Limitation under Wealth-tax reassessment fails where an incidental observation is not a binding finding or direction for the assessee's own case.

Section 17(2) of the Wealth-tax Act, 1957 excludes the normal limitation period only where reassessment is made in consequence of, or to give effect to, a finding or direction in an appellate order. An incidental observation in proceedings concerning another assessee, stating that disputed houses belonged to the present assessee, was not a binding finding or direction necessary for the assessee's own assessment years. The reopening therefore amounted to escaped assessment made beyond limitation, so the reassessments could not be sustained and were annulled.

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Issues: Whether the assessments made in the assessee's case were validly reopened and completed under section 17(2) of the Wealth-tax Act, 1957, or were barred by limitation and outside the scope of a finding or direction in the earlier appellate order.

Analysis: Section 17(2) excludes the ordinary time-limit only where the reassessment is made in consequence of, or to give effect to, a finding or direction contained in an order under sections 23, 24, 25, 27 or 29 of the Wealth-tax Act, 1957. The earlier appellate proceedings were concerned with the wealth of another assessee, and the observation that the disputed houses belonged to the present assessee was only incidental. Such an incidental observation did not amount to a finding or direction necessary for granting relief in respect of the assessee's own assessment years. The reopening was in substance a case of escaped assessment, and the action was initiated beyond the prescribed limitation.

Conclusion: The reassessment could not be sustained under section 17(2) and was time-barred; the issue was decided in favour of the assessee.

Final Conclusion: The Tribunal annulled the reassessments and quashed the orders of the authorities below.

Ratio Decidendi: An incidental observation in proceedings relating to another assessee does not constitute a binding finding or direction for the purposes of section 17(2) of the Wealth-tax Act, 1957, and the exemption from limitation applies only to a finding or direction necessary for the relevant assessee's own assessment.

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