COMMISSIONER OF WEALTH TAX VS DHANSUKHLAL J. GAJJAR
1999 P T D 3782
[1237 I T R 534]
[Gujarat High Court (India)]
Before R. K. Abichandani and Kundan Singh, JJ,
COMMISSIONER OF WEALTH TAX
Versus
DHANSUKHLAL J. GAJJAR
Wealth Tax References Nos.43 with 58 of 1983, decided on 08/05/1998.
(a) Wealth tax--
---- Net wealth---Assessment---Assessment of net wealth as well as determination of sum payable on basis of such assessment---Incumbent upon Assessing Officer to make order in writing on both aspects---Order must bear signature of Assessing Officer---Signature includes initials of Assessing Officer---Incumbent upon Assessing Officer to put his signature on assessment of wealth as well as determination of sum payable as tax---Indian Wealth Tax Act, 1957, S.16.
(b) Wealth tax---
----Assessment---Limitation---Assessment order for assessment years 1967-68 to 1974-75 passed on 20-3-1978---Demand notice issued on 17-4-1979-- Computation sheets prepared on 30-3-1979, but did not bear signature of W.T.O.---No determination of tax payable as shown in forms on 30-3-1979- Determination of wealth tax took place` on 17-4-1979, when demand notice was signed by W.T.O.---Time-limit for making assessments expired on 31-3-1979---Assessment barred by limitation---Section 42C cannot be applied---Indian Wealth Tax Act, 1957, Ss. 17A & 42C.
(c) Wealth tax---
---- Valuation of house---Rule 1 BB providing for method of valuation---Is a rule of evidence---Rule is procedural and not substantive---Applicable to all pending proceedings pending on April 1, 1979, when rule came into force-- Indian Wealth Tax Rules, 1957, R. 1BB.
In cases of regular assessment of wealth made under section,16(3) of the Wealth Tax Act, 1957, the Assessing Officer after taking into account all the relevant material which he may have gathered has to make an order in writing, for assessing the net wealth of the assessee and to determine the sum payable on the basis of such assessment. It is incumbent upon the Assessing officer to make an order in writing on both the aspect, i.e., assessment of net wealth of the assesee as well as determination of the suet payable byto on the basis of such assessment. An order made under a statutory provision by an authority empowered to make it in writing must necessarily hear the signature of such authority to authenticate that the order was in fact made by concerned authority. The word "signature" is wide enough to include the initials of a person. Therefore even if initials are put by the concerned officer that would be sufficient to indicate that the order was in fact made by the concerned authority. In the context of the provisions of section 16(3) of the said Act, it would be incumbent upon the concerned Assessing Officer to put his signature indicating that he had by that order, assessed the wealth and also determined the sum payable. It will not be sufficient compliance with the said provisions if he only puts his signature on the assessment of wealth and does not so authenticate by signature the termination of the sum payable. The words "sum payable" are of wider amplitude than the words tax payable. Therefore, there is greater reason for Assessing Officer to work out the sum payable pursuant to the, assessmentwealth made by him.
The Wealth Tax Officer passed the assessment orders on March 20, 1978, for the assessment years 19677-68 to 1974- 75. The demand notice was issued on April 17, 1979. The computation sheets were prepared on March 30, 1979, but it was found that did not bear the signature of theWealth Tax Officer. The Wealth Tax Officer also made a reference to the valuation cell under, section 16A of the Act in respect of the immovable properties including lands which were claimed by the assessee to he agricultural. The Appellate Assistant Commissioner held that the assessments. made by the Wealth Tax Officer were not time-barred. It was further held that the reference made by the Wealth Tax Officer under section 16A was not valid in respect of the agricultural lands and a direction was given to the Wealth Tax Officer to accept the values of immovable properties m returned by the assessee. The Tribunal, on appeal by the Revenue, on the findings of the Appellate Assistant Commissioner that the reference under section 16A made by the Wealth Tax Officer to the valuation cell was not valid and on cross-objections by the assessee that the assessments were not made within time, held that there was no determination of tax payable as shown in the forms on March 30, 1979 and hence the time limit for making the assessments expired on March 31, 1979, and further that as determination of the wealth tax payable took place on April 17, 1979, when the demand notice was signed by the Wealth Tax Office,-, the assessment had not been completed within the statutory time laid down under section 17A of the said Act. The Tribunal also held that the provisions of rule 1BB of the Wealth Tax Rules, 1957, were applicable to the assessee because the assessments were pending. The Tribunal further held that the provisions of section 42C of the Wealth Tax Act, 1957, were not applicable. On a reference:
Held (i) that the Tribunal on verification of the record had found that the computation sheet/assessment/forms were not signed by the Assessing Officer. Therefore, since the determination of the sum payable was not made by the Wealth Tax Officer before the expiry of the period of limitation laid down under section 17A of the Wealth Tax Act 1957, i.e. March 31, 1979, the assessment was barred by limitation.
Kalyankumar Ray v. CIT (1991) 191 ITR.634 (SC); Kilasho Devi Burman (Smt.) v. CIT (1996) 219 ITR 214 (SC) and CIT v. Purshottamdas T. Patel (1994) 209 ITR 52 (Guj.) fol.
(ii) That in view of the settled position that assessment includes determination of the sum payable and the statutory provisions required the assessment to be made within the time prescribed,, it could not be said that there was only a mistake committed by the Assessing Officer in not signing the computation sheets which could be corrected under section 42C of the said Act. This was not a case of a mere mistake, defect or omission which could be rectified. This was a case, where the assessment was not made within time. The very purpose of the statutory limitation prescribed for making assessments would be frustrated if by applying the provisions of section 42C the assessment which was barred by limitation was to be considered as valid. Therefore, the Tribunal was right in holding that 'the provisions of section 42C were not applicable to the instant case.
(iii) That rule 1BB of the Wealth Tax Rules, 1957, providing for method of valuation of house, partakes of the character of a rule of evidence. The rule is procedural and not substantive and is applicable to -all proceedings pending on April 1, 1979, when the rule came into force.
CWT v. Sharvan Kumar Swarup & Sons (1994) 210 ITR 886 (SC) and CWT v. Kasturbhai Mayabhai (1987) 164 ITR 107 (Guj.) fol.
Manish R. Bhatt for the Commissioner.
N. R. Divetia for the Assesee.
JUDGMENT
R.K. ABICHANDANI, J.---Both the matters raise similar questions and have been argued together, for a common disposal.
In Wealth Tax Reference No. 43 of 1983, the Income-tax Appellate Tribunal, Ahmedabad, has referred the following questions for the opinion of this. Court under section 27(1) of the Wealth Tax Act, 1957:
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that the assessment was not completed within the statutory time laid down under section 17A of the Wealth Tax Act, 1957, notwithstanding the fact that the assessment order was made on March 28, 1979, and the tax computation sheets (assessments/refund forms ITNS 150) were made on March 30, 1979?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that the provisions of rule IBB of the Wealth Tax Rules which carne into force from April 1, 1979, were applicable to the assessment of the 'assessee to wealth tax for the assessment year?"
In Wealth Tax Reference No. 58 of 1983, the Tribunal has referred the following questions under section 27(1) of the said Act:
"(3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that the assessment was not completed within the statutory time limit prescribed under section 17A of the Wealth Tax Act. 1957 notwithstanding the fact that the assessment order was made on March 28, 1979 and tax computation sheets assessment/refund forms ITNS 150) were made on March 30, 1979?
(4) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that the provisions of rule 1 BB of the Wealth Tax Rules which came into force front April 1, 1979, were applicable to the assessments of the assessee to wealth tax assessment year?
(5) Whether, on the facts and circumstances of the case, the Tribunal was right in law in coming to the conclusion that the provisions of section 42C were not applicable in the present case?"
Wealth Tax Reference No. 43 of 1983 pertains to the assessment years 1968-69 to 1973-74, while Wealth Tax Reference No. 58 of 1983 relates to the assessment year 1974-75: The Wealth Tax Officer had passed orders on March 20, 1971?, for all assessment years from 1967-68 to 1973-74 as also for the assessment year 19-'.a-75. Demand notices were issued on April 17, 1979. The computation sheets were prepared on March 30, 1979, but it was found that they did not bear the signature of the Wealth Tax Officer. The Wealth Tax Officer had also made a reference to the valuation cell under section 16A of the Act in respect of the immovable properties including lands which were claimed by the assessee to be agricultural. The Appellate Assistant Commissioner held that the assessments made by the Wealth Tax Officer were not time-barred. It was further held that the reference made by the Wealth Tax Officer under section 16A was not valid in respect of the agricultural lands and a direction was given to the Wealth Tax Officer ,to accept the values of immovable properties as returned by the assessee.
The Tribunal, on appeal by the Revenue, on the findings of the Appellate Assistant Commissioner that the reference under section 16A made by the Wealth Tax Officer to the valuation cell was not valid and on cross objections by the assessee that the assessments were not made within time, held that there was no determination of tax payable as shown in the forms on March 30, 1979, and hence the time limit for making the assessments expired on Match 31,. 1979,'and further that as determination of the wealth tax payable took place on April 17, 1979, when the demand notice was signed by the Wealth Tax Officer, the assessment had not been completed, within the statutory time laid down under section 17A of the said Act. The Tribunal also held that the provisions of rule 1BB of the Wealth Tax Rules were applicable to the assessee because the assessments were pending. The Tribunal in view of its findings that the assessments were not made within the time limit prescribed did not decide the matter on the merits. It was held by the Tribunal that the provisions of section 42C were not applicable. The Tribunal did not decide the question whether the reference made by the valuation cell under section 16A of the Wealth Tax Act was valid in view of its decision on the other aspects of the matter in respect of which the aforesaid questions have been referred.
It was contended on behalf of the Revenue that the assessment order was signed by the Wealth Tax Officer on March 30, 1979, before the expiry of the period of limitation, i.e., March 31, 1979, and that the computation sheet was also worked out on March 30, 1977, which should be taken as a part of the assessment order even if it is not separately signed or initialled.
Mr. Dtvetia, the !earned counsel appearing for the assessee, on the other hand, contended that not only the assessment order was required to be signed by the Wealth Tax Officer even the determination of tax was equally required to be signed. He submitted that the process of assessment included the process of determination of tax.
The provisions relating to assessment of wealth are contained in Chapter IV of the said Act. 1n cases of regular assessment of wealth made under section '16(3) of the Act, the Assessing Officer after taking into account all the relevant material which he may have gathered has to make an order in writing, for assessing the net wealth of the assessee and to determine the sum payable on the basis of such assessment. When the Assessing Officer is duty bound to make an order in wilting for assessing the net wealth as well as determining the sum payable by the assessee on the basis of such assessment, it would be incumbent upon the Assessing Officer to make an order in writing on both the aspects, i.e., assessment of the net wealth of the assessee as well as determination of the sum payable by him on the basis of such assessment. An order made under a statutory provision by an authority empowered to make it in writing must necessarily bear the signature of such authority to authenticate that the order was in fact made by the concerned authority. It cannot be urged that the authority concerned was only required to make an order whether signed or not. It would be impossible to prove, should any dispute arise, that the order was actually made by the concerned authority, unless it bears the signature of the authority who is required to make the order in writing, by a statutory provision. The word "signature" is wide enough to include the initials of a person. Therefore, even if initials are put, by the concerned officer that would be sufficient to indicate that the order was in fact made by the concerned authority. In the context of the provisions of section 16(3) of the said Act, it would be incumbent upon the concerned Assessing Officer to put his signature indicating that he had by that order assessed the wealth and also determined the sum payable. It will not be sufficient compliance with the said provisions if he only puts his signature on the assessment of wealth and does not so authenticate by signature the determination of the sum payable. The words "sum payable" are of wider amplitude than the words tax payable. Therefore, there is greater reason forthe Assessing Officer to work out the sum payable pursuant to the assessment of wealth made by him.
Now, coming to the facts of this case we may take note of the fin4ingsof fact arrived at by the Tribunal in its own words, i.e.,
"We inspected the assessment records and found that tax computation sheets which are described as 'assessment/refund forms' were ITNS 150 and these forms of all the six assessment years bore the date March 30, 1979 (the Appellate Assistant Commissioner was obviously wrong in saying that these had been prepared on March 28, 1979, either he did not see these sheets or missed the date on them) but it was found also that these sheets did not bear the signature of the Wealth Tax Officer, N. K. Jain and the signature column was blank and only the name column showed his name written there. The name column, therefore, in each of the six sheets merely indicated the name of the Wealth Tax Officer, but he had not signed those forms-in the appropriate signatures column. It may also be clarified that the writing in the name column of the name, N. K. Jain was by some staff member and it was not the signature of N. K. Jain. "
Similar finding is arrived at by the Tribunal in Wealth Tax Reference No. 58 of 1983 in para. 3 of its order in which it has been stated that the last assessment/relevant form (computation sheet) was not signed by the Wealth Tax Officer, N.. K. Jain, and the signature column was blank.
We cannot go behind the finding of the fact that the Tribunal on verification of the record found that the computation sheet/assessment/refund forms were not signed by the Assessing Officer. It is, therefore, established that since the determination of the sum payable was not made before the expiry of the limitation period, i.e., March 31, 1979, the Wealth Tax Officer did not complete the assessment within the stipulated period of limitation.
The aforesaid conclusion is fully supported by the decision of the Supreme ,Court. in Kalyankumar Ray v. CIT (1991) 191 ITR 634 in which .the Supreme Court held in context of a similar provision of section 143(3) of the Income. Tax Act, 1961, that assessment was an integrated process involving not only the assessment of the total income but also the determination of the tax. It was held that the latter was as crucial as the former. It was observed that all that was needed was that there must be some writing initialled or signed by the Income-tax Officer before the period of limitation prescribed for completion of the assessment has expired, in which the tax payable is determined. The Supreme Court in fact observed that to avoid unnecessary controversies like this, the Department should, in future, adopt the salutary and useful practice of incorporating the entire tax calculations in I. T. N. S. No. 65 form itself or, in the alternative, make the 1. T. N. S. No. 150 an annexure to form part of the assessment order, have it signed by the Income-tax Officer and have it served on the assessee along with I. T. N. S. No. 65. The same view was reiterated by the Supreme Court in Kilasho, Devi Burman (Smt.) v. CIT (1996) 219 ITR 214 where, upon the record produced by the Revenue before the Tribunal it was found that there was no signed assessment order nor a signed assessment form, it was held that there was no valid assessment. Even this Court in CIT v. Purshottamdas T. Patel (1994) 209 ITR 52 applying the ratio of Kalyankumar Ray's case (1991) 191 ITR 634 (SC) held that the word's "order of assessment" cannot be construed to be assessment of total income only and that there should be an order in writing whereby the total income of the assessee is assessed and the tax payable by him is determined. It is only when an order in writing in respect of both these things is passed that it can be said that there is a complete order of assessment. These two steps may be taken simultaneously or separately, but both of them will have to be taken within the time prescribed by the Act. It applied the dictum of the Supreme Court in Kalyarikumar Ray v. CIT (1991) 191 ITR 634 that the assessment is one integrated process involving not only the assessment of the total income, but also the determination of the tax. In view of this settled legal position, we hold that the Tribunal was right in coming to the conclusion that the assessment was not completed within the statutory time limit laid down under section 17A of the Wealth Tax Act, 1957, and question No. 1 of Wealth Tax Reference No. 43 of 1983 as well as question No. 1 of Wealth Tax Reference No.58 of 1983 are answered in the affirmative against the Revenue and in favour of the assessee.
As regards the above question No. 5 of Wealth Tax Reference No.58 of 1983, in view of the settled position that the assessment includes determination of the sum payable and the statutory provisions required the assessment to be made within the time prescribed, it cannot be said that there was only a mistake committed by the Assessing Officer in not signing the computation sheets which could be corrected under section 42C of the said Act. This is not a case of a mere mistake, defect or omission, which can be rectified. This is a case, where the assessment was not made within time. The very purpose of the statutory limitation prescribed for making assessments would be frustrated if by applying the provisions of section 42C the assessment which was barred by limitation was to be considered as valid. Therefore, the said question No. 5 is answered in the affirmative, against the Revenue and in favour of the assessee.
Now we come to question No. 2 in Wealth Tax Reference No. 43 of 1983 and question No. 4 of the other matter which have a bearing on the question of application of rule 1BB of the said Rules. The Tribunal has held that rule 1BB applied to pending assessments. The Supreme Court in a decision of CWT v. Sharvan Kumar Swarup & Sons (1994) 210 ITR 886 has in the context of the said provisions of rule 1BB held that the said rule partakes of the character of a rule of evidence. The rule is procedural and not substantive and is applicable to all proceedings pending on April 1, 1979, when the rule came into force. The Supreme Court confirmed the view taken by this Court in CWT v. Kasturbhai Mayabhai (1987) 164 ITR 107. In this view of the matter question No. 2 of Wealth Tax Reference No. 43 of 1983 and question No. 4 of Wealth Tax Reference No. 58 of 1983 are both answered in the affirmative, against the Revenue and in favour of the assessee.
Both these references stand disposed of accordingly with no order as to costs.
M.B.A./4202/FCOrder accordingly