Law:

Section:

Section 17 of the Wealth-tax Act, 1957 - Income escaping assessment - Non-disclosure of primary facts - Assessment years 1969-70 and 1971-72 - Assessee had taken loan from Life Insurance Corporation (LIC) on security of his life insurance policy - He claimed exemption of said amount in his wealth-tax return which was allowed by Wealth-tax Officer - However, original assessment was reopened under section 17 and an addition of said loan amount was made in net wealth of assessee - Whether since assessee had claimed deduction of loan amount without mentioning relevant fact that debt was secured against his life insurance policy, it amounted to non-disclosure of relevant materials for purpose of assessment of his net wealth - Held, yes CASE REFERRED TO Sri Krishna (P.) Ltd. v. ITO [1996] 221 ITR 538/ 87 Taxman 315 (SC) [Para 9]. Vikram Gulati for the Applicant. Bharatji Agarwal and A.N. Mahajan for the Respondent. ORDER 1. The following question has been referred to this Court at the instance of the assessee under section 27(1) :- "Whether on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the reopening of the assessment under section 17(1)(a) was valid in law ?" 2. The dispute relates to the two assessment years namely 1969-70 and 1971-72. 3. The original assessment of the assessee, who is an individual, was reopened under section 17(1)(a) of the Wealth-tax Act on the ground that in the net wealth earlier assessed, the wealth of Rs. 20,500 escaped assessment. The facts in a narrow compass. 4. The assessee took a loan of Rs. 20,500 from the Life Insurance Corporation on the security of life policy on 23rd March, 1966, which was deposited in the fixed deposit with Hindustan Commercial Bank. He claimed exemption on the said amount in his wealth-tax return, which was allowed by the Wealth-tax Officer. However, the said assessment was reopened and an addition was made of Rs. 20,500 in the net wealth of the assessee by the Wealth-tax Officer by the order dated 28 February, 1979 in respect of both assessment years by separate orders on identical pleas. The aforesaid reassessment orders were set aside in appeal by the…

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