TaxTMI 
TaxTMI 
2001 (8) TMI 27
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....matter involved in these cases pertains to the assessment years 1981-82 to 1988-89. The facts of these appeals are that the Department on the basis of the information/material in the possession of the Department, which pointed to the fact that the assessee was in possession of wealth of a certain value, which had escaped assessment, a notice under section 17 of the Wealth-tax Act, 1957 (hereinafter referred to as "the Act"), was issued in the name of the legal heirs of the assessee on September 12, 1990. No reply was filed in its response. For completing the proceedings initiated under section 17 of the Act, a notice under section 16(2) of the Act was issued which was responded to by the authorised representative of the assessee. The Assessing Officer que ried and sought reply from the authorised representative as to why on the basis of the material on record, the assessment should not be completed since no return of wealth was filed by the assessee. The assessee did not comply with the requirement and accordingly the assessment was completed ex parte under section 16(4) of the Act. The Assessing Officer issued notice under section 17 of the Act on the basis of major audit objectio....
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....---------------------------------------------- Copies of the assessment orders have also been filed and marked as annexures in these matters. The assessee preferred appeals against the assessment orders before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) allowed the appeals of the assessee holding that the notices under section 17 of the Act were issued by the Assessing Officer without recording the reasons which is a mandatory requirement as per the proviso to subsection (1) of section 17 of the Act and that the assessments completed on the basis of such notices were invalid and void ab initio (annexure 2). That being aggrieved with the order of the Commissioner of Income-tax (Appeals), the Revenue preferred appeals before the Tribunal. The learned Tribunal vide its order dated December 27, 2000 (annexure 3), dismissed the appeals filed by the appellant-Revenue holding that the assessment orders passed by the Assessing Officer under section 16(4) of the Act are invalid and void ab initio and the orders of the Commissioner of Income-tax (Appeals) have been upheld. The Tribunal held that recording of reasons is a condition precedent eve....
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.... Mr. R. B. Mathur. In this case, the following questions of law arise for our consideration: "1. Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal was justified in holding the assessment orders as invalid and void ab initio despite the fact that as per the then existing provisions in the relevant assessment years, the recording of the reasons for issuance of the notice under section 17(1) was not mandatory? 2. Whether, on the facts and circumstances of the case and in law, the Tribunal was right in holding that even in the unamended provisions of section 17, the recording of reasons were necessary despite the fact that the proviso to sub-section (1) of section 17 was added with effect from April 1, 1989, only?" We have perused the entire pleadings and the orders passed by the Commissioner of Income-tax (Appeals) and the learned Tribunal. Before proceeding further, it is beneficial to extract section 17(1) and the proviso to it for better appreciation of the facts and circumstances of the case. "17. Wealth escaping assessment. -(1) If the Assessing Officer has reason to believe that the net wealth chargeable to tax in respect of wh....
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.... representative of the assessee after perusing the comments of the Assessing Officer, reiterated his contention that no reasons for issuance of the notices under section 17 of the Act for all the eight assessment years were recorded by the Assessing Officer and, therefore, the notices issued under section 17 of the Act and the assessment completed as a consequence thereof were invalid as recording of reasons is a condition precedent for assuming jurisdiction and valid issuance of notices under section 17 of the Act. It is thus, seen from the order of the Commissioner of Income-tax (Appeals) that the assessment records were perused in the presence of the parties and after perusing the assessment records, it was found that the reasons recorded were not available on the assessment record for any of the assessment years. Thus, it is seen that the reasons said to have been recorded by the Assessing Officer were not available on the assessment records of any of the years. Therefore, the question to be considered in these appeals is will the notices issued under section 17 of the Act be without jurisdiction and consequently invalid as contended by learned counsel for the assessee. We h....