Law:

Section:

Section 17A of the Wealth-tax Act, 1957-Assessment-Time limit for completion of-WTO directs that assets of firm be valued under section 16A for determining interest of partners-Partners challenge direction in writ petition on ground that firm is not assesses-Pending decision on these petitions, court grants stay of assessment proceedings but refuses to restrain respondents from proceeding with valuation on the ground that period available to revenue to complete assessment would be only two months under section 17A-Whether such refusal justified-Held, no Facts For purposes of evaluating the appellants' interest in the firm, in which they were partners, the WTO had reason to believe that the value of plant and machinery disclosed in the books of the firm did not reflect their correct value and hence directed the Valuation Officer to value these assets for the purposes of the wealth-tax assessment for the assessment year 1976-77. The appellants challenged by means of writ petitions the direction of the WTO on the ground that the firm being not an assessable entity under the Wealth-tax Act, section 16A could not be invoked. During the pendency of these writ pstitions, the assessee also filed miscellaneous petitions for injunction restraining the departmental officers from proceeding with the valuation of the assets. The High Court (represented by a Single Judge) held that since the period available for the revenue to complete the assessments would be only two months, there was no need to restrain the respondents from proceeding with the valuation of the assets. The Court, however, granted a stay of the assessment proceedings pending disposal of the writ petitions. On writ appeals, the appellants contended that there should be an injunction against the respondents from proceedings with the valuation of assets of the firm. Held Under section 17A(1)(b), the wealth-tax assessment for the assessment year 1976-77 should be completed on or before 31-3-1981. Under Explanation 1 to section 17A(4), in computing the period of limitation, the period during which the assessment proceedings were stayed by an order or injunction of any court should be excluded. As in the present…

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