WEALTH TAX OFFICER Vs. GOPAL RAMNARAYAN
INCOME TAX APPELLATE TRIBUNAL
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T. Venkatappa, Judicial Member -
(1.) ORIGINALLY the assessment was made under Section 16(3) of the Wealth-tax Act, 1957 ('the Act') on 26-11-1976 on a net wealth of Rs. 10,06,200. Against this, the assessee appealed to the AAC contending that the amounts due to other members of the family should be deducted. The AAC, by his order dated 9-8-1977, held that the sum of Rs. 50,000 being the part of the converted property attributable to the share of the divided member Shri Jawahar Gopal is to be excluded from the total wealth of the assessee. The assessee as well as the revenue preferred appeals before the Tribunal. The assessee contended that the entire sum of Rs. 3,82,627 should be excluded from the net wealth, It was also submitted that since quantification of tax has not been made in the assessment order, the assessment would be invalid and should be cancelled. This Bench of the Tribunal, by its order dated 23-2-1979 in WT Appeal Nos. 126& 127 (Bang.) of 1977-78 and WT Appeal Nos. 131 & 132 (Bang.) of 1977-78 annulled the assessment on the ground that there is no computation of the tax made in the assessment order. After the above order of the Tribunal, the WTO, with a view to re-do the assessment under the provision of Section 16(3), read with Section 17A, of the Act, issued a notice under Section 16(2) to the assessee calling upon his objections. The assessee's representative filed objections contending that the Tribunal has annulled the assessment order and there is no direction to re-do the assessment. Hence, it is not competent for the WTO to re-commence the assessment proceedings. The WTO did not accept the objections raised by the assessee. He held that when an assessment is annulled, it goes back to the stage of filing of return of wealth by the assessee. Annulment does not wipe out the assessee's liability if it can legally be enforced upon de novo again by resorting to permissible provisions of law. Section 16(3), read with Section 17A, permits passing of an assessment order on a return of wealth filed by the assessee for the assessment year 1975-76 before 31-3-1980. The return of wealth for the assessment year 1975-76 cannot be ignored and a disposal has to be given to it. Thus, he rejected the contention of the assessee and passed the assessment order dated 4-10-1979 computing the net wealth of the assessee at Rs. 9,38,040.
(2.) The assessee appealed to the AAC. The AAC held that the very act of annulment does not clothe the WTO with any more powers to re-do the assessment. The annulment which arises on account of laches in law completely takes away any legal right to re-do the assessment. Thus, he annulled the assessment order dated 4-10-1979. Against the same, the present appeal is filed.
The learned departmental representative submitted that as there was no computation of tax made in the assessment order, the Tribunal annulled the assessment though with regard to the merits, the assessee's contentions were rejected. Since the annulment was on account of computation of tax not having been made in the assessment order, the WTO had jurisdiction to make the assessment order again from the stage where the illegality supervened. The return filed by the assessee was pending as it has to be disposed of. Hence, the WTO rightly issued a notice under Section 16(2). The objection raised by the assessee before him was not valid. The assessment order dated 4-10-1979 is made validly. The AAC was not justified in annulling that assessment. This is not a case of any inherent lack of jurisdiction. It is permissible under law to continue the proceedings from the stage at which the illegality occurred. Annul does not mean cancelling the whole proceedings. Annul means that the order is vacated but it does not prohibit the WTO to make a fresh order by starting the proceedings from the stage where the illegality occurred. In this connection, he placed reliance on the decisions of the Supreme Court reported in Guduthur Bros. v. ITO  40 ITR 298, CIT v. Bidhu Bhusan Sarkar  63 ITR 278, and the decision of the Delhi High Court reported in Raza Buland Sugar Co. Ltd. v. ITO  3 Taxman 281. He also relied on a decision reported in Lachhiram Basantlal & Basantlal Nathani v. CIT 5 ITC 114, Smt. Santosh Debi Baid v. ITO  81 ITR 552 as well as on an order dated 6-2-1982 of this Bench in TT Appeal No. 379 (Bang.) of 1980. He also relied on Section 17A(3) of the Act and submitted that the fresh assessment made is valid.
(3.) THE learned counsel for the assessee strongly urged that the Tribunal has annulled the assessment. Since there is no direction to make a fresh assessment, the WTO has no jurisdiction to make a fresh assessment. An assessment can be made only once and, if that is annulled, the WTO has no power to make the assessment again. In this connection, he placed reliance on a decision reported in AIR 1964 Mad. 111, Surrendra Overseas Ltd. v. CIT  120 ITR 872 (Cal.) and CIT Presidency & Aden v. Khemchand Ramdas  6 ITR 414 (PC). He distinguished the decision in 1978 see (Tax) 149 and submitted that the decision in AIR 1964 Mad. 111 is not disapproved. He further submitted that when two views are taken by two Courts, the view favourable to the assessee should be accepted. He also submitted that Section 17A(1)(a) prescribes only time limit but does not enlarge the powers of the WTO. Thus, he justified the order of the AAC.;
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