Law:

Section:

Section 17(1)(b) of the Wealth-tax Act, 1957 - Reassessment - Information - Whether where incorrect facts were set out by WTO in reasons recorded for reopening assessment under section 17(1)(b), reassessment was liable to be set aside - Held, yes Facts On 25-3-1975, the WTO reopened the assessment for the assessment year 1970-71 on the grounds (i) that the assessee had life interest in a palace owned by a trust, and the same was not brought to tax, and (ii) that the value of one of the two properties owned by the assessee was understated in the original assessment at Rs. 7,800, whereas the same was sold for Rs. 24,000 in 1972. He, accordingly, made the assessment afresh. On appeal, the Tribunal held that the reopening of the assessment under section 17(1)(b) was justified, inter alia, in view of the valuation report submitted by the assessee on 4-10-1975. On reference : Held It is well settled that the jurisdiction of the WTO to reopen assessment under section 77(1)(b) would depend upon the satisfaction of two conditions precedent specified therein, namely (i) that the WTO should have reason to believe that the net wealth chargeable to tax had escaped assessment, and (ii) that the belief should be in consequence of information received by him after the original assessment. In the instant case, the assessment was reopened in consequence of information that life interest in palace was not brought to tax and the value of another property was underassessed. Both these facts were not correct. While according to the original assessment order, the life interest of the assessee was brought to tax, that order also disclosed that the value of the other house was not assessed at Rs. 7,800 but at Rs. 18,000. It was, thus, clear that incorrect facts had been set out in the reasons recorded by the WTO for reopening the assessment and there was nothing to indicate that the WTO came into possession of any information after the original assessment. Moreover, according to the Tribunal, the WTO reopened the assessment in view of the valuation report submitted by the assessee in subsequent years, but this reason did not at all find place in the WTO's order recording reasons for…

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