- (1.) A common question of law arises in these three appeals which were heard analogously. The question that arises for determination in these appeals is whether the initiation of a proceeding under Section 17 of the Wealth Tax Act, 1957 describing M/s. Abhudey Properties Pvt. Ltd. as the assessee who had no existence on the date of initiation of such proceedings, having already been merged with the appellant, was valid and whether the conditions for invocation of Section 17(1A)(b)(ii) are required to be reflected in the notice under Section 17 of the Wealth Tax Act for the purpose of initiation of a proceeding under Section 17 of the Act.
(2.) The following facts are not in dispute: a) M/s. Abhudey Properties Pvt. Ltd. had been wound up by virtue of the order of the Company Court and was amalgamated with the appellant, namely, M/s. I.K. Agencies Pvt. Ltd., with effect from 1st April, 1995. As a result the appellant took all the assets and liability of the wound up company. On the relevant date for the valuation for the assessment year, the wound up company was the owner of certain assets but no Wealth Tax return was filed by it. The Assessing Officer issued a notice under Section 17 of the Wealth Tax Act, on January 20, 1997 on M/s. Abhudey Properties Pvt. Ltd. directing it to file its Wealth Tax return for the relevant period when the said company was no more in existence. b) As no Wealth Tax return was filed by the wound up company, the Assessing Officer, thereafter, issued a notice dated 10th September, 1997 under Section 16(4) of the Act upon the appellant. Consequently, a return showing nil net wealth for the abovementiond assessment year was filed by the appellant on 19th March, 1998 along with statement showing the computation of net wealth and forwarding a letter dated 6th March, 1998. In the said letter, it was inter alia stated that the said notice dated 20th January, 1997 under Section 17 of the Act was invalid, bad in law and without jurisdiction as the said notice had been addressed to the wound up company which was no more in existence as on the date of issue of such notice and the fact of its amalgamation with the appellant was intimated to the Assessing Officer before the said date. c) However, the Assessing Officer completed the assessment of the appellant under Section 16(3)/17 of the said Act and a net taxable wealth was assessed. Being dissatisfied, the appellant preferred an appeal before the Commissioner of Wealth Tax (Appeals) objecting inter alia to the validity of reopening of the Wealth Tax assessment under Section 17 of the Act not only on merit but also on the aforesaid ground of illegality.
(3.) The Commissioner of Wealth Tax (Appeals), however, directed the Assessing Officer to allow a relief as per Rule 4(1) of Schedule III of Wealth Tax Act and further gave relief to the extent that arrear of Municipal Tax should be allowed as deduction from the value of the property in terms of the provision contained in Section 2(m) of the Act.;