COMMISSIONER OF WEALTH TAX WEST BENGAL versus IMPERIAL TOBACCO CO. OF INDIA LID.

Citation: [1966] SUPP. 1 S.C.R. 174 · Decided: 15-04-1966 · Supreme Court of India · Bench: K.N. WANCHOO · Disposal: Appeal(s) allowed

Judgment (excerpt)

174 
COMMISSIONER OF WEALm TAX WEST BENGAL 
v. 
IMPERIAL TOBACCO CO. OF INDIA LID. 
April 15, 1966 
[K. N. WANCHOO, J. c. SHAii AND s. M. Soon. JJ.J 
Wealth Tax Act (37 of 1957), ss. 17(b) and 27-Divergence of 
views in High Courts as to meaning of "lnjormation" in s. 34(1)(b) 
Income Tax Act which is in pari rnateria 1vith s. 17(b)-Duty of Tri-
bunal to make re/<!rence to High Court. 
A 
B 
Orders of reassosmnent under s. 16(3) read with s. 17(b) of the 0 
Wealth Tax Act were passed by the Wealth Tax Officer in respect 
of two assessment years. and by those orders, amounts which had 
been formerly allowed as deduction were included in the total 
' 
wealth of the respondent. The orders were set aside by the Tribu-
~ 
nal on the ground that the reassessment was based on a mere change 
~ 
of opinion on the part of the Officer, because, there was no "informa-
tion" in his possession, as required by s. 17(b), which could lead him 
to believe that chargeable wealth of the respondent had escaped as-
D 
sessment. The appellant's applications to the Tribunal and the High 
Court, for a reference to the High Court, were dismissed. 
In appeal to this Court, 
HELD: The Tribunal should be directed to make n reference 
either to the High Court under s. 27 (I) or to this Court under s. 27 
(3A) of the Wealth Tax Act. [179 G]. 
There is a divergence cxf opinion among the High Courts as to the E 
meaning of the word "information" in s. 34(1)' (b) of the Income-tax 
Act, and some High Courts have taken the view that a change of opi-
nion by the Income-tax Officer, in certain circumstances. will justify 
the issue of notice under s. 34 (l)(b) of the l'ncome-tax :Act. Since that 
section is in pari materia withs. 17(b) of the Wealth Tax Act, a ques-
tion of law did arise as to the interpretation of the word "informa-
tion" in s. 17(b) of the Wealth Tax Act and it should have been re-
ferred by the Tribunal to the High Court. [179 El 
F 
, 
C!v!L APPELLATE JURrsmcnos: Civil Appeals Nos. 1062 and 
1063 of 1966. 
Appeals by special leave from the judgment and order dated 
February 15. 1965 of the Calcutta High Court in matters Nos. 231 
and 232 of J 964. 
R. M. l/azarnavis, K. D. Karklranis, R. H. Dlrebar and R. N. 
G 
Sachthey, for the appellant. 
A. K. Sen, T. A. Ramachandran, 'J. B. Dadachanji, 0. C. 
Mathur and Ravinder Narain, for the respondent. 
The judgment of the Court was delivered by 
Wancboo, J. These two appeals by special leave arise out of B 
two applications by the appellant to the Income-tax Appellate 
I 
""' 
w. TAX COMMR. v. IMPERIAL TOBACCO (Wanchoo, J.) 
175 
A 
Tribunal for reference to the High Court of a question of law, 
which was formulated as follows: -
B 
c 
D 
E 
F 
G 
H 
"Whether on the facts and in the circumstances of 
the case, the Tribunal was right in holding that the reas-
sessment proceedings under s. 17(b) of the Wealth Tax Act 
were not validly initiated and in setting aside the same." 
The facts which led to the 
applications for reference are 
briefly these. The respondent submitted 
wealth-tax returns for 
the years 1957-58 and 1958-59. For the year 1957-58 the res-
pondent claimed that an amount of Rs. 51 lakhs and odd being 
provision for taxation and another amount of Rs. 37 lakhs and 
odd being provision for contingencies, being ascertained liability, 
should be allowed as deduction from the total wealth. For the 
year 1958-59, the respondent claimed Rs. 31 lakhs and odd being 
provision for contingencies as ascertained liability as deduction 
from the total wealth. 
Assessment for the year 1957-58 was completed on December 
30, 1957 and the Wealth-tax Officer accepted the contention of 
the respondent and allowed the claim for deduction. Subsequently 
the Commissioner of Wealth-tax by his order dated December 29, 
1958 passed under s. 25(2) of the Wealth Tax Act, No. XXXVII 
of 1957, (hereinafter referred to as the Act) disallowed the deduc-
tion of Rs. 51 lakhs and odd being the provision for taxation for 
the assessment year 1957-58. The order of the Wealth-tax Officer 
allowing deduction for contingencies for the assessment year 
1957-58 however stood. The assessment for the year 1958-59 was 
completed on December 9, 1958 and deduction was allowed for 
contingencies only. It may be added that we are not concerned 
in the present appeals so far as deduction for provision for taxa-
tion is concerned. On March 22, 1960, the Wealth-tax Officer 
completed the assessment of the respondent for the

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