(a) Wealth tax---

----Reassessment----Notice---Writ petition challenging notice---Deliberate misstatement of facts---Dismissal of writ petition justified---Indian Wealth Tax Act, 1957, S.17---Constitution of India, Art.226.

It is cardinal principle pf writ jurisdiction that the petitioner must approach the Court with clean hands. If false statements are made in the writ petition or misleading or incomplete facts are stated, then the Court is fully justified in dismissing the writ petition on that ground alone.

(b) Wealth tax---

----Notice---Service---Service on chartered accountant.

Where, pursuant to receipt of notice by a chartered accountant, the assessee files a return of wealth and raises no objection before the Wealth Tax Authorities to the effect that the chartered accountant had no authority to accept notice, it is difficult for the Court to believe that such a chartered accountant would accept a reassessment notice under section 17 of the Wealth Tax Act, 1957, without his being authorised to do so.

(c) Writ petition---

---- False averments deliberately made---Compensatory costs awarded-- Constitution of India; Art.226.

The petitioner filed a writ petition challenging a notice of reassessment under section 17 of the Wealth Tax Act, 1957, and the Court found that the petitioner was guilty of misstating the facts deliberately.

The conduct of the petitioner was such that equitable relief under Article 226 of the Constitution could not be granted to him.

[In view of the false averments deliberately made by the petitioner, the Court also awarded compensatory costs to the Department.]

B. Lal, Ms. Geetanjali Mohan and I.B. Gaur for Petitioner.

B. Gupta, Rajendra, R.C. Pandey, R.K. Chaufla, R.N. Verma, D.N. Malhotra and D.C. Taneja for Respondents.

JUDGMENT

B.N. KIRPAL, J,---Sohan Singh Basi (hereinafter referred to as "the petitioner") has filed the present writ petition challenging the two notices issued under section 17 of the Wealth Tax Act seeking to reopen the assessments for the assessment years 1973-74 and 1974-75.

Briefly stated, the facts are that the petitioner was a shareholder of a company known as Continental Construction (Pvt.) Ltd. The petitioner held certain shares therein. For the assessment year 1973-74, a return was filed on August 20, 1973. Thereafter, a revised return was filed on January 1, 1975, Ultimately, the return was accepted and an assessment was made under section 16(1) of the Act.

In respect of the assessment year 1974-75, a return was similarly filed by the petitioner and an assessment was made under section 16(1) of the Act.

After the assessments had been made, notices were sent under section 17 seeking to reopen the said assessments. In order to appreciate the challenge to these two notices it will be helpful to refer to the two facts relating to the two assessment years, namely, 1973-74 and 1974-75, in greater detail, separately. As already noted, on August 20, 1973, a return was filed declaring a wealth of Rs.2,64,000. In Part V of this return, there was a reference to the shares of Continental Construction held by the petitioner, but the value of the same was shown as nil. In Annexure 6, under Serial No.4 which refers to the shares in Indian companies, there is an interpolation in the figure. It appears that originally the figure of Rs.21,250 was filed but at a later stage, it is not known when the figure 1 was altered to figure 7 so that the value of the shares was to be Rs.27,250. However, in Annexure 6, there were two other assets shown, namely, deposit in a bank worth Rs.39,965 and another deposit of Rs.441. The total of the three items, by treating the value of shares at Rs.21,250, comes to Rs.61,656. From this figure, a sum of Rs.39,928 was subtracted and the net value came to Rs.21,728. Had the value of the shares been shown as Rs.27,250 the total in respect of the total value before deduction, would have been Rs.67,656 and not Rs.61,656.

On January 1, 1975, a revised return was filed. In this return also, in Part V, the value of the shares of Continental Construction (P.) Ltd. was shown as nil. Like in the earlier return, in Annexure 6, again, there is an interpolation of a similar amount, namely, the amount of Rs.21,250 was changed to Rs.27,250. What makes the interpolation more glaring is that the details of the amount deducted of Rs.39,928 were given which indicated that the value of the shares was Rs.21,250. Interpolation could only be possible by changing Rs.21,250 to 27,250, but the corresponding interpolation in the other figure could not take place.

During the course of the proceedings, it appears that a statement of wealth, as on March 31, 1973, was filed. The reason for interpolation becomes apparent from it. In this statement, the petitioner valued 200 equity shares at the market rate of Rs.30 each and had shown the total value at Rs.6,000. The petitioner also had 250 preference shares which he valued at the rate of Rs.85 per share which came to the value of Rs.21,250. The total value of the equity and preference shares, therefore, came to Rs.27,250. It is clear that when the original return was filed, the value indicated in Part 6 was of only 250 preference shares which had a value of Rs.21,250. No value was included of the equity shares of Rs.6,000 and this was, in fact, reflected in Part V of the return itself. The reason why this interpolation was done, we will deal with separately.

On March 27, 1982, a notice under section 17 of the Wealth Tax Act was issued to the petitioner. This notice was issued by a registered A.D. cover, as is evident from the original record of the Department which has been made available to us during the hearing of this petition, and the same was served on Shri Sohan Singh Basi.

In respect of the assessment year 1974-75, return of wealth was filed. In the return, it was mentioned that the petitioner owned shares worth Rs.20,000. No details of the shares were indicated. It was not mentioned in this return as to of which company the shares were held by the petitioner nor was the number of shares held mentioned. The file of the respondents also contains a handwritten sheet of paper purporting to show the statement of wealth of the petitioner as on March 31, 1974. Under the heading "movables", there was a reference to 200 equity shares of Rs.100 each. The name of the company is not mentioned, bur it is stated that the face value of those shares is Rs.20,000.

In respect of both the assessment years, namely, 1973-74 and 1974-75, the Wealth Tax Officer passed assessment orders under section 16(1). These orders are both dated November 30,1978.

The contention on behalf of the petitioner is that notices under section 17 were bad in law because the said notices were issued because of change of opinion. In the writ petition, it is further averred that notices which were issued under section 17 were served on Shri S.L. Batra, chartered accountant, and A.K. Jain, an employee of the company, and that was not a proper service. The grievance was that none of these two persons were authorised representatives of the petitioner.

It is a cardinal principle of writ jurisdiction that the petitioner must approach the Court with clean hands. If false statements are made in the writ petition or misleading or incomplete facts are stated, then the Court would be fully justified in dismissing the writ petition on this ground alone.

In our opinion, notwithstanding the fact that, on merits, the petitioner does not have a strong case, we are firmly of the opinion that the petitioner has been guilty of misstating the facts deliberately. The conduct of the petitioner is such that the equitable relief under Article 226 cannot be granted to him.

As already noted, it has been averred in the writ petition, with respect to both the assessment years, namely, 1973-74 and 1974-75, that the notice under section 17 was served on A.K. Jain and S.L. Batra, respectively. The clear implication was that, in respect of the assessment year 1973-74, notice was served on Shri A.K. Jain of Messrs Continental Construction Co., and, in respect of the assessment year 1974-75, notice was served on Shri S.L. Batra, chartered accountant. We, however, find from the record of the Wealth Tax Officer, which has been produced in original before us that notice in respect of the assessment year 1973-74 was issued to Shri Basi by registered post. The signatures of Shri S.S. Basi are appended to the acknowledgment slip. In the writ petition, there is no mention of the receipt of the notice by Shri Basi. Thus, in fact, there was no service of the notice either for 1973-74 or 1974-75 on Shri A. K. Jain. The petitioner is, therefore, guilty of suppressing the material fact, namely, that notice under section 17 was served on Shri S.S. Basi and is further guilty of misstating the fact, namely, when it is averred that the notice was served on Shri A.K. Jain. It is an admitted fact that, for the purpose of reopening an assessment, the Wealth Tax Officer will assume jurisdiction only by the issuance of a valid notice under section 17. Whether there has been a proper service or not amounts to determination of a jurisdictional fact. When a wrong statement is made with regard thereto, the attempt obviously is to mislead the Court on an important issue. On this ground alone, the petitioner would not be entitled to any relief.

It has further been stated in the writ petition that, in the return of wealth, the petitioner had valued the shares of Continental Construction (P.) Ltd. at Rs.100 each which was the face value. This is again a false averment. In actual fact, in the original return filed for the year 1973-74, the value of the equity shares was taken as nil. There is, no doubt, a statement of wealth, which is a handwritten sheet of paper in the record of the Wealth Tax Officer, where the value of the equity shares is stated to be Rs.30. The averment made in the writ petition is not only contrary to the statement on the sheet of paper, but is also contrary to the return filed. This is, in our opinion, another deliberate attempt made by the petitioner in stating a false fact. In respect of the assessment year 1974-75, it is no doubt true that shares have been disclosed at the value of Rs.20,000. But for the assessment year 1973-74, the averment made is far from the truth.

What is of greater cause for concern is the fact that, in the original record of the Wealth Tax Officer, forgery has been attempted to be committed. As would be evident from what has been stated hereinabove, the figure of Rs.21,250 has been changed to Rs.27,250, being the value of the shares. This figure of "1" was converted to the figure 7 in the original return and also in the first revised return. It is not possible for us to come to the conclusion as to who is responsible for this forgery. Overwriting is apparent to the naked eye and even by totalling the various figures, it is evident that there has been an attempt to alter the figure from Rs.21,250 to Rs.27,250. Nevertheless, one can safely presume that this attempt to alter the figure was with a view to subsequently contend that, in the original return, the petitioner had disclosed the value of 200 equity shares at the rate of Rs.30 each. In normal circumstances, this could only have been after issuance of section 17 notice with a view to make out a case that the Department is reopening the assessment only because of the change of opinion and for no other reason. If the petitioner had disclosed the value of the shares, then the petitioner may have been able to contend that it had intimated to the Income-tax Department all primary and material facts and, therefore, resort could not be had to section 17. Being conscious of the fact that, in the original return, the value of the equity shares was shown as nil, such a plea could not have been raised. We have no doubt in our mind that it is only thereafter that an attempt was made to change the figure from Rs.21,250 to Rs.27,250. This change may or may not have been brought about with the connivance of the officers of the respondent, but it is not possible for us to believe that the petitioner or his representative had no hand in this.

The conduct of the petitioner has been such that we are not inclined to exercise our jurisdiction under Article 226 of the Constitution.

It has been contended that, in respect of the assessment year 1974-75, the position is different. We, however, find that with regard to the service of notice, it has been averred that the same was received by Shri S.L. Batra who had no power or authority to receive the same. This is a statement of fact alleged by the petitioner who is guilty of having made a number of false statements at least with regard to the assessment year 1973-74. It is in that background that we have to judge the veracity of the allegation of fact, namely, that Shri S.L. Batra, chartered accountant, had no power or authority to receive the notice for the year 1974-75. Though the question whether Shri Batra was empowered to receive the notice is a question of fact, which should ordinarily be decided by the authority constituted under the Act but, in the present circumstances, we feel there is enough evidence on the record to show that this averment is also untrue and false. The record of the Wealth Tax Officer shows that the petitioner belongs to a group of shareholders of Continental Construction (Pvt.) Ltd. Mr. Batra was representing the case of the members of the group before the Wealth Tax and Income-tax Authorities. Pursuant to the receipt of the notice by Shri S.L. Batra, a return of wealth was filed. No objection was taken before the Wealth Tax Authorities to the effect that Shri Batra had no authority to accept the notice: We do not believe that a professional accountant of repute would accept a notice under section 17 unless and until he was authorised to do so. If he accepted the notice wrongly and thereby deliberately misled the Income-tax Department to believe that the service was proper and that he was authorised to receive the same, then the professional would be, we dare say, guilty of gross misconduct. It is difficult for us to accept that a senior chartered accountant would commit such an error. The preponderance of probability could lead us only to one conclusion, namely, that Shri S.L. Batra had been duly empowered by this petitioner to receive the notice under section 17 of the Wealth Tax Act and because he was so authorised, the petitioner filed a return of wealth in response to the said notice.

We further find that the assessments were completed by the Wealth Tax Officer under section 16(1) and without any further inquiry. Full particulars with regard to the shareholding of the petitioner were not indicated in either of the two returns, namely, for the year 1973-74 or 1974-75. For the year 1974-75, the name of the company of which the shares were held was not indicated, .nor was it mentioned as to what is the basis of showing a figure of Rs.20,000 as being the value of the shares. The petitioner had not, therefore, disclosed the primary or material facts either for the assessment year 1973-74 OR 1974-75.

For the aforesaid reasons, this writ petition is dismissed. In view of the false averments deliberately made by the petitioner in respect of the assessment year 1973-1974, we impose compensatory costs of Rs.5000

M.B.A./1986/T Petition dismissed.