Law: Wealth Tax Act, 1957

Section: 17,16(3),147(a)

Law: Wealth Tax Rules, 1957

Section: 1D

Section 17 of the Wealth-tax Act, 1957 - Reassessment - General - Assessment year 1975-76 - In his wealth-tax return, assessee had disclosed that he had certain shares in a company and valued them at face value - WTO completed assessment but subsequently, reopened assessment on ground that valuation of shares should have been based on break-up value and, therefore, net wealth had escaped assessment - Whether merely because value returned by assessee might not have been correct market value calculated in accordance with rule 1D of Wealth-tax Rules, 1957, it could not be held that assessee had not disclosed all material facts - Held, yes - Whether, therefore, notice under section 17(1)(a) could not be validly issued - Held, yes FACTS The petitioner-assessee had 200 equity shares of Rs. 100 each of 'C' valued at Rs. 20,000 and 5 equity shares of Rs. 100 each in 'B' valued at Rs. 500. During the assessment proceedings, the income and expenditure account as well as the balance-sheet of the petitioner was filed with the WTO. A certificate on behalf of 'C' was also produced which certified that the petitioner was holding 200 equity shares of Rs. 100 each of the said company. On the basis of the return, the WTO assessed the petitioner to wealth-tax by passing an order under section 16(3). The WTO accepted the value of the movable property as declared which included the value of the shares of 'C'. Thereafter, the WTO issued notice under section 17 on the ground that the break up value of the shares was more than the value assessed and, therefore, there had been an escapement of wealth from assessment. On writ : HELD It is now well settled that, if the assessee discloses all primary and material facts, then a notice purporting to reopen an assessment cannot be issued. According to section 17(1)(a) as it stood at the relevant time, a notice seeking to reopen the assessment could be issued, inter alia , on the ground that the assessee had not disclosed fully and truly all material facts necessary for the assessment of his net wealth. What the assessee has to do is to disclose all primary and material facts which can enable the WTO to make an assessment. The primary and…

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