ORDER
Abdul Razack, judicial member
1. These are the appeals filed by the assessee. In these three appeals common issues are involved. They are :
(i) Whether the reassessment proceedings were validly initiated ?
(ii) Whether the assessee can make claims for deduction and reliefs which were not made in the original assessments or though made and have become final can the same be reagitated in reassessment proceedings ?
(iii) Whether the preference shares should be valued in accordance with Rule 1C(2) ? [in ITA No. 132 (Cal.)/90]
(iv) Whether interest under Sections 139(8)/215 and 220(2) of the Income-tax Act can be allowed as a deduction in computing the net wealth ? and
(v) Whether the interest of the assessee in the partnership firm be revalued at the time of reassessment proceedings ?
As the issues are common in all the appeals the same are being heard and disposed of by this common order for the sake of convenience.
2. At the time of hearing the assessee’s counsel has not pressed for any decision on the first issue, namely, about the validity of reassessment proceedings. The same is, therefore, not being considered and decided.
3. Regarding issue No. (if) above it is contended by the counsel for the assessee that in reassessment proceedings the assessee can claim further deductions, allowances and reliefs which he had not made or claimed at the time of finalisation of the original assessments. It is also submitted by assessee’s counsel that once a notice under Section 17 is issued the entire matter is open before the Assessing Officer and a fresh de novo assessment has to be made. Therefore, it is open to the assessee to lay its claim for new deductions or claims for arriving at the chargeable net wealth irrespective of the fact whether the same were earlier claimed or not or even if claimed but disallowed in the original assessment and have become final. In support of his submissions the assessee’s counsel has relied on the decisions in the cases of CIT v. Assam Oil Co. Ltd. [1982] 133 ITR 204 (Cal.), CIT v. Rangnath Bangur [1984] 149 ITR 487 (Raj.); M.R. Thammaiah v. Agricultural ITO [1984] 150 ITR 403 (Kar.); State Bank of Hyderabad v. CIT [1988] 171 ITR 232 (AP) and CIT v. Indian Rare Earth Ltd. [1990] 181 ITR 22 (Bom.). Sri Agarwal, therefore, submitted that the CWT(A) went wrong in this regard. The learned departmental representative, on the other hand, submits that no doubt it is true that once reassessment proceedings commence the assessee is entitled to make claims or deductions which was not originally made so that the proper assessment is made upon to true computation of assessable net wealth. The departmental representative submits further that if the claims which were made in the original assessment and rejected and when the assessee had accepted the same as final without preferring any appeal or revision under the provisions of the Wealth-tax Act then he is prohibited and precluded from making fresh claim for such deductions and allowances in the reassessment proceedings. The learned departmental representative has relied on the judgment of Kerala High Court in CWT v. C. Ravindran [1977] 107 ITR 547 and a decision of the Bombay High Court in the case of CWT v. Ballarpur Industries Ltd. [1979] 118 ITR 711. According to the learned departmental representative, therefore, the CWT(A) did not go wrong in this regard.
4. We have carefully considered the rival submissions of the parties and perused the decisions cited by both the parties before us. The Hon’ble Calcutta High Court in the case of Assam Oil Co. Ltd. (supra) has held that in reopened assessments those deductions which were not claimed in the original assessment can be claimed. The Karnataka High Court in the case of M.R. Thammaiah (supra) has held that an assessee can raise all legitimate contentions in reassessment proceedings which he could have raised in the original assessment and that he cannot be estopped from raising such contentions. The Bombay High Court in the case of Ballarpur Industries Ltd. [supra) has observed that once reassessment proceedings are reopened then it is incumbent upon the ITO to complete whole assessment de novo. The Andhra Pradesh High Court in the case of State Bank of Hyderabad (supra) has summarised the principle in this regard. According to Andhra Pradesh High Court once an assessment is reopened the entire assessment proceedings are at large and the tax authorities should reconsider in such reassessment proceedings all items of escapement of income without any limitation and at the same time it is open to the assessee to put forward the claim for deduction of any expenditure which was inadvertently omitted in the original assessment proceedings. Likewise, the assessee can also put forward claims for non-taxability of items of receipt which were not put forward in the original assessment. Their Lordships of the Andhra Pradesh High Court went further and observed in the said judgment at page 239 that if a claim for deduction or claim for non-taxability of a receipt was put forward in the original assessment proceedings and was considered and rejected by the tax authorities and that finding had become final then it is not open to an assessee to put forward those claims once again during the course of reassessment proceedings. The Rajasthan High Court in the case of (1) Shri Rangnath Bangur (supra) while dealing with similar issue has observed that-
So far as the matters raised and decided in the assessment proceedings or in the appeals against the original assessment order are concerned, they should be considered to have been finally decided between the parties and cannot be reagitated merely because the assessment has been reopened, but questions which were not raised at the time of original assessment proceedings or in the appeals therefrom can undoubtedly be raised during the reassessment proceedings or in the appeals filed against the reassessment order.
The Kerala High Court in the case of C. Ravindran (supra) while considering the scope of claims and deductions in reassessment has observed :
It is settled law that on reassessment the entire assessment is not opened. Thus, claims which had been disallowed during the original assessment cannot be reagitated on the assessment being reopened for bringing to tax certain income which has escaped assessment. The controversy on reassessment is confined to matters which are relevant in respect of the income which had not been brought to tax during the course of original assessment. It has not been contended that the disallowance of expenditure made during the course of original assessment, which the assessee wanted to be reconsidered during reassessment, were relevant for the enquiry on which the Income-tax Officer had re-embarked on reassessment. The disallowance of these expenses in the original assessment had become final and this being so, it was not open for the assessee to make a claim for these items of expenditure.
The Bombay High Court also in the case of Ballarpur Industries Ltd. (supra) followed the judgment of the Kerala High Court in this regard.
5. From the principles enunciated and laid down in the abovementioned cases it is clear that once an assessment is reopened the assessee has a right to make claim for deductions and allowances which were not made by him at the time of original assessment proceedings and that the entire assessment is open and a fresh assessment has to be made. But at the same time it is also settled position by now that an assessee is estopped from making claims for any deduction or allowance which he had claimed in the original assessment proceedings and which have become final either by his own conduct by not preferring any appeal against such disallowance or having preferred appeals before the appellate authorities the same having been rejected and having become final. Therefore, in our opinion, the CWT(A) has right in saying in the impugned order and giving direction to WTO to examine whether the claims which are being made by the assessee before him are fresh claims or claims which were made and rejected at the time of original assessment and have become final. We see no infirmity in such a finding and direction of CWT(A) and, therefore, affirm the same.
6. Issue No. (iii) relates to assessment year 1974-75 only and is covered by our finding given in relation to issue No. (ii) above. We find from the copy of the original assessment order filed in the paper book of the appellant that the assessee himself has returned the value of the preference share at Rs. 125.60 per share and the same had become final. Therefore, in our view, the assessee cannot once again reagitate the same issue which has become final. The value of preference share has to be adopted at Rs. 5,77,760 for assessment year 1974-75 as has been done in the original assessment. The question of valuing those preference shares under Rule 1C(2) as the assessee wants it, is of academic importance and we are, therefore, not embarking upon any discussion in this regard.
7. Regarding issue No. (iv) the counsel for the assessee, Sri G.P. Agarwal submits that interest under Sections 139, 215 and 220(2) of the Income-tax Act are debts and are, therefore, to be deducted in computing the net wealth. The revenue’s representative, Sri S.C. Sen, contends that those interests are not debts on the valuation dates and, therefore, are not deductible to arrive at the assessable net wealth.
8. In order to resolve this controversy we have to decide whether the interest payable under Sections 139, 215 and 220(2) are “debts owed” on the valuation dates. The Hon’ble Supreme Court in the celebrated case of Kesoram Industries and Cotton Mills Ltd. v. CWT [1966] 59 ITR 767 has held at page 780 that the word “owed” means to be under an obligation to pay. It does not really add to the meaning of the word “debt”. The meaning of the words “debt owed” could be defined as a liability to pay in praesenti or in futuro and ascertainable sum of money. Thus, according to the Supreme Court the connotation of word “debt” is much larger to comprehend all liabilities. The emerging principle is that all ascertained or actuarial estimated liabilities due and payable are in the nature of “debt owed”. Liabilities or liability which is uncertain or unascertainable or dependent on a contingency is not a “debt” in praesenti or in futuro that is to say, it is not a “debt owed” and, therefore, not deductible in arriving at the net wealth. Therefore, it is clear by now that “debt owed” means a real and subsisting debt. Further, in our opinion, deduction of debt depends on two conditions. Firstly it must exist on the valuation date and secondly it must be “due” or “owed” on those crucial dates. The word “due” is used always by judges, legislature and texicographers as synonymous with “owing” First National Bank Ltd. v. Seth Sant Lal AIR 1959 Punj. P. 328, 330-331. Let us examine the claim of the assessee in relation to deduction of those interest and whether they are debt owed on the relevant valuation dates. Under the provisions of Section 139(8) the assessee is liable for interest if he fails to furnish the return within the time allowed under Section 139. Such interest is to run from the date of failure till the date of completion of assessment. No doubt under the Income-tax Act the assessee has been given a right for reduction or waiver of interest charged by the Assessing Officer. Therefore, until there is a waiver or reduction the liability of the assessee to pay interest to the Government exists no sooner default is committed in filing the return in time. In our view, therefore, the interest which is payable by an assessee under Section 139(8) is “debt owed” and deductible in computing the net wealth. We wish to make it clear that the interest under Section 139(8) for the assessment year 1974-75 will not be deductible for the wealth assessment year 1974-75 because the liability to pay interest did not exist on the valuation date relevant for assessment year 1974-75 but the same will qualify for deduction as debt owed for any assessment year after assessment year 1974-75. Similarly we are of the opinion that interest under Section 215 which also fastened as a liability upon the assessee from 1st April following the assessment year is a liability and “debt owed” and, therefore, deductible in computing net wealth from the assessment year 1975-76 onwards and not for assessment year 1974-75 as interest under Section 215 was not payable nor the assessee was liable as on the valuation date relevant for assessment year 1974-75. Regarding deduction of interest payable under Section 220(2) is concerned, as “debt owed”, we are of the opinion that the same is payable no sooner the assessee commits default in payment of income-tax as per the demand raised on him under Section 156 of the Income-tax Act. Thus, if the interest under Section 220(2) was due and payable by the assessee in respect of income-tax demand for any assessment years and outstanding as on the valuation dates for any of the assessment years under appeal the same is allowable as a deduction as debt owed in computing the net wealth of the assessee. The CWT(A), in our opinion, was, therefore, not correct in rejecting the claim of the assessee in this regard. We direct the WTO to verify and allow deduction of interest under Sections 139, 215 and 220(2) of the Income-tax Act, 1961 in the light of our above findings.
9. Regarding issue No. (v) we find from the impugned order that the CWT(A) has restored the matter to the file of the Assessing Officer for the purpose of re-examination of the issue by considering certain concrete evidence relating to increase in valuation of the relevant assets as per his appellate order passed by him in the case of other partners of the firm. We do not find any infirmity in this direction we uphold the same.
10. The appeals are disposed of in above terms.