WEALTH-TAX OFFICER v. P. SANJEEVA REDDY
[Citation -1984-LL-0630-6]

Citation 1984-LL-0630-6
Appellant Name WEALTH-TAX OFFICER
Respondent Name P. SANJEEVA REDDY
Court ITAT
Relevant Act Wealth-tax
Date of Order 30/06/1984
Judgment View Judgment
Keyword Tags protective assessment • return of net wealth • disclosure of income • voluntary disclosure • individual capacity • regular assessment • specific provision • disclosure scheme • voluntary return • land acquisition • wealth-tax act • valuation date • oral partition • regular return • refund of tax
Bot Summary: The WTO completed the individual assessments against Shri Sai Reddy for the assessment years 1971-72 to 1975-76 and against Shri Sanjeeva Reddy for the assessment year 1975-76. The AAC held that in the assessment order dated 30-7-1976 the WTO stated that the assessee filed return of wealth in his individual status showing a net wealth of Rs. 16,58,776 for the assessment year 1975-76 and it is very clear that the assessee filed return of wealth before the WTO on the basis of which the assessment, though termed protective was completed. Once the WTO himself recognised the returns as validity filed under the Act and once the Tribunal itself had cancelled the assessments, the WTO according to the assessees' counsel, cannot turn round and say that the assessment proceedings are not under the Act but should be deemed to be under the VD Act. Ultimately, the Tribunal, held that the return accompanying the declaration under section 15 cannot be taken to be voluntary return or a return under section 14(1) or and assessments under Act cannot be completed on the basis of such returns and the assessment made, if any, on such returns, would be invalid. Section 15(7) is as follows: Where any wealth-tax is paid by the declarant for any assessment year in accordance with the provisions of section 5 , read with sub-section or, as the case may be, in accordance with the provisions of sub-section credit therefor shall be given to the declarant in the assessment made under the Wealth-tax Act in that year. As the assessment dated 30-71976 were protective assessments and no realisations can be made under the demands raised the adjustment contemplated under section 15(7) did not of course take place. The original assessments themselves were styled as protective and the tax adjusted against such original assessment was bound to be refunded inasmuch as the main assessments had become final and tax thereunder had been paid if the tax had not been paid in the main assessments, it would have been open to the WTO to adjust the refunds herein against the demands in such family assessments.


appeals are filed by revenue whereas cross-objections are by t h e assessees. Again miscellaneous petitions are by assessees. Therefore, these are taken up together for sake of convenience. 2. Shri Sai Reddy is father of Shri Sanjeeva Reddy. file bearing 815-S/NC started on basis of compensation received under Land Acquisition Act, 1894. 3. Notice dated 19-11-1975/20-11-1975 under section 14(2) of Wealth- tax Act, 1957 ('the Act') was served on Shri Sai Reddy requesting him to file true and correct statement of his assets as on relevant valuation date for assessment year 1975-76. This was received by Shri Sai Reddy on 6-12-1975. On 31-12-1975 he filed from of declaration duly filed in under section 15(1) of Voluntary Disclosure of Income and Wealth Act, 1976 ('VD Act') addressed to Commissioner. He filed voluntary disclosure in Form No. C prescribed under section 14 for assessment year 1975-76. In that he had returned total net wealth of of Rs. 16,58,776.33 for assessment year 1975-76. He had paid amount of Rs. 54,360 on 30-12-1975 under VD Act. return was filed by Shri Sai Reddy as individual. 4. So also, Shri Sanjeeva Reddy filed declaration under VD Act under provisions of section 15(1). He also filed return in Form No. C accompanied by regular return under Act for assessment year 1975- 76. declaration filed under provisions of VD Act is addressed to Commissioner who in his turn had forwarded them before WTO for completing assessment. 5. Further, HUF constituted by Shri Sai Reddy and Shri Sanjeeva Reddy was also assessed to wealth-tax for assessment year 1975-76. Both Shri Said Reddy and Shri Sanjeeva Reddy contended during assessment proceedings of HUF that there was oral partition between them on 10-12- 1970 and subsequently suit for partition was also filed in Court of Fifth Additional Judge, City Civil Court in SO No. 573 of 1975. It is only subsequent to claim for partition that individual returns were filed by Shri Sai Reddy and Shri Sanjeeva Reddy, inter alia, for assessment year 1975-76. HUF of Sai Reddy filed wealth-tax appeals for assessment year 1967-68 to 1975-76 in WT Appeal Nos. 248 to 251 (Hyd.) of 1978-79 and 148 to 152 (Hyd.) of 1977- 78. By its orders dated 17-7-1979 Tribunal held in wealth-tax proceedings that in assessment year 1975-76 also there was no partition. They found that if at all there was partition it was only in succeeding assessment year. 6. In meanwhile, WTO completed individual assessments against Shri Sai Reddy for assessment years 1971-72 to 1975-76 and against Shri Sanjeeva Reddy for assessment year 1975-76. He made assessment against Shri Sai Reddy for assessment year 1975-76 by his assessment order dated 30-7-1976 under section 16(3) of Act on total wealth of Rs. 12,24,520 raising demand of Rs. 28,980. Against Shri Sanjeeva R e d d y assessment was completed for 1975-76 on total wealth of Rs. 13,64,800 as per assessment order dated 30-7-1976 under section 16(3). Against individual assessment, Shri Sai Reddy and Shri Sanjeeva Reddy, went in appeal before AAC who gave partial relief. Thereupon revenue filed appeals in individual assessments of Shri Sai Reddy for assessment years 1971-72 to 1975-76 year 1975-76 before this Tribunal. These appeals were taken up by this Tribunal 'A' Bench in WT Appeals Nos. 342 to 345 (Hyd.) of 1979. All of them were disposed of by common order dated 25-9- 1980 during course of which Tribunal had ordered as follows: "There will be no claim which will fall to be assessed in hands of Shri Sai Reddy for assessment year 1971-72 to 1975-76 and in hands of Shri Sanjeeva Reddy for assessment year 1975-76." They had also held as follows: "Protective assessments made in case of each of assessee as referred to above they have to be cancelled." Implementing said orders WTO passed modificatory orders dated 18-12-1982 vacating assessments, inter alia, for assessment year 1975- 76 against Shri Said Reddy as well as Shri Sanjeeva Reddy. Before passing of t h e modificatory orders in case of each of these assessees they filed separate petitions dated 20-10-1982 before WTO requesting for grant of refunds of amounts which they have paid on 30-12-1975 and 31-12-1975. Shri Said Reddy requested for refund of Rs. 54,360 paid on 30-12-1975 through SBH, challan No. 8094 whereas Shri Sanjeeva Reddy prayed for refund of Rs. 29,600 paid on 31-12-1975 in SBH Gunfoundry by cheque No. 543804. They made request for refund of those amounts paid under VD Act in their individual statutes with interest at 12 per cent as there is no assessment against them individually as held by Tribunal. However, WTO, by his modifictory orders dated 18-12-1982 held, as there was no specific provision for refund of amount paid under VD Act towards wealth-tax no question of refunds arises. He had also relied upon this Tribunal's decision in case of Smt. Rambai v. WTO [WT Appeal Nos. 469 to 475 (Hyd.) of 1980 dated 29-7-1981] wherein it was held that return filed along with declarations under VD Act, cannot form basis for assessment. WTO held that unless assessment is made tax paid under VD Act cannot be adjusted under terms of section 15(7). Therefore, he held that respective amounts deposited under VD Act cannot be refunded. As against each of modificatory order Shri Sai Reddy and Shri Sanjeeva Reddy went in appeal before AAC. 7. contention of assessee was that while passing order under section 16(3) on 30-7-1976 WTO recognised return of wealth, field by each of assessee, along with declaration in Form No. C provided under VD Act, is return of wealth and they were recognised as those filed under Act, apply to assessee's case. According to them, refusal to grant refund amounts to non-implementation of order of Tribunal. AAC held that in assessment order dated 30-7-1976 WTO stated that assessee filed return of wealth in his individual status showing net wealth of Rs. 16,58,776 for assessment year 1975-76 and it is very clear that assessee filed return of wealth before WTO on basis of which assessment, though termed protective was completed. Hence, contention of assessee that while passing order on 30-7-1976 under section 16(3) WTO recognised turn of wealth of assessee as one field under Act has to be accepted. He also held that decision in case of Smt. Rambai (supra) replied upon by WTO cannot apply to facts of assessee's case. AAC also held that according to section 15(7) where any wealth-tax was paid by declarant for any assessment year credit therefore shall be given to declarant in assessment made under Act for that year. AAC also held that WTO had taken too technical view of section 15(7). He pointed out that substative decision of this Tribunal was that net wealth of assessees in their individual capacity should be considered at nil and since assessees filed returns of wealth which were accepted by WTO on basis of which assessments were made, though termed as protective assessments, assessee are entitled to credit for tax paid under VD Act in view of clear provisions of section 15(7) of VD Act. AAC also held that while giving effect to Tribunal's order WTO was required to delete wealth- tax assessed by him in assessee's individual assessments and consequent upon nil wealth to be assessed in their hand, on basis of returns filed by them, assessees are entitled to refund of wealth-tax paid by them under VD Act. Ultimately, WTO was directed to refund Rs. 54,360 to Shri Sai Reddy and Rs. 29,600 to Shri Sanjeeva Reddy though orders dated 14-3- 1983 appeals filed by these assessees are allowed and refunds were ordered. 8. As against impugned orders of AAC dated 14-3-1983 granting refunds these second appeals were filed. cross-objections were filed by two assessees only in support of AAC's orders and no specific prayer was made in them or no substantial relief was prayed for in them. 9. two miscellaneous petitions were filed, as already stated above, by assessees. In each of them it is stated that Tribunal while passing its orders dated 25-9-1980 in WT Appeals Nos. 312 and 343 to 347 (Hyd.) of 1979 d i d not specifically order refunds of amounts paid by theses for assessment year 1975-76 and on that ground WTO refused to grant refunds due which is quite untenable. Therefor, it was prayed that Tribunal may be pleased to clarify order dated 25-9-1980 by giving directions to WTO to grant refund due to assessees and pass such other orders which are deemed fit and proper in circumstances of case. 10. We have heard Shri V. P. Rao, learned departmental representative and Shri M. V. Pastry, learned counsel for assessees. In grounds of appeal filed on behalf of department it is contended that as there was no specific provision under VD Act providing for refund of wealth- tax collected under scheme, action of WTO should have been upheld by AAC. It is also contended that following order of this Tribunal dated 29-7-1981 in Smt. Ram Bai [IT Appeal Nos. 469 to 475 (Hyd.) of 1980] order of WTO should have been upheld by AAC. assessees' counsel contended that provision of VD Act are clear. Under section 15(4) of VD Act, copy of declaration made by declarant under sub-section (1) of section 15 shall be forwarded by Commissioner to WTO and information contained therein may be taken into account for purposes of proceedings relating to assessment or reassessment of net wealth of declarant under provisions of Act. This provision, according to assessees' counsel would clearly show that declaration submitted under sub-section (1) of section 15 can be taken into account for purposes of assessment or reassessment of wealth-tax proceedings. Rule 5 of VD Rules, 1975, directs that declaration under sub-section (1) of section 15 should be made duplicate in Form No. C. Sub-rule (2) of rule 5 would make it clear that declaration under sub-rule (1) for any assessment year or years shall be accompanied by return of net wealth for such year or years in form prescribed under section 14. Therefore, according to learned counsel for assessee once returns of net wealth were filed along with declaration filed under section 15(1) , assessments or reassessments can be made making use of contents of statement filed by assessees under section 15(1) are filed in Form No. C and they were also accompanied by wealth-tax returns filed under section 14(1) or (2). Commissioner forwarded returns as well as statements to WTO and directed him to complete assessments for 1975-76. Thereupon, WTO recognised those very returns of wealth as these were filed under Act and completed assessments under section 16(3) dated 30-7-1976. Once WTO himself recognised returns as validity filed under Act and once Tribunal itself had cancelled assessments, WTO according to assessees' counsel, cannot turn round and say that assessment proceedings are not under Act but should be deemed to be under VD Act. Once proceedings of these assessees which took place for assessment year 1975-76 were taken to be proceedings under Act, then under section 34 of said Act refunds can be validly granted. 11. On other hand, learned departmental representative contents that in Smt. Rambai's case (supra), 'A' Bench of Tribunal by its order dated 29-7-1981 categorically held that he return filed in compliance with express requirements of VD Act cannot be considered to be return voluntarily filed under section 15 , read with section 14. Simply because return was annexed to declaration under VD Act there had been no element of volition on part of assessee and, therefore, on that ground returns accompanying declarations cannot be taken to have been filed under section 14. So, ultimately, Tribunal, held that return accompanying declaration under section 15 cannot be taken to be voluntary return or return under section 14(1) or (2) and assessments under Act cannot be completed on basis of such returns and assessment made, if any, on such returns, would be invalid. To same effect is decision of Calcutta Bench of Tribunal in Smt. Manmohini Coomer v. WTO [1984] 8 ITD 537 (TM.). In that case it is held that return accompanying declaration under VD Act as annexure cannot form basis of assessment and it does not give WTO jurisdiction to make assessment taking it as basis under section 17 of Act. 12. Thus, we have considered arguments advanced at length. Firstly, we are of opinion that as this is case of only refund we need not go into question whether return accompanying Form No. C filed as per requirements of section 15(1) is valid return filed under section 14(1) or (2) and whether it is voluntary return or not. question in this case is very simple. Even according to WTO, on basis of returns accompanying declaration under section 15(1) , they having been forwarded to WTO completed assessment against each of assessees under section 16(3) by his orders dated 30-7-1976. Having done so, very same WTO, in our opinion, cannot turn round and say that proceedings which took place were not proceedings under Act but were all proceedings under VD Act and on that ground he cannot deny refund of amount. He, in our opinion is estopped to do so. We, therefore, proceed on premise that return filed, assessment made, appeal taken were all proceedings under Act only. Once they are all proceedings which took place under Act only. Once they Once they are all proceedings which took place under Act only. Once they are all proceedings which took place under Act and as assessments themselves were annulled refund of tax already paid can be validly made under section 34 o f Act. Further, individual assessments made against these assessees for 1975-76 were only protective assessments, which term by itself shows that only demand can be raised by no realisation of demand can be made. protective assessment will ordinarily be resorted in case where department does not know whether 'A' or 'B' is liable for assessment of same asset. Now in this case admittedly HUF headed by Shri Sai Reddy was already assessed for assessment year 1975-76 and demanded tax was already paid. In fact, so-called individual assets of these assessees comprised nothing but alleged divided properties of HUF. So, when HUF was itself assessed for assessment year 1975-76, same assets which were sought to be assessed in individual hands of these assessees were deemed to have been already assessed. If that is so, department cannot recover wealth-tax both from HUF as well as opinion, once Tribunal annulled individual assessments for 1975-76 it means that assessees had no assets at all to be taxed in their hands. tax amount paid by them would remain as mere deposits which are not liable to be appropriate towards any tax. In our opinion, deposits, thus, standing to credits of assessees are neither governed by provisions of VD Act nor by provisions of Act and, therefore, under principles of general law as they cannot be appropriated towards any particular demand, amounts can be validly refunded. Assuming without admitting that deposits of above amounts were governed by provisions of VD Act even then position would not materially change as disclosed below. Section 15(7) is as follows: "Where any wealth-tax is paid by declarant for any assessment year in accordance with provisions of section 5 , read with sub-section (5) or, as case may be, in accordance with provisions of sub-section (5A) credit therefor shall be given to declarant in assessment made under Wealth-tax Act in that year." In pursuance of provisions of above Act as soon as assessment w s completed on 30-7-1976 under section 16(3) on total wealth of Rs. 12,24,520 in case of Shri Sai Reddy demand raised of Rs. 28,980 should be adjusted from out of Rs. 54,360 deposited by Shri Sai Reddy as per terms of section 15(7). So also, as soon as assessment dated 30-7-1976 was completed in case of individual assessment of Shri Sanjeeva Reddy on net wealth of Rs. 13,64,800 amount of Rs. 29,600 deposited by him should have been adjusted towards demand of Rs. 35,200. As assessment dated 30-7=1976 were protective assessments and no realisations can be made under demands raised adjustment contemplated under section 15(7) did not of course take place. But suppose in case of regular assessment once these amounts were, thus, adjusted as per provisions of section 15(7) they can no longer remain as amounts or deposits governed by VD Act. But they would become amounts governed by provisions of Act. Even according to this reasoning also amounts were found to be refundable under section 3 4 . Under circumstances, major controversial issue raked up by parties in these appeals which is adverted to above and which is already concluded by at least two orders of Tribunal need not be touched for disposal of these matters. Suffice it for us to say that ultimately we found that refund of amounts to assessee by impugned order of AAC is found equitable, just besides being quite legal. Under circumstances, we find no merits in these appeals filed by department and they are dismissed. 13. As already stated cross-objections are filed only in support of AAC's order cross-objections are also dismissed. To extent stated by us above two miscellaneous petitions filed by assessees are allowed. Per Shri S. Rajartnam, Accountant Member: 14. I would like to concur with conclusion of my learned brother on very simple ground. orders is dispute before us are consequential orders (dated 18-12-1982) of WTO giving effect to Tribunal's orders dated 2-5- 1980 cancelling protective individual assessments on these two assessees inasmuch as inclusion of self-same assets in hand of respective families had become final. assessments had been cancelled only on merits as there were no assets which were includible in assessee's hands. Hence, consequential orders thereto have merely to cancel demand and refund tax, if any, adjusted against same. Instead, WTO tried to find another reason for refusing refund of tax adjusted against original demand. It was stated that original assessments were bad and that tax adjusted could not be refunded as these were collected under Voluntary Disclosure Scheme. But he stage for taking such argument was long since past. Inasmuch as Tribunal's orders were not taken up in further reference, only course open to WTO is to give effect to Tribunal's order by cancelling demand and refunding tax adjusted against such demand in original assessments. Besides, original assessments themselves were styled as protective and, hence, tax adjusted against such original assessment was bound to be refunded inasmuch as main assessments had become final and tax thereunder had been paid if tax had not been paid in main (family) assessments, it would have been open to WTO to adjust refunds herein against demands in such family assessments. issue to whether original protective assessments were otherwise invalid or as to whether tax paid under Voluntary Disclosure Scheme was rightly given credit cannot now arise while giving effect to Tribunal's orders. It is not open to WTO to find new reasons for not giving effect Tribunal's orders. assessees are entitled to succeed on this ground alone. I agree that departmental appeals have to be dismissed on this ground alone. 15. assessee had filed cross-objections as well as miscellaneous petitions on original order seeking clarifications for directions of refund. Cross-objections try to meet departmental objections on merits. Since assessees are entitled to succeed merely on ground that WTO has only limited jurisdiction while giving effect to Tribunal's orders, cross-objections have become infructuous and they are dismissed. As for direction for issue of refund requested in miscellaneous petitions, such direction is now unnecessary in view of our order of dismissal of departmental appeals seeking restoration of WTO's orders. If it were necessary to deal with same, we could have had to authorise consequential relief by way of refund of tax adjusted against original demand which stood cancelled by Tribunal. It is for this reason that miscellaneous petitions have to be treated as allowed inasmuch as reliefs claimed have been allowed by dismissal of departmental appeals. 16. entire exercise by way of departmental appeals appear to be academic even for another reason. We are informed that refunds have already been issued in pursuance of orders of first appellate authority. If it were not possible for WTO to issue refund of wealth-tax paid under VD Act, how was he able to adjust it at first instance? Apparently, section 15(7) is his authority. If he could adjust it at first instance, he can certainly refund it if such adjusted tax is found not payable. If he did not wish to refund any tax, all he had to do was to refrain from making any assessment. Having chosen to make assessment and having adjusted tax against demand, there is no means of appropriating tax so adjusted in case demand is reduced or cancelled in further appeal. Having issued refund, it is possible for revenue to get it back when demand, against which it was originally adjusted, no longer survives? Can there be collection back of amount against non-existent demand? These appear to be further hurdles in way of departmental appeals. *** WEALTH-TAX OFFICER v. P. SANJEEVA REDDY
Report Error