TaxTMI 
TaxTMI 
2011 (2) TMI 113
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....rs and there being taxable wealth, the Assessing Officer issued notice under section 17 of the Wealth-tax Act, 1957 (hereinafter referred to as "the Act") on 9-6-2000, which was duly served upon the assessee on 25-6-2000. The AR of the assessee submitted a letter dated 3-7-2000 to the Assessing Officer stating the notice issued to be bad in law mainly on the grounds that public is substantially interested in the shares of assessee-company and so the proceedings are liable to be dropped. However, the Assessing Officer not being convinced gave another opportunity and issued notice under section 16(4) of the Act on 13-3-2002 whereby the assessee was again asked to furnish return for the said years and also seek any further clarification about the notice under section 17 of the Act already issued. In response thereto, the AR of the assessee filed written reply dated 26-3-2002 taking the same stand as taken in the aforesaid letter of 3-7-2002. The Assessing Officer not agreeing with the reasons given by the assessee that it being a public company and so not liable to file wealth-tax return, proceeded to assess chargeable wealth at. Rs. 4,93,33,500 (AY-1997-98) and Rs. 19,38,98,400 (AY-1....
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....ice under section 17 of the Act was issued and since assessee still failed to comply, another opportunity was given by issuing notice under section 16(4) of the Act on 13-3-2000. In response to this notice, AR of the assessee attended the proceedings on 22-3-2002 and 26-3-2002 and filed written submissions stating that the company is not liable. Since no return was filed even after all this, assessment was completed under sections 17 and 16(5) of the Act. According to Assessing Officer, since valid notice under section 16(4) of the Act had been issued, no further notice under section 16(5) of the Act was necessary before completing the assessment. This time CWT(A) vide common order dated 18-8-2005 allowed the appeals of the assessee for both the assessment years. The CWT(A) was of the view that notice which was issued under section 16(4)(i) of the Act, but the mandatory notice of first proviso to section 16(5) was not issued, which could be done away only where notice was issued under clause (ii) of sub-section (4) of section 16 of the Act prior to making of assessment. Since, no such notice was issued under clause (ii) of sub-section (4) of section 16 of the Act, the assessment wi....
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....d be dispensed if a notice under clause (ii) of sub-section (4) had been issued to the assessee prior to the making of the best judgment assessment. He submits that since no such notice was given under the first proviso and the notice which was given being under clause (i) and not clause (ii) of sub-section (4), the assessment made by the Assessing Officer is vitiated. On the other hand, learned counsel, Ms. Aggarwal, appearing for the revenue submits that the notice which was contemplated under second proviso was under clause (i) and not clause (ii) of sub-section (4). She submits that clause (ii) notice was only for production of accounts, records or documents etc., which may be required by the Assessing Officer where return had been filed under section 14 or 15 of the Act. In case, where no return had been made, the notice contemplated was under clause (i) of sub-section (4) of section 16. She submits that in the present case since still no return had been filed by the assessee, notice was issued under section 17 of the Act and since no return was filed, it was issued under section 16(4) of the Act calling upon the assessee to file return. 9. So far as the facts are concerned....
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.... 14 or section 15, or in response to a notice under clause (i) of sub-section (4) of this section, the Assessing Officer shall, if he considers it necessary or expedient to ensure that the assessee has not understated the net wealth or has not under-paid the tax in any manner serve on the assessee a notice requiring him, on a date to be specified therein, either to attend at the office of the Assessing Officer or to produce, or cause to be produced there, any evidence on which the assessee may rely in support of the return : Provided that no notice under this sub-section shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished. (4) For the purposes of making an assessment under this Act, the Assessing Officer may serve, on any person who has made a return under section 14 or section 15 or in whose case the time allowed under sub-section (1) of section 14 for furnishing the return has expired, a notice requiring him, on a date to be specified therein, - (i) Where such person has not made a return within the time allowed under sub-section (1) of section 14 to furnish a return of his net wealth or the net wealth....
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....ued by the Assessing Officer for production of record, documents as may be required. No notice under clause (ii) is contemplated in a situation where return has not been filed at all inasmuch as in the absence of return no documents or records may be required. 14. Sub-section (5) makes a provision for best judgment assessment in two situations; first, under clause (a) where a person fails to make the return under sub-section (1) of section 14 or under section 15. Secondly, where he fails to comply with all the terms of notice issued under sub-section (2) or sub-section (4). However, before proceeding to make best judgment assessment, the Assessing Officer is required to give opportunity of hearing to the person concerned. The first proviso to sub-section states that opportunity of hearing is to be given by serving a notice calling upon him to show cause why the assessment should not be completed to the best of judgment of Assessing Officer. Second proviso provides that no notice of opportunity of hearing is required where a notice under sub-section (4) has been issued prior to the making of the best judgment assessment. 15. The learned counsel for assessee submits that no not....
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....means that if a notice under clause (i) in the case where return was not filed or a notice under clause (ii) calling upon to file documents, etc., had been issued, that was enough to dispense with issue of another notice of hearing opportunity contemplated in the first proviso of sub-section (5). We may clarify that if notice has been issued in clause (i) where return has not been filed calling upon a person to file return or where a return has been filed calling upon the person to produce documents, etc., that would amount to issuance of notice contemplated in the second proviso and in such situation no separate notice of hearing opportunity was required to be issued before making best judgment assessment. We fail to understand as to how the learned counsel tries to introduce prior notice under clause (ii) of sub-section (4) only for the applicability of second proviso to sub-section (5). We are of the view that CWT(A) and Tribunal have given wrong interpretation to the provisions of sub-section (4) and sub-section (5) of section 16 by stating that the statutory notice under first proviso could be done away only if prior notice was under clause (ii) of sub-section (4). We are unab....