BALIA, J. - (1.) AT the instance of Commissioner of Wealth Tax, these three appeals filed against the common order passed by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur dt. 19. 06. 2001 holding that the initiation of proceedings under Sec. 17 of the Wealth Tax Act after the expiry of four years from the end of relevant assessment years in question namely 1981-82, 1982-83 and 1983-84 were barred by time and also that the proceedings were bad because notices have not been issued to all the members of the erstwhile HUF which has since been partitioned. As all the appeals raise common issue on same set of facts, we have heard the same together and propose to decide by this common order.
(2.) FOR the convenience we notice the facts realising to assessment year 1982-83. The facts of the case are that HUF viz. M/s. Sewalal Gafarlal was disrupted by a total partition on 16. 11. 82 and order under Sec. 20 of the Wealth Tax Act, to that effect was recorded on 3. 10. 1986. The properties were distributed in the hands of the members of the erstwhile HUF. Out of seven members Shri Bhupatilal is being assessed to wealth tax at Kota. Smt. Durga Devi expired after 16. 11. 82 and she transferred her interest to her daughter through a Will. The other five co-parceners are being assessed to Wealth Tax at Banswara from 1984-85 in the status of their respective HUFs. Assessment of Wealth Tax for the assessment year 1982-83 of the then existing HUF was completed on 7. 2. 86, by valuing the net wealth of HUF as on valuation date relevant to assessment year 1982-83 at Rs. 14,92,000/- as against net wealth of Rs. 4,75,495/- returned by the HUF. In the case of assessment of (i) Shri Indra Kumar Sewalal, (ii) Durlabhlal Sewalal, (iii) Shri Govind Lal Sewalal, (iv) Shri Bharatilal Sewalal and (v) Shri Surendra Kumar Gewalal during the assessment proceedings for 1989-90, long after partition of M/s. Sewalal Gordhanlal (the erstwhile bigger HUF) had been recorded and its assessment for the assessment year 1982-83, the last year of its existence under the Wealth Tax, reference for valuing the properties in the hands of the aforesaid five assessees were made under Sec. 16a to Departmental Valuation Officer. By a strange reasoning that had the properties not partitioned and remained with bigger HUF, its combined valuation as on the valuation date relevant to assessment year 1989-90 would have been three times the value declared by the new assessees for assessment year 1989- 90. Assessment of M/s. Sewalal Govindlal for assessment year 1982-83 was sought to be reopened under Sec. 17 of the Health Tax Act, 1957 which notices were issued on 9. 9. 92 under Sec. 16 (2) of the Act. Ultimately reassessment was made by valuing the property on the basis of valuation report obtained for the assessment year 1989-90, in the cases of properties held by the erstwhile members of the family in their hands respectively. The Commissioner Wealth Tax (Appeals) by a common order for the assessment years 1982-83 and 1983-84 in the name of HUF Sewalal Gafarlal, through Karta Shri Govindlal Yagnik allowed the same and set aside the assessment orders by holding that notices issued to one member of disrupted HUF only which now no more exists, by describing him as Karta without notice to other members of the family was nullity and assessment was liable to be quashed. On further appeal before the Tribunal, the Tribunal noticed that notices in respect of initiation of proceedings under Sec. 17 were beyond the expiry of period of four years provided under Sec. 17 (1) (b) and barred by time. According to the Tribunal in the aforesaid cases, the Assessing Officer initiated proceedings under Sec. 17 of the basis of valuation report obtained for the assessment year 1989- 90, treating it to be an information furnishing basis for holding reasons to believe regarding escapement of assessment due to under-assessment or assessment at too law a rate, obviously the cases fall within Section 17 (1) (b ). In that view of the matter the initiation of proceedings under Sec. 17 were found to be time barred in all the above three assessment years under appeal. It is in the aforesaid circumstances, the revenue has filed these three appeals suggesting following substantial questions of law said to be arising for consideration in these appeals: " (i) Whether on the facts and in the circumstances of the case the ITAT was justified in law in holding that initiation of proceedings under Sec. 17 of the W. T. Act was barred by Limitation, which finding was arrived at by ignoring the amended provisions of law. (ii) Whether on the facts and in the circumstances of the case the ITAT was justified in law in holding that after the partition of HUF, notices need to be served on all the erstwhile members of the HUF, when service of notice upon Karta of the erstwhile HUF was sufficient compliance to the requirements of law. "
(3.) IT has been contended by the learned counsel for the appellant that the Tribunal has seriously erred in considering the unamended provisions of Section 17 enabling the Assessing Officer to reopen the completed assessment in the circumstances mentioned therein and there has been considerable change in the scheme of powers enabling the Wealth Tax Officer to reopen the complete assessment under the amended provisions which were brought into effect by the Direct Tax Laws (Amendment) Act, 1987 w. e. f. 1. 4. 89, the provisions which existed at the time when notices were issued reads as under: Section 17 (1) : If the Assessing Officer, has reason to believe that the net wealth chargeable to tax in respect of which any person is assessable under this Act has escaped assessment for any assessment for any assessment year (whether by reason of under assessment or assessment at too law a rate or otherwise), he may, subject to the other provisions of this section and section 17a, serve on such person a notice requiring him to furnish within such period, a return in the prescribed form and verified in the prescribed manner setting forth the net wealth in respect of which such person is assessable as on the valuation date mentioned in the notice, along with such other particulars as may be required by the notice, and may proceed to assess or reassess such net wealth and also any other net wealth chargeable to tax in respect of which such person is assessable, which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section for the assessment year concerned (hereinafter in this section referred to as the relevant assessment year), and the provisions of this Act shall, so far as may be, apply as if the return were a return required to be furnished under Sec. 14. Provided that where an assessment under sub-section (3) of Section 16 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any net wealth chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under Section 14 or section 15 or in response to a notice issued under sub-section (4) of section 16 or this section or to disclose fully and truly all material facts necessary for his assessment for that assessment years. Provided further that the Assessing Officer shall, before issuing any notice under this sub-section, record his reason for doing so. For the purpose of clarity we may also reproduce here Sec. 17 (1) as it existed prior to substituted of aforesaid provision: 17. Wealth escaping assessment.- (1) If the Wealth Tax Officer- (a) has reason to believe that by reason of the omission or failure on the part of any person to make a return under section 14 of his net wealth or the net wealth of any other person in respect of which he is assessable under this Act for any assessment year or to disclose, fully and truly all material facts necessary for assessment of his net wealth or the net wealth of such other person for that year, the net wealth chargeable to tax has escaped assessment for that year, whether by reason of under-assessment or assessment at too low a rate or otherwise; or (b) has, in consequence of any information in his possession, reason to believe, notwithstanding that there has been no such omission or failure as is referred to in clause (a), that the net wealth chargeable to tax has escaped assessment for any year, whether by reason of under-assessment or assessment at too low a rate or otherwise. he may, in cases falling under clause (a) at any time within eight years and in cases falling under clause (b) at any time within four years of the end of that assessment year, serve on such person a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of Sec. 14, and may proceed to assess or re-assess such net wealth, and the provisions of this Act shall, so far as may be, apply as if the notice had issued under that sub-section. The perusal of the aforesaid provision makes it abundantly clear that in the time frame prescribes for initiating the proceedings for re-assessment, where the Assessing Officer has reason to believe that the net wealth chargeable to tax in respect of which any person is assessable under this Act has escaped assessment for any assessment year, two district categories of case are envisaged and treated differently on that basis. Where there is no failure on the part of the assessee to make a return u/sec. 14 or Section 15 or in response to a notice issued under sub-section (4) of Sec. 16 or Sec. 17 or to disclose fully and truly all material facts necessary for his assessment for that assessment years on the one hand. On the other hand the cases where the escapement of assessment has not taken place for any failure on the part of the assessee for reasons those mentioned in proviso to sub-sec. (1) of Sec. 17. Sub-section 1a lays down different period of limitation within which re-assessment proceedings can be initiated depending on the quantum of tax chargeable on the net wealth chargeable to tax which has escaped assessment or is likely to have escaped assessment. However, in a case falling under proviso an embargo has been placed against resorting to Sec. 17 after expiry of four years from the end of relevant assessment year. ;