Income Tax Appellate Tribunal - Hyderabad
Smt. T. Devakidevi vs Wealth-Tax Officer on 9 April, 1990
Equivalent citations: [1990]35ITD259(HYD)
ORDER
T.V. Rajagopala Rao, Judicial Member
1. These areassessee's appeals. Since they came out of the common order passed by the Appellate Assistant Commissioner dated 7-1-1988 and since common questions are involved and the assessee is one and the same in all these appeals, they can be taken up together and disposed of by a common order for the sake of convenience.
2. For the assessment year 1978-79 there are three questions involved. The first question is that the value of the assessee's interest in the firm of M/s. Sudarshan 70 MM should not have been estimated at Rs. 7,43,750 as against Rs. 2,34,310. The second point involved in this appeal is that the credit balance of Rs. 94,722 which the assessee had in the firm of M/s. Sudarshan 70 MM should not have been added separately but should have been telescoped into the higher estimated interest of the assessee in M/s. Sudarshan 70 MM, which was taken at Rs. 7,43,750. The third ground of appeal is that the additional income-tax and wealth-tax liabilities amounting to Rs. 78,640 claimed by the assessee should have been allowed as a deduction while computing her wealth for the assessment year 1978-79.
3. The facts leading to the present appeal briefly stated are as follows. The assessee filed her return of wealth on 30-12-1978, which was accepted under Section 16(1) of the Wealth-tax Act at the returned figure of Rs. 2,01,971 as per the Wealth-tax Officer's order dated 29-1-1980. The assessee, however, revised her return of wealth on 6-9-1985, in which she revised the value of her net wealth to Rs. 2,44,160. However, the Wealth-tax Officer by his order dated 31-3-1986 had determined the net wealth of the assessee at Rs. 9,23,027. Again the assessee filed another revised return under the Amnesty Scheme on 9-2-1987 admitting additional wealth comprised of gold and cash worth Rs. 1,20,000. On filing this amnesty return, formally the wealth-tax proceedings were reopened under Section 17(1)(a) and the Wealth-tax Officer by his assessment order under Section 16(3) read with Section 17 dated 23-3-1987 determined the net wealth of the assessee at Rs. 10,40,400. While making the assessment under the amnesty scheme the Wealth-tax Officer simply added Rs. 1,20,000 surrendered as the additional wealth by the assessee on 9-2-1987 to the already assessed wealth of Rs. 9,35,485 and determined the net wealth of the assessee in a round sum of Rs. 10,40,400. Thus it can be seen that neither the correct value of the assessee's interest in M/s. Sudarshan 70 MM nor the question whether the sum of Rs. 94,722 should be telescoped into the above figure of Rs. 7,43,750 or not were not either raised or considered before the Wealth-tax Officer, when he made the amnesty assessment dated 23-3-1987.
4. However, when the matter was taken in appeal before the Appellate Assistant Commissioner the contention that the interest of the assessee in M/s. Sudarshan 70 MM was estimated at an inflationary figure of Rs. 7,43,750 and that the credit balance of Rs. 94,722 in the books of the firm M/s. Sudarshan 70 MM should not be added separately to the wealth of the assessee but should have been telescoped while working out the value of her interest at Rs. 7,43,750 in the firm of M/s. Sudarshan 70 MM was advanced before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner held in his impugned common order dated 7-1-1988 that these two grounds do not arise from out of the assessment order.
5. In this second appeal an objection was taken on behalf of the Revenue that on filing the amnesty scheme return dated 9-2-1987 the assessment was reopened at the instance of the assessee only to include the further surrendered wealth of Rs. 1,20,000 and assessed the same as part of her wealth for the assessment year 1978-79. Since the above two questions were neither raised nor argued before the Wealth-tax Officer, no occasion arose for the Wealth-tax Officer either to consider them or to pass his decision thereon. In those circumstances it is not open to the assessee to raise these grounds in the second appeal, which arose out of reopened proceedings. On behalf of the assessee Shri Parthasarathy contended that these questions can be raised in view of the Andhra Pradesh High Court decision in State Bank of Hyderabad v. CIT [1987] 34 Taxman 515 [1988] 171 ITR 232. In that case the Andhra Pradesh High Court after reviewing the cases decided by the Rajasthah High Court in CIT v. Shri Rangnath Bangur [1984] 149 ITR 487 and the Calcutta High Court in CIT v. Assam Oil Co. Ltd. [1981] 6 Taxman 251 [1982] 133 ITR 204, culled out the following principles : "(i) Once an assessment is reopened under Section 148, the entire assessment proceedings are at large. It is open to the tax authorities to reconsider in such reassessment all items of escapement of income without limitation; at the same time it is open to the assessee to put forward claim for deduction of any expenditure which was inadvertently omitted in the original assessment proceedings. Likewise, the assessee can also put forward claims for non-taxability of items of receipt which were not put forward in the original assessment (ii) In any event, the income for purposes of reassessment cannot be reduced beyond the income originally assessed, as basically the assessment is reopened on account of escapement of income and by allowing an assessee to claim deductions, it is not permissible under law to reduce the income originally assessed. Even if the assessee's fresh claims during the course of reassessment enquiry are accepted, still the allowance of the claims should be limited to the extent to which they reduce the income to that originally assessed under Section 143(3). (iii) If a claim for deduction or a claim for non-taxability of a receipt was put forward in the original assessment proceedings and was considered and rejected by the tax authorities and that finding had become final, it is not open to an assessee to put forward those claims once again during the course of reassessment proceedings". In this case the two grounds which are now raised were never raised before the Wealth-tax Officer either at the completion of amnesty proceedings or at the time of making the reassessment dated 31-3-1986, in which assessment in fact the wealth of the assessee was computed at Rs. 9,23,027 and her interest in the firm of M/s. Sudarshan 70 MM was estimated at Rs. 7,43,750 as against the returned figure of Rs. 2,34,310 and also her credit balance of Rs. 92,722 in M/s. Sudarshan 70 MM was added separately as part of her wealth for the assessment year 1978-79. As against the assessment order dated 31-3-1986 the assessee did not go in appeal and from the record placed before us it would appear that the assessee had allowed the said assessment to become final. Having allowed those two aspects to have become final, whether the assessee is entitled to agitate them for the first time before this Tribunal on the ground that on reopening of assessment the whole assessment is reopened and it is open to the assessee to put forward such of the contentions which were inadvertently omitted in the original assessments themselves. Even assuming for awhile that such a course is open to the assessee still the scope of such grounds should be hedged and limited to the extent to which they reduced the income to that originally assessed under Section 143(3). That means in this case it should not be allowed to go below Rs. 9,23,027, which was determined as per the assessment order dated 31-3-1986. On behalf of the assessee Shri Parthasarathy contended that the total value of M/s. Sudarshan 70 MM as on 31-3-1978 was estimated by the District Valuation Officer, Income-tax Department, Hyderabad at Rs. 28.10 lakhs by his report dated 15-3-1983. Having regard to the said value the interest of the assessee should have been accepted at Rs. 2,34,310 at which it was returned instead of estimating the same at Rs. 7,43,750. In our opinion the assessee is not entitled to raise these two grounds, since they were allowed to become final even under the assessment dated 31-3-1986. Firstly we hold that in the Income-tax Act there is a specific provision in Section 152, which in our opinion gives ample scope for the assessee to get relief even in the reopened proceedings up to the extent up to which the ultimate tax on the reopened proceedings would not exceed that of the tax already charged in the original assessment.
In order to clarify the point further we may extract the provisions of Section 152 as follows:
152.(1)...
(2) Where an assessment is reopened in circumstances falling under Clause (b) of Section 147, the assessee may, if he has not impugned any part of the original assessment order for that year either under Sections 246 to 248 or under Section 264, claim that the proceedings under Section 147 shall be dropped on his showing that he had been assessed on an amount or to a sum not lower than what he would be rightly liable for even if the income alleged to have escaped assessment had been taken into account, or the assessment or computation had been properly made :
Provided that in so doing he shall not be entitled to reopen matters concluded by an order under Sections 154, 155, 260, 262 or 263.
Therefore under the above provisions available under the Income-tax Act, it is open to the assessee to argue as a defence, in reassessment proceedings that to the extent of the excess income which is sought to be added in the reassessment proceedings, he was already assessed in excess, in the original proceedings itself and so no prejudice would be caused to the department even though reassessment proceedings are not continued against her. However, there is no corresponding provisions of Section 152 of the Income-tax Act available in the Wealth-tax Act. Therefore in our considered opinion the Andhra Pradesh High Court decision in State Bank of Hyderabad's case (supra) rendered in the context of Income-tax Act, cannot be applied to a wealth-tax case, which is now before us. One of the questions sought to be canvassed before the Madras High Court in Chettinad Corporation (P.) Ltd. v. CIT [1983] 14 Taxman 533 [1984] 147 ITR 57 that once the reopening is undertaken either under Section 8(a) or Section 8(b) of the Companies (Profits) Surtax Act, 1964 by the Income-tax Officer the assessee is entitled to claim relief in respect of certain matters dealt with in the original assessment and which have become final. This argument was not accepted by the Tribunal and it was held that the assessee cannot be permitted to raise any plea in relation to matters which were already concluded by the original assessment, in the reopened assessment. Their Lordships decided the case as follows : "However, having regard to the object and the language of Section 34 of the 1922 Act and Section 147 of the 1961 Act and Section 8 of the Surtax Act, we are of the view that the reopening can only be for the benefit of the Revenue. But this is subject to one exception. Where a particular item is sought to be brought to charge for the first time in the reassessment proceedings, any allowance, deduction or other relief in relation to that item can be put forward by the assessee and that has to be necessarily considered by the assessing authority and relief granted, if the circumstances warrant. If any disallowance made during the course of the original assessment, which the assessee wants to be reconsidered during the reassessment, is relevant or has a nexus with items of income brought to charge by the ITO on reassessment, that can be considered. All other items of disallowance or relief claimed by the assessee which are not relevant to the items which are the subject-matter of the enquiry during reassessment cannot be considered again by the ITO at the stage of the reassessment. Therefore, in reassessment proceedings, the assessee cannot reagitate questions which have been decided in the original assessment; nor can the ITO make a reassessment inconsistent with the original assessment in respect of matters which are not the subject-matter of proceedings under Section 8 of the Surtax Act". We should hold that either the present two grounds with which we are concerned were not raised or were raised and held against the assessee in the assessment proceedings which culminated in the order dated 31-3-1986. These questions are nowhere related to or have any nexus with the charge of tax which arose for the first time under the amnesty proceedings. Therefore, the general rule that reopening can be made only for the benefit of the Revenue should be followed and it should be held that since these two grounds which were not dealt with by the Wealth-tax Officer in the assessment proceedings pursuant to the amnesty return filed fot the assessment year 1978-79 should not be permitted to be raised by the assessee before this Tribunal. We hold that the Appellate Assistant Commissioner is justified in rejecting the same.
6. to 9. [These paras are not reproduced here as they involved minor issues.]