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Commissioner Of Wealth-Tax vs J.K. Srivastava And Sons

High Court Of Judicature at Allahabad|12 January, 1983

JUDGMENT / ORDER

JUDGMENT Satish Chandra, C.J.
1. The Income-tax Appellate Tribunal, Allahabad, has submitted this statement of the case and has referred the following question of law for the opinion of this court :
"Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in cancelling the assessment made by the Wealth-tax Officer in the status of an individual based on the returns filed in the status of an association of persons ?"
2. The statement of the case involves the assessment years 1957-58 to 1976-77. For all these years the assessee filed returns under the W.T. Act in the status of an association of persons. At the hearing before the WTO it was contended on behalf of the assessee that no wealth-tax was chargeable on an association of persons. This submission was repelled on the ground that the word "individual", occurring in Section 3 of the W.T. Act, included an association of persons. Accordingly, the assessee was assessed in the status of an individual. The assessee went up in appeal, but failed. It then filed a second appeal to the Tribunal. The Appellate Tribunal held that it cannot be disputed that an association of persons is an entity different from an "individual" and a voluntary return filed in the status of an association of persons could not be treated as a return in the status of an individual and acted upon accordingly. Admittedly, no notice was issued to the assessee to file a return in the status of an individual under Section 14(2) of the W.T. Act. The authorities had, therefore, no jurisdiction to assess the assessee in the status of an individual. For these reasons the assessments were cancelled.
3. Aggrieved, the Commissioner of Wealth-tax came to this court and at his instance this court asked the Tribunal to refer the question of law mentioned in the beginning of this judgment to this court.
4. Learned counsel for the Department has not disputed or challenged the finding of the Tribunal that an association of persons is a chargeable entity different from that of an individual. Learned counsel for the assessee invited our attention to Section 21AA of the W.T. Act, which has been introduced with effect from 1st April, 1981, and which, it has been clarified, is applicable in relation to the assessment year 1981-82 and subsequent years. Section 21AA hence is not applicable to assessment years prior to the year 1981-82. This provision authorises the wealth-tax authorities to levy wealth-tax on an association of persons on the same basis as they levy wealth-tax on individuals in the circumstances mentioned in that section. Since the section was not applicable for the assessment years in question, it could not be relied upon by the Revenue. This also supports the finding of the Tribunal that an association of persons was a chargeable entity independent and different from that of an individual. Hence, when a voluntary return was filed in the status of an association of persons', it could not be treated as if a voluntary return had been filed in the status of an individual. If the WTO thought that the correct status in which the assessee could be charged with wealth-tax was that of an individual, he should have issued a notice under Section 14(2) of the W.T, Act, to the assessee, and should have required it to file a return. Admittedly, this was not done. The limitation for issuing such a notice is prescribed in Section 17 of that Act. It is four years in certain circumstances and eight years in other cases. Admittedly, the period of limitation by now has expired. It is, therefore, unnecessary to send the case back, as submitted by the learned counsel for the Revenue, for the issuance of a requisite notice.
5. We, therefore, answer the question referred to us in the affirmative, in favour of the assessee and against the Department. The assessee is entitled to costs which we assess at Rs. 200, one set.
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Title

Commissioner Of Wealth-Tax vs J.K. Srivastava And Sons

Court

High Court Of Judicature at Allahabad

JudgmentDate
12 January, 1983
Judges
  • S Chandra
  • B Agrawal