COMMISSIONER OF WEALTH TAX WEST BENGAL vs. IMPERIAL TOBACCO CO. OF INDIA LID.

CIVIL APPEAL No. 1062/1966Supreme Court1966 INSC 10415 April 1966Bench: 3 JudgesAuthor: K.N. WANCHOO, J.C. SHAH, S.M. SIKRI COMMISSIONER OF6 pages
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What were the facts?

The Wealth Tax Officer initiated reassessment proceedings under Section 17(b) of the Wealth Tax Act, 1957, for the assessment years 1957-58 and 1958-59. These proceedings aimed to include amounts previously allowed as deductions for contingencies in the respondent's total wealth. The respondent argued that the reassessment was based on a mere change of opinion by the Officer, as no "information" in possession justified believing that chargeable wealth had escaped assessment. The Tribunal agreed, setting aside the reassessment orders. The appellant's applications for a reference to the High Court, and subsequently to the Supreme Court, were dismissed by the Tribunal and the High Court respectively. The Supreme Court granted special leave to appeal.

What did the Supreme Court hold?

The Supreme Court held that a question of law did arise concerning the interpretation of the word "information" in Section 17(b) of the Wealth Tax Act, given the divergence of opinion among High Courts on the analogous provision in Section 34(1)(b) of the Income Tax Act. The Court noted that some High Courts have taken the view that a change of opinion by the Income Tax Officer, in certain circumstances, can justify the issue of a notice under Section 34(1)(b). The Court referred to decisions from the Madras, Mysore, and Allahabad High Courts which indicated a broader interpretation of "information," including mistakes apparent from the record, discovery of errors, correct interpretation of notifications, and information received in any manner. The Court stated that it is now settled that "information" includes information as to the true and correct state of law, and judicial decisions. Therefore, the Tribunal should have referred the question of law to the High Court. The appeals were allowed, the High Court's order was set aside, and the Tribunal was directed to state a case, with the option to refer it to the High Court or the Supreme Court.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the reassessment proceedings under Section 17(b) of the Wealth Tax Act were not validly initiated and in setting aside the same? (Question of mixed law and fact, concerning Section 17(b) of the Wealth Tax Act). Assessee's contentions: The reassessment was invalid as it was based on a mere change of opinion by the Wealth Tax Officer. There was no "information" in the Officer's possession that indicated chargeable wealth had escaped assessment. Such information must be acquired subsequent to the original assessment. Revenue's contentions: There is a divergence of opinion among High Courts regarding the meaning of "information" in Section 34(1)(b) of the Income Tax Act (which is in pari materia with Section 17(b) of the Wealth Tax Act). Some High Courts hold that a change of opinion, under certain circumstances, can justify reassessment proceedings. Therefore, a question of law arose that should have been referred to the High Court.

Which sections of the Income-tax Act were involved?

Section 17(b),Section 16(3),Section 25(2),Section 27(1),Section 27(3),Section 27(3A),Section 34(1)(b)

AI-generated summary — verify with the full judgment below

174 COMMISSIONER OF WEALm TAX WEST BENGAL v. IMPERIAL TOBACCO CO. OF INDIA LID.

April 15, 1966 [K. N. WANCHOO, J. c. SHAii AND s. M. Soon. JJ.J Wealth Tax Act (37 of 1957), ss. 17(b) and 27-Divergence of views in High Courts as to meaning of "lnjormation" in s. 34(1)(b)

Income Tax Act which is in pari rnateria 1vith s. 17(b)-Duty of Tri- bunal to make re/<!rence to High Court. A B Orders of reassosmnent under s. 16(3) read with s. 17(b) of the 0 Wealth Tax Act were passed by the Wealth Tax Officer in respect of two assessment years. and by those orders, amounts which had been formerly allowed as deduction were included in the total ' wealth of the respondent. The orders were set aside by the Tribu- ~ nal on the ground that the reassessment was based on a mere change ~ of opinion on the part of the Officer, because, there was no "informa- tion" in his possession, as required by s. 17(b), which could lead him to believe that chargeable wealth of the respondent had escaped as- D sessment. The appellant's applications to the Tribunal and the High Court, for a reference to the High Court, were dismissed.

In appeal to this Court, HELD: The Tribunal should be direc

The order continues below.

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