Gopalan Nambiyar, J. -
(1.) THE writ appeal is against the dismissal of O.P. No. 227 of 1971 in which the petitioner-appellant impugned the notices for reassessment (exhibits P-5 and P-6) for the assessment years 1961-62 and 1962-63, issued to her under Section 17 of the Wealth-tax Act. O.P, No. 263 of 1971 is to quash the notices, exhibits P-l to P-5, issued to her for reassessment under the Income-tax Act in respect of the assessment years 1962-63 to 1965-66. Both, broadly and generally, raise the question of the jurisdiction to start, and to proceed with, the reassessment proceedings, and the validity of the action launched, and may be dealt with in a common judgment. We shall deal first with the writ appeal.
(2.) W.A. No. 536 of 1973
The appellant-writ petitioner's father, the late Mr. E.D. David, who died on September 3, 1958, was a prominent member of the Jewish community in Cochin. Her husband, Mr. S. Koder, is a commanding figure of that community. By documents inter vivos Mr. David had created three trusts : (1) The Mercantile Bank Trust ; (2) The Bank of India Trust; and (3) The Eastern Bank Trust. The settlor, Mr. E.D. David, it is said, was entitled to the income from the properties during his lifetime, and thereafter the same was to be taken by the appellant during her life, at least in respect of the first two trusts. Neither the settlement deeds or documents constituting the trust nor copies thereof have been exhibited. By his last will and testament dated April 12, 1943, Mr, David constituted a fourth trust, the State Bank of India Trust, in regard to his residuary properties. In respect of this last trust, the State Bank of India Trust was constituted both the executor as well as the trustee. Exhibit P-11 is a copy of the will. The appellant, as noticed, is a beneficiary under the Mercantile Bank Trust, the Bank of India Trust, and the State Bank Trust. It is said by the respondents that the State Bank functioned as executor of the residuary estate from September 3, 1958, till March 31, 1969. Thereafter, according to the respondents, the appellant, as the sole beneficiary, is entitled to the income of the trusts during her lifetime, and to payments under the will as legatee of the testator, from the State Bank of India in respect of the State Bank of India Trust. According to the respondents, she received payments from the trust and also a portion of the income from the executor. But neither the petitioner's returns nor the returns filed by the executors disclosed these assets and, therefore, the petitioner's interests in the assets were not included for assessment under the Wealth-tax Act. The petitioner's individual assessments under the Act for the years 1961-62 and 1962-63 were completed on September 17, 1962. Exhibits P-1 and P-2 are copies of the assessment orders. According to the respondent, these orders did not take into account the valuation of the petitioner's interests in the assets included in the trusts. Exhibits P-3 and P-4 dated March 30, 1962, and January 29, 1963, are copies of the assessment orders on the State Bank of India in respect of the State Bank Trust properties for the same period, viz., 1961-62 and 1962-63. Exhibits P-5 and P-6, the notices impugned, for reassessment of the petitioner, were issued after these assessment orders. These merely state that the petitioner's net wealth chargeable to tax for the assessment years 1961-62 and 1962-63 had escaped assessment within the meaning of Section 17 of of the Wealth-tax Act and, therefore, it was proposed to reassess the net wealth which has escaped assessment. It is, however, well settled that the notices need not "speak" or disclose the grounds for the proposed action, and there was no argument to the contrary.
The State Bank of India filed exhibit R-1 revision to the Commissioner of Income-tax against the wealth-tax assessment for the year 1963-64. It recalled the three trusts, viz., the Mercantile Bank Trust, the Bank of India Trust and the State Back Trust and pointed out that in the return of wealth of the estate of the late Mr. E.D. David, the wealth represented by the residuary estate and also the assets held in the name of the trusts were included. It was stated that while this might be in order during the lifetime of Mr. David, the State Bank was of the view that subsequent to his death the wealth of the estate should include only the residuary assets. Exhibit R-1 proceeded:
"As regards the assets held by the above-mentioned two trustees, viz., Mercantile Bank (Agency) Pvt. Ltd. and Bank of India Ltd., as Mrs. Koder was the life tenant under these two trusts, a portion of the value of the trust assets on the basis of Jellicoe's formula should be included in the lady's wealth-tax return. The balance of wealth should be taxed in the hands of the two trustees. However, as stated above, the total of the value of the residuary assets as well as of the trust assets have been assessed to wealth-tax in the hands of the estate of Mr. E.D. David. We also advised Mrs. Koder about this matter and she differed from us. We requested the Wealth-tax Officer to revise the assessment but the Wealth-tax Officer advised us to prefer an appeal to you."
(3.) THE counter-affidavit has stated that on this petition, the Commissioner set aside the assessment orders for 1963-64 to 1967-68 and directed the Wealth-tax Officer to make fresh assessments. It was thereafter that exhibits P-5 and P-6 notices were issued.
The appellant moved the Commissioner of Income-tax and received exhibit P-8 reply refusing to interfere at this stage with the proposed reassessment. The appeal or representation to the Government of India also proved unsuccessful (exhibit P-9). It was thereafter that this writ petition was filed.;