JUDGMENT
M.B. Shah, J.
1. It is the say of the petitioner that the petitioner is being taxed in the status of Hindu undivided family under the Wealth-tax Act, 1957, since a number of years. The petitioner submitted the returns of wealth-tax for the concerned assessment years 1972-73 to 1978-79 with the statement of rental income which showed the rent due on the first day of the calendar years, the rent accrued during the year, the rent received in cash during the year and the balance due at the end of the year. In spite of the fact that such balance due at the end of the year was specifically shown, it was not included in the net wealth of the petitioner and the Wealth-tax Officer did not include the same in the assessment of wealth. The petitioner was following the said patterns since prior to 1972-73 and had continued it up to 1978-79. On the basis of the said returns, the Wealth-tax Officer under section 16(3) of the Act had passed the assessment order after investigation of the case.
2. Thereafter the Wealth-tax Officer issued notices dated February 18, 1981, stating that he had reason to believe that the net wealth chargeable to tax had escaped assessment within the meaning of section 17 of the Act and had, therefore, asked the petitioner to filed returns of wealth within 35 days for the assessment years 1973-74 to 1978-79. The petitioner has challenged the aforesaid notices at exhibits D-1 to D-7 and has prayed that the respondent be restrained from taking any further action in pursuance of the said notices.
3. At the time of admission, after hearing the respondent, ad interim relief by way of stay of proceedings pursuant to the impugned notices was granted.
4. In the affidavit-in-reply, the respondent has stated that while valuing the property at Vala Hall Compound, the asset known as the old water tank was not disclosed by the assessee in the wealth-tax return and that, along with the returns, the petitioner had filed certain statements in which particulars of rent received and receivable were shown, but the rent actually accrued was not offered for taxation and, therefore, there was reason for issuance of notice under section 17 of the Wealth-tax Act.
5. At the time of hearing of this petition, learned counsel for the petitioner vehemently submitted that the notice issued by the respondent is on the fact of it without jurisdiction as the petitioner has throughout disclosed the rental income received by him and the rental income which was recoverable by him at the end of the year.
6. In our view, it would be difficult to accept the contention of the respondent that the petitioner has not disclosed fully and truly all material facts necessary for assessment of his net wealth. It is an admitted fact that along with the return, the petitioner has submitted the statement mentioning fully and truly the rent which was recoverable by him at the end of the calendar year. The Wealth-tax Officer has passed the order under section 16(3) of the Act which would mean that he has passed the order after considering such evidence as is produced on record and considering such other evidence as he may require on specified points. Hence, the provision of section 17(1)(a) of the Wealth-tax Act would not be applicable. The assessee had, in his return for the relevant assessment years under reference, disclosed the necessary facts. The Wealth-tax Officer had accepted the returns submitted by the assessee. Under these circumstances, it cannot be said that the assessee had omitted or failed to disclose fully and truly all material facts necessary for the assessment of his net wealth which would confer jurisdiction for issuance of notice under section 17 of the Act.
7. However, with regard to the application of section 17(1)(b) of the Act, Mr. Thakore, learned counsel for the respondent, submitted that it was open to the respondent to issue notice for the relevant period of four years as the wealth (net rent due) chargeable to tax has escaped assessment for those years on the basis of information which was in the possession of the Wealth-tax Officer.
8. As against this, learned counsel for the petitioner submitted that, for this submission, there is no basis in the notice issued by the respondent or in the affidavit-in-reply. In the two short affidavit-in-reply filed by the respondent, it is nowhere mentioned that the Wealth-tax Officer who had passed the assessment orders in the relevant years had not taken into consideration the annexures produced by the petitioner along with the returns.
9. From the record of this petition and the copies of the returns which are produced on record it seems that even though the petitioner has throughout pointed out the basic fact that some amount of rent was due and recoverable by him at the end of the calendar years and that the amount was not included in his wealth for the purpose of assessment of tax. There is nothing on record to show that the Wealth-tax Officer had not at all applied his mind to the question whether the rent due at the end of the calendar year was taxable or not. Normally, it would be presumed that the Wealth-tax Officer had considered and formed an opinion on the said material in the original assessment itself. In any set of circumstances as there is no affidavit-in-reply to the effect that the concerned Wealth-tax Officer had not considered or had not formed any opinion on the said material at the time of original assessment, it would be difficult for us to accept the contention of the learned advocate for the respondent. The Supreme Court in the case of A. L. A. Firm v. CIT [1991] 189 ITR 285 has considered all the relevant decisions and dealt with similar contention. In that case, the court observed that the decisions in the case Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996 (SC) which holds the view that the opinion of an audit party would not constitute “information” and qualifying the principles enunciated in the case of Kalyanji Mavji and Co. v. CIT [1976] 102 ITR 287, is pending consideration by a larger Bench of that Court. In Kalyanji Mavji’s case [1976] 102 ITR 287, 296 (SC) the court had laid down as under (See [1991] 189 ITR 293) :
“On a combined review of the decisions of this court the following tests and principles would apply to determine the applicability of section 34(1)(b) to the following categories of cases :
(1) where the information is as to the true and correct state of the law derived from relevant judicial decision :
(2) where in the original assessment the income liable to tax had escaped assessment due to oversight, inadvertence of a mistake committed by the Income-tax Officer. This is obviously based on the principle that the taxpayer would not be allowed to take advantage of an oversight or mistake committed by the taxing authority :
(3) where the information is derived from an external source of any kind. Such external source would include discovery of new and important matters or knowledge of fresh facts which were not present at the time of the original assessment;
(4) where the information may be obtained even from the record of the original assessment from the investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law.”
10. That case was considered in the case of Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996, 1004 (SC) and the Court observed as under (see [1991] 189 ITR 295) :
“Now, in the case before us, the Income-tax Officer had, when he made the original assessment, considered the provisions of sections 9 and 10. Any different view taken by him afterwards on the application of those provisions would amount to a change of opinion on material already considered by him. The Revenue contends that it is open to him to do so, and on that basis of reopen the assessment under section 147(b). Reliance is place on Kalyanji Mavji and Co. v. CIT [1976] 102 ITR 287 (SC), where a Bench of two learned judges of this court observed that a case where income had escaped assessment due to the ‘oversight, inadvertence for mistake’ of the Income-tax Officer must fall within section 34(1) (b) of the Indian Income-tax Act, 1922. It appears to us, with respect, that the proposition is stated too widely and travels farther than the statute warrants in so far as it can be said to lay down that if, on reappraising the material considered by him during the original assessment, the Income-tax Officer discovers that he has committed an error in consequence of which income has escaped assessment, it is open to him to reopen the assessment. In our opinion, and error discovered on a reconsideration of the same material (and no more) does not give him that power. That was the view taken by this court in Maharaj Kumar Kamal Singh v. CIT [1959] 35 ITR 1 (SC), CIT v. A. Raman and Co. [1968] 67 ITR 11 (SC) and Bankipur Club Ltd. v. CIT [1971] 82 ITR 831 (SC) and we do not believe that the law has since taken a different course. Any observations in Kalyanji Mavji and Co. v. CIT [1976] 102 ITR 287 (SC) suggestion the contrary do not, we say with respect, lay down the correct law.”
11. Thereafter, the court considered the facts of the case and observed as under (at page 299 of 189 ITR) :
“We think there is force in the argument on behalf of the assessee that, in the face of all the details and statement placed before the Income-tax Officer at the time of the original assessment, it is difficult to take the view that the Income-tax Officer had not at all applied his mind to the question whether the surplus is taxable or not. It is true that the return was filed and the assessment was completed on the same date. Nevertheless, it is opposed to normal human conduct that an officer would complete the assessment without looking at the material placed before him. It is not as if the assessment record contained a large number of documents or the case raised complicated issues rendering it probable that the Income-tax Officer had missed these facts. It is a case where there is only one contention raised before the Income-tax Officer and it is, we think, impossible to hold that the Income-tax Officer did not at all look at the return field by the assessee or the statements accompanying it. The more reasonable view to take would, in our opinion, be that the income-tax Officer looked at the facts and accepted that assessee’s contention that the surplus was not taxable. But, in doing so, he obviously missed take not of the law laid down in G. R. Ramachari and Co. [1961] 41 ITR 142 (Mad) which, there is nothing to show, had been brought to his notice. When he subsequently became aware of the decision, he initiated proceedings under section 147(b). The material which constituted information and on the basis of which the assessment was reopened was the decision in G. R. Ramachari and Co. [1961] 41 ITR 142 (Mad). This material was not considered at the time of the original assessment. Though it was a decision of 1961 and the Income-tax Officer could have know of it had he been diligent, the obvious fact is that he was not aware of the existence of that decision then and, when he came to know about it, he rightly initiated proceedings for reassessment.
12. From the aforesaid observations, it is apparent that if details and statement were placed before the Wealth-tax Officer at the time of the original assessment, it is difficult to accept the contention that the Wealth-tax Officer had not at all applied his mind to the question whether rent due at the end of the year was not assessable to wealth-tax. The assessment orders were made under section 16(3) of the Wealth-tax Act after issuing notices under section 16(2) to the petitioner. Therefore, it is difficult to presume that the Wealth-tax Officer had completed the assessment without looking at the material placed before him. There is no other material which constitutes “information” for reopening the assessment which is finalised.
13. In this view of the matter, this petition is allowed. The notices (annexures D-1 to D-7) issued under section 17 of the Wealth-tax Act on February 18, 1981, are quashed and set aside. The respondents are restrained from taking any action in pursuance of the said notices. Rule made absolute to the aforesaid extent with no order as to costs.