M.C. Agarwal, J. - (1.) BY this petition under Article 226 of the Constitution of India, the petitioner has challenged the notice dated August 16, 1976, issued by the Wealth-tax Officer under Section 17 of the Wealth-tax Act, 1957, for the assessment year 1973-74, requiring the assessee-petitioner to file its return of wealth for the said year and the subsequent notices dated January 31, 1978, March 10, 1978, March 11, 1978 and April 15, 1978, issued by the Valuation Officer in connection with the valuation of the assets of the petitioner.
(2.) COUNTER and rejoinder affidavits have been exchanged. We have heard learned counsel for the petitioner, Sri V.B. Upadhyaya, and Sri Bharat Ji Agarwal, learned standing counsel for the respondents. The petitioner is a public religious and charitable trust. Its case is that it is exempt from income-tax by virtue of Section 11 of the Income-tax Act, 1961, and also from wealth-tax by virtue of section 5 of the Wealth-tax Act. For the assessment years 1972-73 and 1973-74 proceedings were initiated to assess the income of the assessee under the Income-tax Act and, ultimately, the Income-tax Appellate Tribunal, vide its order dated September 27, 1977, held that the petitioner was entitled to exemption from income-tax. Since the petitioner was exempt from levy of wealth-tax, it did not file any wealth-tax return, but the Wealth-tax Officer, Kanpur, issued the impugned notice under Section 17. The petitioner filed its return under protest. By letter dated January 31, 1978, the Valuation Officer, respondent No. 2, asked the petitioner to supply the details of the property regarding the Kamla castle for purposes of valuation under the Act. It was alleged that there was no material on record that the wealth of the petitioner has escaped assessment and, therefore, the condition precedent for the exercise of the powers under Section 17 of the Wealth-tax Act was absent and, consequently, the proceedings for the valuation of the properties were also invalid. It is on this basis that the various notices issued by the Valuation Officer have been challenged in the writ petition.
(3.) IN the counter-affidavit, it was alleged that the petitioner was not a public charitable trust and was not entitled to exemption under the INcome-tax and Wealth-tax Acts and that the controversy between the parties about the eligibility of exemption to the petitioner has not been finally settled and application under Section 256(1) for reference to the High Court is pending. At the hearing before us, it was pointed out that in the income-tax proceedings for the assessment years 1972-73 and 1973-74, the Income-tax Officer had taken the view that the assessee had violated the provisions of Section 13 of the Income-tax Act and was, therefore, not entitled to exemption under Section 11. Section 21A was enacted in the Wealth-tax Act with effect from April 1, 1973, containing provisions parallel to Section 13 of the Income-tax Act and providing the circumstances in which the wealth held under trust for any public purpose of a charitable or religious nature may become liable to wealth-tax. The impugned notice under Section 17 of the Act was issued by the Wealth-tax Officer after recording his reasons which were produced before us at the hearing. The reasons stated that "as per finding recorded in the income-tax assessment of 1973-74, that the income and also property of the trust during the previous year was used directly or indirectly for the benefits of persons specified in Section 13(3) of the Income-tax Act. On account of this fact I have reason to believe that the net wealth computed below has escaped assessment on account of failure on the part of the trust to file its return of wealth".;