TaxTMI 
TaxTMI 
1993 (8) TMI 129
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....sessee filed wealth-tax return on 8-4-1983 admitting a net wealth of Rs. (-) 4,08,500. As per the assessment order dated 30-3-1985, the net wealth was determined at Rs. 34,08,080. This assessment order was set aside by the Commissioner of Income-tax (Appeals) on 13-2-1987. The set aside assessment was completed on 31-3-1987 determining the net wealth of the assessee at Rs. 37,93,770 which was reduced by the Commissioner of Income-tax (Appeals) to Rs. 14,87,140. 4. In the course of the income-tax proceedings of the assessee it was observed that by way of professional remuneration for acting as Hero in the feature film 'Superman', as per the evidence recorded from the film producer, Shri R. Gopal of M/s. Lakshmi Vishnu Production, the assessee was said to have been paid the following amounts : 14-1-1978 : Rs. 1,00,000 16-8-1979 &nbs....
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....r assessment years 1979-80 and 1980-81, the Commissioner of Wealth-tax, Andhra Pradesh-I, thought that the assessments dated 31-3-1989 were erroneous and prejudicial to the interests of the Revenue. He, therefore, called upon the assessee through his letter dated 27-2-1991 to show cause as to why a proper order under section 25(2) of the Wealth-tax Act should not be passed in this regard. A copy of the said letter was provided at pages 39 to 43 of the paper book. The assessee filed his objection, a copy of which is provided at pages 33 to 37 of the paper book filed on behalf of the assessee. It is contended in his reply that the original assessment order for these two years were dated 28-2-1984 and 30-3-1985. Those original assessment orders were no longer amenable to revisionary jurisdiction of the Commissioner of Wealth-tax inasmuch as such action would be time barred. According to the assessee the fresh assessment orders dated 30-3-1989 for both the assessment years under consideration cannot be taken up for revision. 5. Except the unilateral statement of Shri R. Gopal, no other material was brought on record to show that the assessee received the alleged sum of Rs. 6,60,000 fo....
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....roperty of that firm. Since assessments were set aside on the common ground, he had discussed nothing about other grounds of appeal. In the fresh assessment made on 31-3-1989, the Asstt. Commissioner had considered only aspects of fresh valuation of annuity policies and of the 14% share of interest of the assessee in M/s. R.K. Cine Studios. Once the original assessment had been set aside by the Commissioner of Wealth-tax (Appeals), the learned Commissioner of Wealth-tax held that they ceased to exist. The assessee is wrong in presuming that the revision is taken up against the original orders since they have no existence after passing of the appellate order dated 13-2-1987 they having been set aside by that date. The present revision is taken up only against the fresh assessment order dated 31-3-1989 passed for assessment years 1979-80 and 1980-81. The initiation of revisionary proceedings under section 25(2) of the Wealth-tax Act in respect of these two assessment years both dated 31-3-1989 is well within the statutory time limit and the revisionary order is, therefore, valid under law since time is available to pass revisionary orders up to 31-3-1991. As per Explanation (c) to se....
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....Delhi) wherein it was held that it was not possible to expect any direct evidence regarding such 'on money' and prove conclusively that any such 'on money' went to the assessee-companies. In the income-tax assessment order dated 28-9-1988 for assessment year 1979-80, the Assessing Officer had brought out several vouchers indicating the receipt of the impugned total amount of Rs. 6,60,000 by the assessee for his acting in the film 'Superman'. The reassessment orders for assessment years 1979-80 and 1980-81 passed against the assessee were no doubt cancelled by the Commissioner of Income-tax (Appeals)-I, by his consolidated order dated 28-9-1990 on the ground that the reassessment under section 147(a) of the Income-tax Act was bad under law and the learned Commissioner (Appeals) in para 15 of his appellate orders dated 28-9-1990 held "at this stage, I need not go into the merits of the additions made for these two years". Thus there was no finding regarding the merits of the addition relating to professional remuneration by the assessee for his acting in the film 'Superman'. 7. The learned Commissioner of Wealth-tax held that under the circumstances, the findings of the Assessing Of....
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.... the assessee, namely, that the Commissioner of Wealth-tax had no right to assume jurisdiction under section 25(2) of the Wealth-tax Act. The revisions are barred by limitation and on merits of the case there is no justification to make the addition of Rs. 1 lakh in assessment year 1979-80 and Rs. 6,60,000 in assessment year 1980-81. The final direction given by the learned Commissioner of Wealth-tax is quite unwarranted and unjustifiable. 9. We have heard Shri N. Sriramamurthy, learned advocate for the assessee and Shri V. Raghavendra Rao, the learned Departmental Representative. Now let us take up the objection one after the other. The first objection is that both the original assessment orders dated 28-2-1984 and 30-3-1985 may be treated as erroneous and prejudicial to the interests of the revenue, but the fresh assessment made under section 16(3) on 31-3-1989 in compliance with the direction of the Commissioner of Income-tax (Appeals) as per his consolidated order dated 13-2-1987 cannot be treated as prejudicial to the interests of the revenue. In short, the contention is that the original assessment may form the subject of revision and not the fresh assessments made as per th....
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....sdiction used to be the subject-matter of controversy up to 1-6-1988. Majority of the High Courts including the A.P. High Court took the view that the doctrine of merger would operate only on matters which were the subject-matter of decision by the first appellate authority and has no application to matters which have not been touched by that authority. Such untouched matter may be subjected to revisionary order under section 25(2) of the Wealth-tax Act and 263(1) of the Income-tax Act, 1961 - CIT v. East Coast Marine Products (P.) Ltd. [1990] 181 ITR 314 (AP). In that case it was specifically held that CIT can revise portion of the ITO's order which has not been considered by the Appellate Asstt. Commissioner. In the headnote of the decision the following is what is held: "Where an appeal is preferred by the assessee to the Appellate Assistant Commissioner from an order of assessment made by the Income-tax Officer in respect of only some of the items covered by the Income-tax Officer's order and the remainining part of the Income-tax Officer's assessment order, were not agitated and the Appellate Assistant Commissioner did not consider them suo motu and no decision of the Appella....
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....d' and the second is regarding the issue relating to merger of the Assessing Officer in the order of the appellate authority. 11. Regarding the circumstances under which the order of the Assessing Officer merges with that of the appellate authority, conflicting decisions have been given by the Courts. The judicial controversy centres around the question as to whether the entire order of assessment passed by the Assessing Officer merges with the order of the first appellate authority or the merger is only with reference to that part of the order of the Assessing Officer which relates to the matters considered and decided by such an authority. Some High Courts have held that there is complete merger once an appeal is decided against an order on one or two points alone, while a number of High Courts have held that there is only a partial merger confined to points adjudicated upon. To eliminate any further litigation the Finance Act, 1988 has amended section 263 by inserting an Explanation to the effect that the Commissioner will be competent to revise an order passed by an Assessing Officer on all matters except those that have been considered and decided in appeal. Similar amendment....
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....er was satisfied that there was an application for registration filed by the assessee. He, therefore, set aside the assessment and directed the Income-tax Officer to receive duplicate application and to deal with it according to law. Thereupon the Income-tax Officer has called upon the assessee to produce its account books to make fresh assessment. The assessee applied to the High Court for the issue of a writ of prohibition restraining the Income-tax Officer from making a de novo assessment. In that connection, the High Court held that the order of the Appellate Asstt. Commissioner did not contain any direction that the Income-tax Officer should proceed to make fresh assessment as was envisaged under section 31(3)(b) of the Income-tax Act, the order was specific and all that the Appellate Asstt. Commissioner directed the Officer to do was to receive a duplicate copy of the application for registration and dispose of it according to law and, therefore, it was not open to the Officer to conduct a fresh enquiry and proceed to make a fresh assessment. In Bandaru Sanyasi Raju's case, the only point involved was whether the Appellate Asstt. Commissioner while disposing of the appeal und....
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.... original assessment. In a given case, the Commissioner can also exercise power under section 263, if the requisite conditions are satisfied." Thus it is clear that the last of the cases in the case of S. V. Divakar a decision cited on behalf of the assessee in fact helps the revenue rather than coming to the help of the assessee. As already stated, the fresh assessments are the assessments in which the first appellate authority's order was merged can be made the subject-matter of revision only on such matters which are not decided by the first appellate authority. Now in this case, the only point which the first appellate authority had focussed its attention was already mentioned. They are: (1) To reconsider valuation of annuities in the light of the order dated 23-1-1986 of the ITAT, B-Bench for assessment years 1976-77 and 1977-78. (2) To revalue the assessee's interest in M/s. R.K. Studios by making fresh reference to the Valuation Cell. Thus the assessment of Rs. 1 lakh or Rs. 6,60,000 which is the remuneration said to have been paid to the assessee for his role as hero in 'Superman' did not form the subject-matter of appeal before the Commissioner of Wealth-tax (Appeals) ....
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....ected as it stands. However, this argument is to be rejected in view of the latest decision of the Supreme Court in Martin Burn Ltd. v. CIT [1993] 68 Taxman 346. The question in that case was whether the Appellate Tribunal had powers to remand and whether it was justified in restoring the appeals to the file of the Additional Commissioner of Income-tax for passing fresh orders under section 263 after making further investigations and whether the High Court was justified in upholding the powers of the Tribunal. The Hon'ble Supreme Court held that the Tribunal had such powers and the Calcutta High Court was right to recognise such powers of the Tribunal and the said decision of the High Court was quite in consonance with its own earlier decision in Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232 (SC). Therefore, we are quite competent to send back the matter to the Commissioner of Wealth-tax with direction to make further enquiry and to redetermine the quantum of wealth to be added in the hands of the assessee if any to be decided afresh and according to law. Now we may state the material that is to be considered by the learned Commissioner of Wealth-tax while coming to the just addit....