Audit objection alone cannot justify wealth-tax reassessment; notices and consequential proceedings were quashed.

Reassessment under section 17 of the Wealth-tax Act could not be sustained where the notices were issued solely on the basis of an audit objection. The Court applied the settled principle that an audit opinion on valuation facts, by itself, is not a valid foundation for reopening an assessment, and treated that principle as applicable to section 17. On the uncontroverted writ averments, the notices and consequential steps were therefore unsupported in law and were quashed.

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Issues: Whether proceedings for reassessment under section 17 of the Wealth-tax Act could be sustained when they were initiated solely on the basis of an audit objection.

Analysis: The petitioners had already been assessed to wealth-tax and rectification had earlier been made under section 35. The subsequent notices under section 17 were shown, on the uncontroverted writ averments, to have been founded only on an audit objection. The Court relied on the settled principle that an audit opinion on valuation facts cannot by itself constitute a valid basis for reopening an assessment, and treated the position as equally applicable to section 17 of the Wealth-tax Act by reason of its similarity to the reopening provision considered in the cited authorities. The notices and consequential steps were therefore unsupported in law.

Conclusion: Reassessment initiated solely on the basis of an audit objection was held invalid and the impugned notices and orders were quashed.

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