LexM/S. LOK NATH AND COMPANY, THE MALL, SHIMLA versus COMMISSIONER OF WEALTH TAX, PATJALA
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M/S. LOK NATH AND COMPANY, THE MALL, SHIMLA
v.
COMMISSIONER OF WEALTH TAX, PATJALA
OCTOBER 31, 1995
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{B.P. JEEVAN REDDY AND S.B. MAJMUDAR, .I.I.]
Wealth Tax Act, 1957:
Ss. 14, 16 18( 1 )(a), 25(2 }-Wealth Tax--Retum-Assessee filing retums
C beyond presc1ibed tinie-Wea/th Tax Officer after notice, ntaking assessnient
purported to be under S.16(3}-Commissioner of Wealth Tax vacating assess-
ment for non-issuance of notice under S.16(2)-Held, quoting of sub-section
(3) of s.16 in assessment orders was a case of quoting wrong provision of law
and does not affect its legalityAssessment was in substance and effect under
D S.16( 1)-Non-issuance of notice under S.16(2) did not affect the assessment.
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The appellant-assessee filed returns in August 1969 in respect of his
house property for the assessment years 1959-60 to 1967-68. The Wealth
Tax Ollicer, finding the returns as filed beyond the prescribed period,
issued notices under section 18(1)(a) of the Wealth Tax Act 1957. On
receipt of the revised returns, he made the assessment purporting to be
under section 16(3). The Commissioner of Wealth Tax opined that the
assessment was invalid for non-issuance of notice under S.16(2) and there
was under-assessment. He expressed his apprehension that such an as-
sessment could be challenged by the assessee even after the period for
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re-opening tJ1e assessn1ent under S.17 was over and in that event the
Department would not be able to collect the tax due. He proposed to
revised the assessment under S.25(2) and accordingly issued notice to the
assessee. The assessee appealed to t~e Income Tax Appellate Tribunal
which held that the Commissioner wrongly assumed jurisdiction under
S.25(2). At the instance of the Revenue, a reference was made to the High
G Court whether the Tribunal was right in holding that the Commissioner
wrongly assumed jurisdiction. The High Court answered the reference in
favour of Revenue holding that though the orders passed by the Wealth
Tax Ollicer purported to be under sub-section (3) of section 16 of the Act,
the same were in substance and effect under sub-section (1) of section 16
H and as such were not violative of section 16(2); that the Commissioner was
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LOK NATH AND CO. v. COMMR. OF WEALTH TAX
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empowered to exercise the jurisdiction under S.25(2) on his being satisfied A
that there was an under-assessment; and that even assuming that the
Wealth Tax Otncer made assessment under section 16(3), non-issuance of
notice under section 16(2) did not affect the assessment. Aggrieved, the
assessee tiled the appeal by special leave.
Allowing the appeal and answering the reference in favour of the
assessee, this Court
HELD : I.I. There was no sufficient ground for the Commissioner
of Wealth Tax to exercise his jurisdiction under section 25(2) of the Wealth
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Tax Act, 1957. He acted on certain assumptions and the apprehension C
expressed by him, which constitutes the basis of his order, is to remote,
be>.<1es being difficult to appreciate. [594-D-C]
1.2. Once the High Court opined, and rightly, that quoting of sub-
section (3) of S.16 of the Wealth Tax Act, 1957 in the assessment orders
was really a case of quoting the wrong provisions of law and does not affect
its legality, question of setting aside the assessment orders did not arise.
The revi,cd returns tiled by the assessee-appellant were accepted by the
Wealth Tax Officer and the assessment made. [593-D]
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1.3. From a perusal of the assessment order it is obvious that the E
same is made under sub-section (1) of S.16 though wrongly mentioning
section 16(3). Indeed, the High Court has held further that even if the said
assessments are deemed to be under sub-section (3), yet they cannot be
held to be without jurisdiction merely because notice under sub-section (2)
of S.16 was not issued. [594-A)
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 9697 of
1995.
From the Judgment and Order dated 24.10.90 of the Himachal
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Pradesh High Court in Wealth Tax Reference No. 1 of 1977.
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G.L. Sanghi and R.K. Mehta, for the Appellant.
B.S. Ahuja for S.N. Terdol, for the Respondent.
The Judgment of the Court was delivered by
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SUPREME COURT REPORTS IJ995) SUPP. 4 S.C.R.
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H.P. JEEVAN REDDY, J. Leave granted. Heard counsel for both the
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parties.
This appeal arises from the judgment of the Himachal Pradesh High
Court ans\vering the question referred to it, at the instanExcerpt shown. Read the full judgment & AI analysis in Lexace.