Commissioner of Wealth Tax v. Smt. Saroj Madhava Prasad

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The Tax Publishers2005 TaxPub(DT) 0630 (All-HC) : (2005) 273 ITR 0427 : (2005) 145 TAXMAN 0361 CWT v. Smt. Saroj Madhava Prasad () WEALTH TAX --Revision under section 25(2)----DOCTRINE OF MERGERIssue not considered by appellate authority--Held: In view of amendment made in clause (c) of Explanation to section 25(2) the powers of CWT under section 25(2) shall extend and shall be deemed always to have extended to them because the same had not been considered and decided in the appeal filed by the assessee. Wealth Tax Act, 1957 s.25(2) CWT v. Smt. Saroj Madhava Prasad In The Allahabad High Court R. K. Agarwal K. N. Ojha JJ. W. T. R. No. 19 of 1987 14 September 2004. Counsel : A. N. Mahajan, for the Commissioner R. S. Agrawal, for the Assessee. JUDGMENT The Income-tax Appellate Tribunal, Delhi, has referred the following question of law under section 27 (1) of the Wealth Tax Act, 1957, hereinafter referred to as 'the Act', for the opinion to this court : 'Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the assessment order of the Wealth-tax Officer dated 27-2-1982, stood wholly merged in the appellate order dated 27-5-1983, and that hence the Commissioner of Wealth-tax had no power to interfere under section 25 (2) of the Wealth Tax Act, 1957, and on that reasoning in quashing the order of the Commissioner of Wealth-tax dated 24-2-1984, as not valid in law?' The reference relates to the assessment year 1977-78. While passing the assessment, the Wealth-tax Officer had valued the shares held by the respondent- assessee in L. H. Sugar Factory Ltd., Pilibhit, at Rs. 9.96 per share. It may be mentioned here that, the shares of Mils. L. H. Sugar Factory Limited are not quoted in the stock exchange. The Commissioner of Wealth-tax, after examining the record was of the opinion that a sum of Rs. 50,96,955 being a provision for gratuity made by M/s. L. H. Sugar Factory Ltd., was also deducted out of the total value of the assets of the said company. He was of the opinion that this could not have been done and, therefore, valuation taken by the assessing officer was low and consequently, the order was erroneous and prejudicial to the interests of the revenue, initiating proceedings under section 25 (2) of the Act. He, after giving opportunity of hearing to the respondent-assessee set aside the assessment to be framed de novo. The respondent feeling aggrieved, preferred an appeal before the Tribunal. The Tribunal, relying upon the decision of this court in the case of J. K. Synthetics Ltd. v. Addl. CIT (1976) 105 ITR 344 allowed the appeal on the preliminary point that in the assessment year, the order was carried in appeal and it had merged with the order of the appellate authority and, therefore, the Commissioner of Wealth-tax has no jurisdiction to initiate proceedings under section 25 of the Act. The Tribunal had not decided the appeal on the merits. We have heard Shri A. N. Mahajan, learned standing counsel for the revenue, and Shri R. S. Agrawal, learned counsel appearing for the respondent- assessee. Learned counsel for the revenue submitted that after the amendment carried out in section 25 by inserting the following words 'filed on or before or after the 1-6-1988' and 'shall be deemed always to have extended', in clause (c) of the Explanation to sub-section (2) of section 25 of the Act by the Finance Act, 1989, with effect from 1-6-1988, the Commissioner had the power to revise an order which had been the subject matter of any appeal to such matters as had not been considered and decided in such appeal. He relied upon the decision of the apex court, in the case of CIT v. Shri Arbuda Mills Ltd. (1998) 231 ITR 50, wherein the apex court has held that the powers of the Commissioner under section 263 shall extend and shall be deemed always to have extended to them because the same had not been considered and decided in the appeal filed by the assessee. The amendment made in clause (c) of the Explanation to section 25 (2) of the Act is similar to the amendment made in section 263 of the Income Tax Act, 1961, and the same principle would apply in the present case also. Respectfully following the above decision, we are of the considered opinion that the Commissioner had requisite jurisdiction to initiate proceedings under section 25 of the Act in the present case. In this view of the matter, we answer the question of law in the negative, i.e., in favour of the revenue and against the assessee. However, there shall be no order as to costs. OPEN SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2005 TaxPub(DT) 0630 (All-HC) : (2005) 273 ITR 0427 : (2005) 145 TAXMAN 0361

CWT v. Smt. Saroj Madhava Prasad ()

WEALTH TAX

--Revision under section 25(2)----DOCTRINE OF MERGERIssue not considered by appellate authority--Held: In view of amendment made in clause (c) of Explanation to section 25(2) the powers of CWT under section 25(2) shall extend and shall be deemed always to have extended to them because the same had not been considered and decided in the appeal filed by the assessee.

Wealth Tax Act, 1957 s.25(2)

CWT v. Smt. Saroj Madhava Prasad

In The Allahabad High Court R. K. Agarwal K. N. Ojha JJ.

W. T. R. No. 19 of 1987 14 September 2004.

Counsel : A. N. Mahajan, for the Commissioner R. S. Agrawal, for the Assessee.

JUDGMENT

The Income-tax Appellate Tribunal, Delhi, has referred the following question of law under section 27 (1) of the Wealth Tax Act, 1957, hereinafter referred to as 'the Act', for the opinion to this court :

'Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the assessment order of the Wealth-tax Officer dated 27-2-1982, stood wholly merged in the appellate order dated 27-5-1983, and that hence the Commissioner of Wealth-tax had no power to interfere under section 25 (2) of the Wealth Tax Act, 1957, and on that reasoning in quashing the order of the Commissioner of Wealth-tax dated 24-2-1984, as not valid in law?'

The reference relates to the assessment year 1977-78. While passing the assessment, the Wealth-tax Officer had valued the shares held by the respondent- assessee in L. H. Sugar Factory Ltd., Pilibhit, at Rs. 9.96 per share. It may be mentioned here that, the shares of Mils. L. H. Sugar Factory Limited are not quoted in the stock exchange. The Commissioner of Wealth-tax, after examining the record was of the opinion that a sum of Rs. 50,96,955 being a provision for gratuity made by M/s. L. H. Sugar Factory Ltd., was also deducted out of the total value of the assets of the said company. He was of the opinion that this could not have been done and, therefore, valuation taken by the assessing officer was low and consequently, the order was erroneous and prejudicial to the interests of the revenue, initiating proceedings under section 25 (2) of the Act. He, after giving opportunity of hearing to the respondent-assessee set aside the assessment to be framed de novo. The respondent feeling aggrieved, preferred an appeal before the Tribunal. The Tribunal, relying upon the decision of this court in the case of J. K. Synthetics Ltd. v. Addl. CIT (1976) 105 ITR 344 allowed the appeal on the preliminary point that in the assessment year, the order was carried in appeal and it had merged with the order of the appellate authority and, therefore, the Commissioner of Wealth-tax has no jurisdiction to initiate proceedings under section 25 of the Act. The Tribunal had not decided the appeal on the merits.

We have heard Shri A. N. Mahajan, learned standing counsel for the revenue, and Shri R. S. Agrawal, learned counsel appearing for the respondent- assessee. Learned counsel for the revenue submitted that after the amendment carried out in section 25 by inserting the following words 'filed on or before or after the 1-6-1988' and 'shall be deemed always to have extended', in clause (c) of the Explanation to sub-section (2) of section 25 of the Act by the Finance Act, 1989, with effect from 1-6-1988, the Commissioner had the power to revise an order which had been the subject matter of any appeal to such matters as had not been considered and decided in such appeal. He relied upon the decision of the apex court, in the case of CIT v. Shri Arbuda Mills Ltd. (1998) 231 ITR 50, wherein the apex court has held that the powers of the Commissioner under section 263 shall extend and shall be deemed always to have extended to them because the same had not been considered and decided in the appeal filed by the assessee. The amendment made in clause (c) of the Explanation to section 25 (2) of the Act is similar to the amendment made in section 263 of the Income Tax Act, 1961, and the same principle would apply in the present case also.

Respectfully following the above decision, we are of the considered opinion that the Commissioner had requisite jurisdiction to initiate proceedings under section 25 of the Act in the present case.

In this view of the matter, we answer the question of law in the negative, i.e., in favour of the revenue and against the assessee. However, there shall be no order as to costs.

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