88 ITR 439 the reassessments in question can be considered to have been made under Section 17(1)(b) when the original assessments were admittedly and specifically reopened under Section 17(l)(a). In any case, there is no satisfactory material on the record to conclusively hold that the correct value of the property for the assessment years 1976-77 and 1977-78 was really more than the declared value of $ 10,000 so as to justify the reopening of the assessments under Section 17(l)(b). The mere fact that the value of this property was estimated by the auctioneers at $ 40,000 and $ 50,000 as in January 1978 and January 1979 is not, by itself, sufficient to hold that the value of the property was necessarily more than $ 10,000 in the assessment years under consideration so as to believe that wealth chargeable to tax had escaped assessment. In the final analysis this would be a case of mere change of opinion. If that be so, then the assessments could not be reopened even under Section 17(1)(b). The power to act on information is not to be confused with the power to revise. The rule that the WTO is entitled to act on information received by him does not permit fresh application of the mind to the same issue or enable him to correct his own or his predecessor's error of the judgment. The WTO cannot take action under Section 17(l)(b) merely because he happens to change his opinion or to hold an opinion different from that of his predecessor on the same set of facts. This proposition of law is supported by the decision of the Supreme Court in CIT v. Dinesh Chandra H. Shah [1971] 82 ITR 367. To the same effect are the views of the Bombay High Court in Tulsidas Kilachand v. D.R. Chawla [1980] 122 ITR 458 and the Madras High Court in Family of V.A.M. Sankaralinga Nadar v. CIT[1963] 48 ITR 314. Thus, in our opinion, the department has no case even under Section 17(1)(b).

8. In view of the above discussion, we are of the opinion that the order of the AAC is sound and calls for no interference. We, accordingly, confirm his order.


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