WEALTH-TAX OFFICER v. SIRI PAL OSWAL
[Citation -1985-LL-1231-4]

Citation 1985-LL-1231-4
Appellant Name WEALTH-TAX OFFICER
Respondent Name SIRI PAL OSWAL
Court ITAT
Relevant Act Wealth-tax
Date of Order 31/12/1985
Assessment Year 1972-73, 1974-75
Judgment View Judgment
Keyword Tags opportunity of being heard • statutory requirement • computation of income • condonation of delay • memorandum of appeal • additional evidence • competent authority • additional ground • vested interest • natural justice • co-operative • time barred • net wealth
Bot Summary: Counsel for the assessee was that there was nothing in the IT Act enabling the CIT to exercise powers simultaneously under s. 127 and under s. 125 of the IT Act because s. 127 specifically provided that specific cases may be transferred under that section from an ITO to another ITO or from an ITO to another concurrently with an IAC and vice versa. Explaining the scope of s. 24 6 of the IT Act which is Pari material with the provisions of s. 23 of the WT Act, 1957, their Lordships of the Allahabad High Court in the case of Mahan Lal Khemka vs. CIT 81 ITR 89 observed that an assessee denies his liability to be assessed under the Act not only when he contends that the Act has liability to be assessed under the Act not only when he contends that the Act has no application to him at all but also when he urges that he cannot be assessed in a particular proceeding taken under the Act. Departmental Representative further urged that under s. 125 of the IT Act, the CIT by general or special order in writing, could direct that the powers conferred to the ITO by or under the IT Act shall, in respect of any specified case or class of cases of any specified person or class of persons, be exercised by the IAC of IT. Further under s. 125, where an order under. S 125 has been made by the CIT, reference in the IT Act or in any rule made thereunder to the ITO shall be deemed to be reference to the IAC of IT. He urged that in view of the provisions contained in s. 2 of the WT Act r/w s. 125(a), the ITO having been equated with the IAC of IT was to be considered as the WTO under the WT Act. Counsel for the assessee, on the other hand, took us through various provisions of WT Act and contended that in the absence of similar provisions in this Act, the IAC of IT could not be equated with the WTO under the WT Act. In our opinion, the issue is squarely covered by the above decision of the Madras High Court in favour of the assessee At page 213 in the headnotes, the observations are as under : On a reference at the instance of the Revenue, the High Court rejected the Revenue s contention that once a notification is issued under the IT Act conferring powers of the ITO on the IAC, the IAC would automatically assume jurisdiction as WTO under the WT Act and pointing out that, if that were the position, there would have been no necessity for making a provision like s. 8AA in the WT Act. Counsel for the assessee also submitted that, assuming while not conceding, that the jurisdiction under the WT Act was automatic, while passing order under s. 127 of the IT Act r/w s. 125 thereof, the CIT did not allow any opportunity to the assessee while transferring the jurisdiction from the ITO. Central Circle I, Ludhiana to the IAC, Patiala as required under sub-s. thereof.


RAM RATTAN, A. M.: Order These three appeals by Revenue relating to asst. yr. 1972-73, 1973-74 and 1974-75 are directed against consolidated order of CWT (A). Since identical grounds have been taken in these appeals by Revenue, same are being disposed of by common order. common grounds for all three assessment years read as under : "1 On facts and in circumstances of case, ld. CIT (A) erred in annulling assessments for asst. yrs. 1972-73, 1973-74 and 1974-75 holding these to be legally invalid for want of jurisdiction. CIT (A) has overlooked provisions of s. 125 (2) (a) of IT Act, 1961 which equate IAC with ITO and IAC by virtue of becoming assessing authority under s. 125 acquires exclusive jurisdiction under s. 8 of WT Act, 1957. 2. It is prayed that order of ld. CIT (A) be set aside and that of ITO restored." 2 . During course of hearing , following additional grounds of appeals were taken by Revenue for all three assessment years : "1. On facts and in circumstances of case, ld. CIT (A) has erred in entertaining appeal of assessee on question of jurisdiction as assessee never challenged authority of IAC of WT (Asst.) to proceed with these cases during course of assessment proceedings relating to asst. yrs. 1972-73, 73-74 and 1974-75. 2 . On facts and circumstances of case, ld. CIT (A) erred in annulling assessments for asst. yrs. 1972-73, 1973-74 and 1974-75 as CIT (A) had no jurisdiction to entertain ground raised by assessee reading validity of assessment framed by IAC (Asst.) of Wealth-tax". 3 . We have reproduced grounds of appeal above. At outset, we would like to add that these appeals are under WT Act, 1957 while in second ground of appeal in original grounds, relief sought is that orders of ITO should be restored. As matter of fact, assessment orders passed are neither by ITO nor by WTO but by IAC of IT (Asst.), Patiala whereas these should have been by IAC of Wt (asst.) Patiala. grounds of appeal by Revenue, original or additional will have to be considered against background that assessment orders were passed by IAC of WT (Asst.), Patiala, which are sought to be restored by Revenue. Before considering above grounds of appeal little background of case would be necessary. 4 . Briefly, facts are that on 1st April, 1972, jurisdiction over assessee under IT Act vested with ITO, Central Circle I, Ludhiana. same ITO was WTO under WT Act in relation to above assessee. Accordingly assessee filed returns of net wealth for asst. yrs. 1972- 73, 1973-74 and 1974-75 with WTO, Central Circle I, Ludhiana on dates mentioned below : Asst. yr. Date of filing return 1972-73 28th Aug., 1972 1973-74 17th Sept., 1973 1974-75 30th Aug., 1974 On 7th Dec., 1977 notices under s. 16 (2) of WT Act were issued to assessee for each of above assessment years fixing date of hearing for 22nd Dec., 1977. In meantime, order dt. 21st Dec., 1978 was passed by CIT, Patiala, in exercise of powers conferred on him under sub-s. (11) of s. 127 of IT Act, 1961 , and of all other powers enabling him in this behalf thereby cancelling all previous orders under s. 127 of IT Act in certain orders which also included case of assessee w.e.f. 26th Dec., 1978 and in exercise of powers conferred by cl. (a) of sub-s. (1) of s. 125 of said Act and directed that powers conferred on ITO by or under this Act shall, in respect of those cases be exercised by IAC of IT (Asst.), Patiala with effect from above date. effect of above order is that jurisdiction for purposes of IT Act in case of assessee before us was vested with IAC of IT (Asst.). Patialal w.e.f. 26th Dec., 1978. There is no specific order transferring jurisdiction by CWT Patiala from WTO Central Circle. I, Ludhiana to IAC of WT (Asst. ), Patiala, who however, passed assessment orders in case of assessee under WT Act. on 31st March 1979 for three assessment years under appeal. This action of IAC of IT (Asst.) was challenged before CWT (A). contention of ld. counsel for assessee was that there was nothing in IT Act enabling CIT to exercise powers simultaneously under s. 127 and under s. 125 (1) of IT Act because s. 127 specifically provided that specific cases may be transferred under that section from ITO to another ITO or from ITO to another concurrently with IAC and vice versa. It was, further contended that there was no provision in s. 127 for transfer of cases from ITO to IAC of IT (Asst.) exercising exclusive power of assessment. In other words, submission of ld. counsel for assessee was that s. 125 could not run into s. 127 and, therefore, jurisdiction vested by order of CIT passed on 21st Dec., 1978 was vitiated. It was also stated that exercise of powers under WT Act in view of said order dt. 21st Dec., 1978 was all more faulty because there was no proto- type of s. 125 (1) in WT Act. assessee s counsel also contended against legality of assessments made by IAC of IT (Asst.) CWT (A) taking into consideration rival submissions held that he was of view that assessments were invalid for want of jurisdiction. He held that WT Act and IT Act were two separate enactments. provisions of IT Act were not fully imported in WT Act. He further observed that provisions of IT Act were employed in WT Act in limited way with limited purpose. Further in regard to jurisdictional matters, provisions of IT Act had been imported in s. 8 of WT Act. It was also held that order passed under s. 127 r/w s. 125 (1) by CIT on 21st Dec., 1978 transferring jurisdiction to IAC of IT (Asst.) w.e.f. 26th Dec., 1978 was bad in law on ground that CIT had neither recorded reasons nor communicated same to assessee before passing orders. In other words neither reasons were recorded not opportunity of being heard to assessee was afforded by CIT before transferring jurisdiction under s. 127 which was statutory requirement in view of Supreme Court judgment in case of Ajantha Industries & Ors. vs. CBDT 1976 CTR (SC) 79 : (1976) 102 ITR 281 (SC). He also agreed with ld. counsel for assessee that WT Act did not envisage vesting of exclusive jurisdiction in wealth tax assessment with IAC. He also held that order under s. 127 dt 21st Dec., 1978 was legally invalid because under WT Act IAC (Asst.) could not be vested with exclusive jurisdiction to frame WT assessments. He, therefore, held that IAC of IT (Asst.), Patiala had no jurisdiction over assessee insofar as WT Act was concerned. He, therefore, annulled all three assessments made by IAC (Asst.) under WT Act. It is against these orders of CWT (A) that Revenue is aggrieved and is in appeal before us. 5 . We have already noted above that Revenue raised two additional grounds of appeal during course of hearing of these appeals which have been reproduced above. In view of second additional ground, first additional ground was not admitted by Tribunal and this was also not pressed by ld. Departmental Representative . We shall, therefore, not go into merits of first additional ground. 6. Against second additional ground, ld. counsel for assessee raised preliminary issue that this ground should not be admitted. ld. Departmental Representative contended that appeals to first appellate authority i.e. AAC of WT/CWT (A) against orders of assessing officers can be filed under s. 23 of WT Act. He further pointed out that under s. 23(1), appeals can be filed before AAC of WT while under sub-s. (1A), appeals can be filed before CWT (A) in certain cases. He urged that none of provisions in this section authorises assessee to go in appeal before first appellate authority against jurisdiction of assessing officer. In other words, he urged that issue regarding jurisdiction of assessing officer could not be agitated before CWT(A). He further submitted that at all assessees was aggrieved about jurisdiction of assessing officer, he could challenge same only by way of writ petitions before High Court or Supreme Court. He also submitted that no assessee had vested right to be assessed by particular Officer and it was exclusive jurisdiction of administration to confer any officer with priers of execution under Direct Taxes Laws. He further urged that second additional ground raised by Revenue went to root of problem and, therefore, it should be admitted. In Revenue went to root of problem and, therefore, it should be admitted. In this connection referred to decision of Chandigarh Bench of Tribunal in case of Panipat Co-operative Sugar Mills vs. ITO (1982) 2 ITD 495 (Chd). He also referred to r. 11 of ITAT Rules which empowers ITAT to admit additional grounds of appeal. In this connection he referred to judgment of Punjab and Haryana High Court in case of Atlas Cycle Industries Ltd. Vs. CIT (1981) 21 CTR (P&H) 109 : (1982) 133 ITR 231 (P&H). He pointed out that power of Tribunal in appeal to allow additional plea and consequently for additional evidence being taken was given to do substantial justice between parties. He urged that it was fit case to admit additional ground as it went to root of problem and CWT (A) had exceeded his jurisdiction by admitting appeals when he was not competent to do so. He also referred to another decision of Punjab and Haryana High Court in case of CIT vs. Amri Sports Industries (1983) 37 CTR (P&H) 290 : (1984) 145 ITR 231 (P&H) and pointed out that objection to assumption of jurisdiction by Competent Authority can be taken in appeal even if it was not specifically raised before Competent Authority. He also relied on judgment of Bombay High Court in case of CIT vs. Belapur Sugar and Allied Industries Ltd. (1982) 26 CTR (Bom) 271 : (1983) 141 ITR 404 (Bom) and contended that in appeal to Tribunal, point which goes to jurisdiction of assessment can be taken, although not taken earlier either before ITO or AAC. He also referred to judgment of Supreme Court in case of Raja Jagdambika Pratap Narain Singh vs. CBDT 1975 CTR (SC) 206 : (1975) 100 ITR 698 (SC). submission was if there was flagrant violation of natural justice, order by Tribunal was nullity. He, therefore urged that order of CWT (A) was nullity for want of jurisdiction and he had committed flagrant violation of law i.e. s. 23 of WT Act in admitting appeals. 7. Shri Dinesh Vyas, ld. counsel for assessee, on other hand, contended that additional ground taken by Revenue is time barred and filed much after pried of limitation allowed under Act. He further urged that even on date of hearing before Tribunal, there was no application for condonation of delay by Revenue and no reasons were given for such belated additional ground. He further urged that only such additional ground of appeal could be raised as related to subject matter of appeal. New questions could not be raised in additional grounds. In this connection he relied on decision of Gujarat High Court in case of CIT vs. Orient Prospecting Co. (1983) 141 ITR 301 (Guj). According to him, additional ground changeling jurisdiction of CWT (A) being new item, could not be allowed to be raised otherwise additional ground amounted to review application. Referring to order of Tribunal in case of Panipat Sugar Mills, ld. counsel for assessee pointed out that said order was dealing with regular ground of appeal in memorandum of appeal and not additional ground. He further pointed out that CWT (A) was competent to entertain appeals against orders of assessing authority on point of jurisdiction. 8 . We have carefully considered rival submission. In our opinion, additional ground raised by Revenue goes to root of problem. Rule 11 of IT Tribunal Rules., 1963 authorises Tribunal to admit additional ground of appeal. Chandigarh Bench of Tribunal in case of Panipat Co-operative Sugar Mills took following view : "Therefore, we are of opinion that we cannot avoid looking into this aspect of matter. Whether order of CIT (A) is maintainable or not because unless this aspect is looked into, we will be deciding appeal in lopsided matter, closing our eyes to various important issues that concern us." It has been held by Supreme Court in case of Raja Jagdambika Pratap Narain Singh (1975) 100 ITR 698 (SC) (supra) that merely because order has been passed and has not been appealed against it dies not become legal and final if otherwise it is void. If we apply this principle, we find that order of CIT(A) is challenged as ab initio void for want of jurisdiction. Therefore, we cannot proceed further without deciding this issue first. Hence, objection of Revenue, we hold, is in order and maintainable. Chandigarh Bench of Tribunal has already taken similar view in above case. We are in respectful agreement with above decision. We are, therefore, inclined to admit second additional ground of appeal raised by Revenue. In case of Atlal Cycle Industries Ltd. (supra) their Lordships of Punjab & Haryana High Court have already held that Tribunal is empowered in appeal to allow additional grounds of appeal to be raised before it. Bombay High Court in case of Belapur Sugar & Allied Industries Ltd. (supra) has taken similar view and has held that in appeal to Tribunal point which goes to jurisdiction of assessment can be allowed to be taken although not taken earlier either before ITO or AAC. In view of above discussions, we admit second additional ground of appeal. 9. Having admitted second additional ground, we shall now go into its merits as to whether appeal against CWT (A). In other words issue is whether CWT (A) had no jurisdiction to entertain appeals challenging jurisdiction of assessing authority. 10. ld. Departmental Representative submitted that in s. 23 of WT Act. there was no provision under which appeal on point of jurisdiction of assessing officer could be entertained. He, therefore, urged that admission of appeals by CWT (A) and deciding same on merits was without jurisdiction and, therefore, his order was liable to be annulled. 11. ld. counsel for assessee on other hand, contended that s. 23 (1) of Act provides, inter alia as under : "23 (1) subject to provisions of sub-s. (1A), any person xx xx xx xx xx xx (c) denying his liability to be assessed under this Act. xx xx xx may appeal to AAC against assessment or penalty order, as case may be, in prescribed form and verified in prescribed manner." He further referred to sub-s. (1A) of s. 23 and pointed out that notwithstanding anything contained in sub-s. (1), any person objecting to assessment or order referred to in cls. (a) to (h) (both inclusive) where such assessment or order has been made by IAC in exercise of powers or functions conferred on or assigned to him under s. 8AA may appeal to CIT ( ) against assessment or penalty order as case may be in prescribed form and verified in prescribed manner. He, therefore, pointed out that CWT (A) had jurisdiction to entertain appeals on jurisdiction of AO under s. 23 (1A) (c) of WT Act, 1957. He submitted that denial has to be against being subject as whole procedure for ascertaining and imposing liability on taxpayer. denial being against subject to part of process of ascertaining and imposing liability is not within its ambit. denial clause did not encompass denial which is to some part of process of assessment or under particular provision of Act. denial applies to situation where denial is as to applicability of Act as such. For this proposition he relied on decision of Allahabad High Court in case of CIT vs. Geeta Ram Kali Ram (1980) 15 CTR (All) 67 : (1980) 121 ITR 708 (All). For similar proposition he relied on decision of Punjab and Haryana High Court in case of Chhat Mull Aggarwal vs. CIT (1979) 8 CTR (P&H) 368 : (1979) 116 ITR 694 (P&H). Reliance was also placed by him on judgment of Allahabad High Court in case of Mohan Lal Khemka vs. CIT (1971) 81 ITR 89 (All). He relied on few other authorities also. 1 2 . ld. Departmental Representative, in rebuttal, referring to provisions of s. 23 (1) (c) pointed out that it related to situation where assessee denies that he was not assessable under WT Act. He urged that there was no denial by assessee that he was not assessable under WT Act and on contrary his wealth has been assessed at more than Rs. 6 lacs for each of assessment year under appeal. 13. We have given our careful consideration to rival submissions. In our opinion, CWT (A) had jurisdiction to entertain appeals by assessee challenging jurisdiction of assessing officer under s. 23 (1A) (c) r/w s. 23 (1) (c) of WT Act, 1957. Explaining scope of s. 24 6 (1) (c) of IT Act which is Pari material with provisions of s. 23 (1) (c) of WT Act, 1957, their Lordships of Allahabad High Court in case of Mahan Lal Khemka vs. CIT (!971) 81 ITR 89 (All) observed that assessee denies his liability to be assessed under Act not only when he contends that Act has liability to be assessed under Act not only when he contends that Act has no application to him at all but also when he urges that he cannot be assessed in particular proceeding taken under Act. It was, therefore, open to assessee to appeal against assessment orders on ground that he was not partner of firm and appeals were competent under substantive provisions. Again in CIT vs. Geeta Ram Kali Ram (supra) their Lordships of Allahabad High Court observed that in context of cl. (c), words "assessed" cannot mean computation of income or determination of tax, because such things are already provided for latter part of same clause. Obviously it is used in comprehensive sense to mean subjected to whole procedure of ascertaining and imposing liability on taxpayer and liability was under Act and not under any particular provision or individual. Similar view had been taken by their Lordships of Punjab and Haryana High Court in case of Chhat Mull Aggarwal (supra) and again in case of Amrit Sports Industries (1984) 145 ITR 231 (P&H) (supra) where it has been held that objection to assumption of jurisdiction by Competent Authority can be taken in appeal, even if it was not specifically raised before Competent Authority. In view of above judicial pronouncements which have defined scope of cl. (c) of s. 24 6 (a) of IT Act, which is Pari materia with s. 23 (1) (a), (b) and (c) of WT Act, we have no hesitation in accepting submissions by learned counsel for assessee that appeals on jurisdiction of assessing officer for making assessment are maintainable before CWT (A). We, therefore, do not find any merit in second additional ground raised by Revenue. 1 4 . Having rejected second additional ground by Revenue on merits, we shall now proceed to consider regular grounds of appeals by Revenue. We have already reproduced above these grounds of appeal. main contention on behalf of Revenue was that under s. 2 (s) of WT Act, 1957, WTO means ITO authorised to perform function of WTO under WT Act. ld. Departmental Representative further urged that under s. 125 (1) (a) of IT Act, CIT by general or special order in writing, could direct that powers conferred to ITO by or under IT Act shall, in respect of any specified case or class of cases of any specified person or class of persons, be exercised by IAC of IT. Further under s. 125 (2) (a), where order under .s 125 (1) (a) has been made by CIT, reference in IT Act or in any rule made thereunder to ITO shall be deemed to be reference to IAC of IT. He, therefore, urged that in view of provisions contained in s. 2 (s) of WT Act r/w s. 125 (2)(a), ITO having been equated with IAC of IT was to be considered as WTO under WT Act. He, therefore, urged that there were no specific provisions in WT Act. analogous to s. 125 (2) (a) of IT Act. IAC of IT who was assigned function of ITO by CIT under s. 125 (1) (a) had proper jurisdiction over case of assessee under WT Act. He, therefore, urged that order of CWT (A) was liable to be reversed. 15. ld. counsel for assessee, on other hand, took us through various provisions of WT Act and contended that in absence of similar provisions in this Act, IAC of IT could not be equated with WTO under WT Act. He also pointed out that WT Act was amended by Government to overcome situation though not retrospectively covering above assessment years. He also urged that specific order was necessary under WT Act for transferring jurisdiction from officer to another, but no such order was passed by CWT. Lastly he relied on judgment of Madras High Court in case of CWT vs. B. Nathmal Vaid by L/r N. Mangal Chand Jain (1985) 44 CTR (Mad) 213 : (1985) 154 ITR 186 (Mad). He, therefore, urged that issue was squarely conferred in favour of assessee by above judgment of Madras High Court. He, therefore, supported order of CWT (A). 16. In our opinion, issue is squarely covered by above decision of Madras High Court in favour of assessee At page 213 in headnotes, observations are as under : "On reference at instance of Revenue, High Court rejected Revenue s contention that once notification is issued under IT Act conferring powers of ITO on IAC (Asst.), IAC (Asst.) would automatically assume jurisdiction as WTO under WT Act and pointing out that, if that were position, there would have been no necessity for making provision like s. 8AA in WT Act. High Court held that concurrent power under WT Act had to be conferred on IAC (Asst.) by separate notification under s. 8AA of WT Act. High Court found no reason to disagree with Tribunal and saw no justification for directing reference as sought by Revenue." No authority to contrary has been brought to our notice on behalf of Revenue. issue is squarely conferred by above judgment of Madras High Court against Revenue. On face of above judgment, it is not considered necessary by us to deal with various contentions made on behalf of assessee. In such circumstances, we have no hesitation in sustaining order of CWT (A) holding that IAC of IT (Asst.) had no jurisdiction under WT Act in case of assessee. 17. ld. counsel for assessee also submitted that, assuming while not conceding, that jurisdiction under WT Act was automatic, while passing order under s. 127 (1) of IT Act r/w s. 125 (1) (a) thereof, CIT did not allow any opportunity to assessee while transferring jurisdiction from ITO. Central Circle I, Ludhiana to IAC (Asst.), Patiala as required under sub-s. (1) thereof. He urged that this opportunity was not mere formality but mandatory where transfer was from one station to another. Reliance in this connection was placed by him on decision of Supreme Court in case of Ajantha Industries & Ors. vs. CBDT (supra). ld. Departmental Representative reiterated that no assessee has vested interest that he should be assessed by particular and it was administrative convenience officer for which jurisdiction to be exercised by officer. He, therefore, urged that IAC of IT (Asst.). Patiala was competent authority to exercise jurisdiction under WT Act in case of assesses. 18. We agree with ld. Departmental Representative that assessee cannot have vested interest to be assessed by particular officer but at same time which particular officer should exercise jurisdiction over particular assessee has to be determined according to law by those charged with administration of law. Not only that, provisions of Act, while conferring such jurisdiction, have to be followed. ld. Departmental Representative, however, conceded before us that while passing order under s. 127 r/w s. 125 (1) (a) of IT Act, no opportunity as required under s. 127 (1) was given to assessee, before transferring jurisdiction from ITO, Central Circle I, Ludhiana to IAC of IT, Patiala. issue is, therefore, squarely covered against Revenue by judgment of Supreme Court in case of Ajantha Industries & Ors. referred to above. Their Lordships of Supreme Court held in that case that non-communication of reasons in order passed under s. 127 (1) was serious infirmity and order was invalid. ld. Departmental Representative brought to our notice earlier decision of Supreme Court in case of Kashiram Aggarwala vs. Union of India (1965) 56 ITR 14 (SC). It may be pointed out that this decision was duly referent to before Hon ble Supreme Court in case of Ajantha Industries and Others 1976 CTR (SC) 79 : (1976) 102 ITR 281 (SC). We, therefore, hold that IAC of IT (Asst.), Patiala, even under s. 127 (A) of IT Act was not armed with valid jurisdiction for want of opportunity not having been given to assessee as required under s. 127 (1). Even on this account, order of CWT (A) deserves to be sustained. It is confirmed. 19. In result, all three appeals by Revenue are dismissed. *** WEALTH-TAX OFFICER v. SIRI PAL OSWAL
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