ORDER
Arun Kumar, J.
1. This batch of writ petitions challenges the action of the respondents in issuing notices for re-assessment under section 17 of the Wealth-tax Act (hereinafter referred to as “the Act”). The notices for re-assessment were issued with respect to assessment years – 1985-86, 1986-87, 1987-88 and 1988-89. The case of the petitioner is that the notices for re-assessment are without jurisdiction and as such are liable to be quashed.
2. The assessee filed returns with respect to his wealth for the relevant assessment years as under :-
Assessment Return filed Assessment u/s Year on 16 of the Act completed on. 1985-86 02.08.1985 26.03.1990. 1986-87 12.08.1986 12.08.1990. 1987-88 17.08.1987 12.08.1990. 1988-89 03.08.1988 12.08.1990. 3. The controversy in the present batch of writ petitions centres around three properties belonging to the assessee. They are: 1. Karni Bhawan. 2. Junagarh Fort. 3. Gajner Palace. 4. In the original assessment completed under section 16(3) of the Act, the
value of these immovable properties was assessed on the basis of order of the Settlement Commission dated 14th March, 1990 which was with respect to assessment years 1978-79 to 1981-82. The Assessing Officer, however, had sought report of the Valuation Officer with respect to these properties before finalising the assessment. The valuation report was received on 26th March, 1991. On the basis of the valuation report, the notices for re- assessment were issued under section 17 of the Act on 31st March, 1992. The table given below shows the difference between the value of the properties as per the assessment completed and as per the report of the Valuer.
KARNI BHAWAN Assessment Value taken as Value as per per Year initial Valuer assessment (Rs. in lacs) 1985-86 09.50 45.27 1986-87 10.45 51.50 1987-88 10.45 55.75 1988-89 10.45 60.34 JUNAGARH FORT Assessment Value taken as Value as per per Year initial Valuer assessment (Rs. in lacs) 1985-86 02.50 53.00 1986-87 03.13 61.20 1987-88 03.13 69.26 1988-89 03.13 85.23 GAJNER PALACE Assessment Value taken as Value as per per Year initial Valuer assessment (Rs. in lacs) 1985-86 22.33 137.41 1986-87 11.36 159.02 1987-88 11.36 174.65 1988-89 11.36 194.26
5. From the above table it is clear that there is a substantial differ- ence
between the two valuations. The main question for consideration in these writ
petitions is whether the assessments already completed could be re-opened? The
question of re-opening of a completed assessment is governed by section 17 of
the Act. Section 17 of the Wealth Tax Act was amended w.e.f. 1st April, 1989 vide Direct Tax Laws (Amendment) Act, 1989. The amended section is reproduced as under:-
“(1) If the Assessing Officer, has reason to believe, that the net wealth chargeable to tax in respect of which any person is assessable under this Act has escaped assessment for any assessment year (whether by reason of under assessment or assessment at too low a rate or otherwise), he may, subject to the other provisions of this section and section 17A, serve on such person a notice requiring him to furnish within such period, not being less than thirty days, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth the net wealth in respect of which such person is assessable as on the valuation date mentioned in the notice, along with such
other particulars as may be required by the notice, and may proceed to assess or reassess such net wealth and also any other net wealth chargeable to tax in respect of which such person is assessable, which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section for the assessment year concerned (hereinafter in this section referred to as the relevant assess- ment year), and the provisions of this Act shall, so far as may be, apply as if the return were a return required to be furnished under section 14: Provided that where an assessment under sub-section (3) of section 16 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any net wealth chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 14 or section 15 or in response to a notice issued under sub-section (4) of section 16 or this section or to disclose fully and truly all material facts necessary for his assessment for that assessment year………”
Section 17A.
“(IA) No notice under sub-section (1) shall be issued for the relevant assessment year,_
(a) In a case where an assessment under sub-section (3) of section 16 or sub-section (1) of this section has been made for such assessment year,_
(i) if four years have elapsed from the end of the relevant assessment year, unless the case falls under sub-clause (ii) or sub-clause (iii);
(ii) if four years, but not more than seven years, have elapsed from the end of the relevant assessment year, unless the net wealth chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees five lakhs or more for that year;
(iii) if seven years, but not more than ten years have elapsed from the end of the relevant assessment year, unless the net wealth chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees ten lakhs or more for that year……..”
6. According to the learned counsel for the petitioner, the petitioner had made true and full disclosure of all material facts for purposes of the wealth tax assessment for the relevant year. It is further pointed out that as a matter of fact the Department did not accept the valuation of the properties as declared by the assessee in the return. The value was taken as per the Settlement Commission order. The assessments had been duly completed. Therefore, unless it could be said to be a case of failure on the part of the assessee to truly and fully disclose all material facts, the assessments could
not have been re-opened. On this basis, the learned counsel has challenged the very jurisdiction of the assessing authority to issue the notice of re-assessment.
7. Learned counsel for the assessee relied on Jindal Photo Films Ltd. Vs. Deputy Commissioner of Income Tax and Others, 234 ITR 170, to urge that in the facts of the present case the notices of reassessment are totally without jurisdiction and as such are liable to be quashed. It was held that the key words in the section which bestows power in the Assessing Officer to issue notice of reassessment are: “reason to believe”. If “reason to believe” are available on record, the writ court will not exercise its power of judicial review nor it will go into the questions of sufficiency oradequacy of the material available. However, if it is a case of absence of any reason or the reasons not being bona fide, or being based on irrelevantmaterial, the notice of the assessement could be held to be without jurisdiction. On the facts of the case this court felt that no new material hadcome on record nor any fresh information had been received. There was no change of law. Therefore, it was found that it was a case of a mere change of opinionon the same given facts. It could not be said to be a case of any reason being available for the belief to reopen assessment. The notices of reassessment werequashed. This was a case under Sections 147/148 of the Income Tax Act, whichgive powers for reopening the income tax assessments already completed. The following observations from the decision of the Supreme Court in Phool ChandBajrang Lal and Another Vs. Income-tax Officer and Another 203 ITR 456 were relied upon:
“An Income-tax Officeracquires jurisdiction to reopen an assess- ment under section 147(a) read withsection 148 of the Income-tax Act, 1961, only if on the basis of specificreliable and relevant information coming to his possession subsequently, he has reasons, which he must record, to believe that, by reason of omission orfailure on the part of the assessee to make a true and full disclosure of all material facts necessary for his assess- ment during the concluded assessmentproceedings, any part of his income, profits or gains chargeable to income-tax has escaped assessment. He may start reassessment proceedings, either becausesome fresh facts had come to light which were not previously disclosed or some information with regard to the facts previously disclosed comes into hispossession which tends to expose the untruthfulness of those facts. In such situations, it is not a case of mere change of opinion or the drawing of a differentinference from the same facts as were earlier available but acting on fresh information. Since the belief is that of the Income-tax Officer, thesufficiency of reasons for forming the belief is not for the Court to judge but it is open to an assessee to establish that there in fact existed no beliefor that the belief was not at all a bona fide one or was based on vague, irrelevant and non-specific information. To that limited extent, the court maylook into the conclusion arrived at by the Income- tax Officer and examine whether there was any material available on the record from which the requisitebelief could be formed by the Income-tax Officer and further whether that material had any rational connection or a live link for the formation of the requisitebelief.”
8. The above observations of the Supreme Court are equally attracted in the controversy in hand which relates to reassessment notices under the Wealth-taxAct.
9. Next the learned counsel for the petitioner relied on Commissioner of Wealth-tax Vs. Raghunanadan Saran Ashok Saran 60 Current Tax Reporter (Del)175. This was a case in which the assessment already completed under Section 16A of the Wealth-tax Act was sought to be reopened under Section 17 of thesaid Act on the basis of a report of the Valuation Officer, obtained by the Wealth-tax Officer after the original assessments were completed. This courtapproved the decision of the Tribunal whereby it was held that the assessment which was already completed on proper principles could not be reopened on thebasis of the valuation report obtained by the Wealth-tax Officer. The learned counsel submits that this case applies on all fours to the facts of the presentcase and as such should be followed.
10. The learned counsel for the Revenue, Mr. R.D. Jolly raised a preliminary objection about the maintainability of the writ petitions. He submits thatin the facts of the present case it cannot be said that the notices of reassessment are without jurisdiction. For this reason writ petitions underArticle 226 of Constitution of India cannot be the remedy. Further accord- ingto him the petitioner can raise all the points which are being raised in the present proceedings before the Assessing Officer and from the order of theAssessing Officer, the petitioner has a right of appeal in accordance with the Statute. Therefore, petitioner has a right to avail statutory remedies andthe writ petitions are, therefore, not maintainable.
11. On merits he contended that in view of the provisions of section 3 ofthe Wealth Tax Act, the petitioner is liable to pay wealth tax in respect of the net wealth of the petitioner on the corresponding valuation date. Theexpression ‘net wealth’ has been defined in section 2(m) of the Act to mean –
“net wealth” means theamount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to theassessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregatevalue of all the debts owed by the assessee [on the valuation date which have been incurred in relation to the said as- sets];
12. It may also be relevant to quote sub-section (q) of section 2 whichdefines ‘valuation date’ –
“valuation date”, inrelation to any year for which an assessment is to be made under this Act, means the last day of the previous year as defined in [section 3] of theIncome-tax Act, if an assessment were to be made under this Act for that year:”
13. Thus according to the learned counsel it is the obligation of the assessee to disclose his net wealth as on the valuation date. In the presentcase apparently the Assessing Officer was not satisfied with the valuation of the properties in question disclosed by the assessee and that is why he soughtfor the report of the Valuation Officer. The report of the Valuation Officer was sought during the pendency of the assessment proceed- ings and not afterthe completion of the assessment under section 16(3) of the Act. However,before the report of the Valuation Officer was received, the valuation was completed under section 16(3) of the Act. This was also done not as per thevaluation of the properties disclosed by the assessee but as per the order of the Settlement Commission dated 14th March, 1990. This according to the learnedcounsel for the Revenue shows that in the first instance itself, the Assessing Officer was not satisfied that there was a true and full disclosure of thevalue of assets by the assessee and that is why he sought report of the Valuer. The learned counsel submits that the report of the Valuer was receivedsubsequent to the completion of the assessment and in these circumstances the Assessing Officer was justified in accordance with the provisions of Section17 of the Act to issue notice of the re-assessment. The learned counsel reliedon a Full Bench decision of the Kerala High Court in Commissioner of Income-tax Vs. V. Cleetus 213 ITR 14 in support of his case. In this case it was held :
“that merely because theorder of the Valuation Officer reached the Wealth-tax Officer after the completion of the assessment proceedings, it did not lose the character ofinformation as envisaged under section 17(1)(b). In a case where the assessmentproceedings were completed, the Wealth-tax Officer could not call for the order of the Valuation Officer. As the order of the Valuation Officer was called forduring the pendency of the assessment proceedings, it could not be equated to a case where the order was sought after the completion of the assessment. Assection 17(1)(b) in clear terms mentioned “any information in thepossession of the Wealth-tax Officer” for initiating the reassessment proceedings, the Valuation Officer’s order which was certainly an informationin the possession of the Wealth-tax Officer could not be considered to be devoid of any value or significance. The Wealth-tax Officer could certainly acton the information, though subsequently received, for initiating reassessment proceedings.”
14. We are fully in agreement with the view expressed by the Kerala High Court in the above judgment.
15. The legal position which emerges on the basis of the various relevant decisions is that no general rule of law can be laid down. Each case has to beexamined on its own facts. If on facts it turns out to be a case of mere change of opinion by the Assessing Officer, the notice of reassessment has to be heldto be void. As in the case of Jindal Photo Films (supra) it was found that there was neither any change in law, nor there was any change in facts, nor anyfresh information had come to the Assessing Officer. There was no basis to reopen the assessment. In such facts even if the Assessing Officer was torecord that he had reason to believe, the statement would be totally hollow and such a notice of assessment will have to be held to be bad. But if there arereasons to reopen an assessement, like fresh facts coming to light or some information becoming available to the Assessing Officer showing that factsdisclosed by the assessee and accepted by the officer earlier, were not true, the notice of reassessment will be fully justified. Rule of prudence andrequirement of finality to be attached to assessment orders, so far as the officer passing the same is concerned, enjoin that the Assessing Officersshould not be allowed to lightly reopen the assessments already completed by them or their predecessors. The requirement that the officer should have”reason to believe”, contains the safeguards in this behalf. No elaborate reasons are required to be recorded nor will the court go intosufficiency of reasons for forming the belief by the officer. The assessee has a limited right to challenge the notice of assessment by saying that eitherthere was no reason for the belief or the reasons were based on irrelevant or extraneous material or fact etc.
16. As per facts already noted, the Assessing Officer had sought for the Valuer’s report while the assessment was still pending before him. The reportthough received subsequent to completion of assessment, would be sufficient ground to re-open the assessment and the notice of re-assessment under section17 of the Act cannot be said to be without jurisdiction. In the facts of thecase, the notice for re-assessment can be fully justified under the relevant provision authorising the Assessing Officer to issue such a notice.
17. In view of these facts reliance placed by the learned counsel for the assessee on Jindal Photo Films and Raghunandan’s case (Supra) is of no avail.As already noticed in Jindal Photo Films case there was no basis for issuance of notice of reassessement. It was a case of mere change of opinion of theAssessing Officer. Raghunanadan’s case was a case of completed assessment and the Wealth-tax Officer seeking the valuation report after having completed theassessment. In the present case the Valuer’s report was sought while the assessment was still pending before the Assessing Officer but was receivedsubsequent to the completion of assessment. Therefore, neither of these cases help the petitioner. The notices of the reassessment in the case in handcannot be said to be without jurisdiction.
18. It follows from the above when the notices for re-assessment cannot be said to be without jurisdiction, the writ petitions challenging such notices arenot maintainable. The petitioner has to participate in the de- partmental proceedings and raise all the objections there. The petitioner will be entitledto pursue remedies in case of any adverse orders in accordance with the Statute. The Statute in the present case permits appeals against the orders ofthe Assessing Officer. The petitioner is thus relegated to the assessment proceedings and remedies in accordance with the Statute. These writ petitionsare dismissed as not maintainable. We have refrained from expressing any opinion on the merits of the controversy so that there is no prejudice to thecase of the parties in the proceedings before the departmental authorities under the Statute.
19. The writ petitions are dismissed. No order as to costs.