WEALTH-TAX OFFICER v. RAVI KUMAR DAFARIA
[Citation -1984-LL-0511-3]

Citation 1984-LL-0511-3
Appellant Name WEALTH-TAX OFFICER
Respondent Name RAVI KUMAR DAFARIA
Court ITAT
Relevant Act Wealth-tax
Date of Order 11/05/1984
Assessment Year 1974-75, 1976-77
Judgment View Judgment
Keyword Tags reopening of an assessment • reassessment proceedings • departmental valuer • immovable property • partial partition • reason to believe • audit objection • value of land • audit party • net wealth
Bot Summary: Assessment for all these years were originally completed by the WTO, but later on the basis of an audit note the assessment were reopened under s. 17(1)(b) of the WT Act. The assessee had shown this property in his return for all the assessment years and valued it at Rs. 75,000 and claimed exemption under s. 5(1)(iva). On the basis of this audit note the WTO commenced proceedings under s. 17(1)(c) of the Act which provides that in case the WTO has in consequence of any information in his possession reason to believe that the net wealth chargeable to tax has escaped assessment for any year, he may re-assessee such net wealth. AAC vide orders under appeal set aside the assessments on the ground that they were not validly reopened under s. 17(1)(b). The following grounds have been raised: On the facts and in the circumstances of the case the AAC erred: in holding that the proceedings under s. 17(1)(b) are abinitio void; in reducing the value of land as determined by the WTO; in holding that four outhouses and garages which are given three different municipal numbers constitute one immovable property and are eligible for exemption under s. 5(1)(iv) of the WT Act; in holding that value of the swimming pool cannot be separately added in the wealth of the assessee. The assessee had claimed exemption under s. 5(1)(iv) of the WT Act meaning thereby he described the entire property as agricultural land. We are of the view that there was no information with the WTO entitling him to reopen the assessment under s. 17(1)(b) and therefore the ld.


M. C. AGARWAL, J. M.: There are three appeals by Revenue against assessee for asst. yrs. 1974-75, 1975-76 and 1976-77 respectively. Assessment for all these years were originally completed by WTO, but later on basis of audit note assessment were reopened under s. 17(1)(b) of WT Act. facts of case are that on 1st Jan., 1974 there was partial partition in family of assessee had assessee received one bigha of agricultural land with water tank, engine room and bungalow with fuel store rooms and garages situated in t h e same compound and bearing municipal numbers 17, 18 and 21. assessee had shown this property in his return for all assessment years and valued it at Rs. 75,000 and claimed exemption under s. 5(1)(iva). same was granted by WTO. audit objection however, pointed out that outhouses were four in number and only one of them was exempted under s. 5(1)(iv). audit note further stated that whole of land had been treated as agricultural land while according to Departmental valuer s report only area of 71196 sq. ft. was agricultural land and rest was appurtenant to building. On basis of this audit note WTO commenced proceedings under s. 17(1)(c) of Act which provides that in case WTO has in consequence of any information in his possession reason to believe that net wealth chargeable to tax has escaped assessment for any year, he may re-assessee such net wealth. assessments were accordingly framed in spite of objections by assessee that they were no validly reopened. appeal was taken to AAC, against assessments and ld. AAC vide orders under appeal set aside assessments on ground that they were not validly reopened under s. 17(1)(b). ld. AAC also held that four outhouses and main building consisted of single building and were exempted under s. 5(1)(iv) and value of swimming pool could not be separately assessed. Feeling aggrieved Department has preferred aforesaid appeals. following grounds have been raised: On facts and in circumstances of case AAC erred: (i) in holding that proceedings under s. 17(1)(b) are abinitio void; (ii) in reducing value of land as determined by WTO; (iii) in holding that four outhouses and garages which are given three different municipal numbers constitute one immovable property and are eligible for exemption under s. 5(1)(iv) of WT Act; (iv) in holding that value of swimming pool cannot be separately added in wealth of assessee. We would deal with first ground about application of s. 17(1)(b). As already pointed out above that section authorises reopening of assessment if WTO has information in his possession that wealth has escaped assessment. information has to be fresh information and not merely one which was already before WTO to which he applied his mind, but committed mistake in analysing fact. In case before us assessee had specifically stated in his return of income that he had received property in partial partition which consisted of one bigha of agricultural land with water tank, engine room, bungalow with fuel store rooms and garages situated in same compound and bearing municipal Nos. 17, 18 and 21. assessee had claimed exemption under s. 5(1)(iv) of WT Act meaning thereby he described entire property as agricultural land. It is not case of WTO that this information about nature of property was not before him at time of original assessment. What audit note pointed out to WTO was that only part of property was agricultural land and that various outhouses could not have been granted exemption as only one house was exempted. This was no information as law is quite clear as to assets that are exempted under s. 5 of WT Act. Reliance was placed by ld. Departmental Representative on ruling in S. Narayan Appa & Ors. vs. CIT (1967) 63 ITR 219 (SC). This is ruling on s. 34 of IT Act and deals with conditions under which assessment could be reopened under IT Act. It further held that reasons for reopening assessments must really exist and it should not be merely pretence and that reasons need not be communicated to assessee. We find nothing in this ruling that may help Department in this case. Similarly ruling in CIT vs. A. Raman & Co. (1968) 67 ITR 11 (SC) is of no help to Department. It lays down that expression information must mean instruction or knowledge derived from external source concerning facts or particulars or as to law relating to matter bearing on assessment. This ruling has to be read with reference to latest law declared by Hon ble Supreme Court in Indian & Eastern Newspaper Society vs. CIT (1979) 12 CTR (SC) 190: (1979) 119 ITR 996 (SC), in which it was held that information contained in audit note on point of law could not be regarded as information enabling ITO to initiate reassessment proceedings under s. 147(b). It was further held in that case that part of audit note which embodies opinion of audit party in regard to application or interpretation of law cannot be taken into account by ITO. As is clear in case before us, audit party has tried to advise ITO about application of law to facts of case and in view of law laid down by Hon ble Supreme Court this cannot be done. In that case (1979) 12 CTR (SC) 190: (1979) 119 ITR 996 (SC), it was argued before Hon ble Supreme Court that realisation by ITO that he had committed error when making assessment amounts to information within provisions of s. 147(b) of IT Act. This argument was rejected by Hon ble Supreme Court observing that it was inconsistent with terms of s. 147(b). Hon ble Supreme Court further laid down that error, discovered on reconsideration of same material and not more, does not confer power to reopen assessment. We are, therefore, of view that there was no information with WTO entitling him to reopen assessment under s. 17(1)(b) and therefore ld. AAC has rightly quashed assessments. In view of our this finding we need not decide other issues raised in grounds of appeal. In view of above discussions all three appeals are dismissed. *** WEALTH-TAX OFFICER v. RAVI KUMAR DAFARIA
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