COMMISSIONER OF WEALTH TAX JALANDHAR vs. RAKESH KUMAR JAIRATH

WTR/3839/1990HC Punjab & HaryanaPHHC01026412199027 November 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL6 pages
AI SummaryRemanded

What were the facts?

The Commissioner of Wealth Tax, Jalandhar (revenue) has filed a reference application challenging an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had ruled in favour of the assessee, Shri Rakesh Kumar Jairath, for assessment years 1976-77 and 1977-78. The dispute arose from a revision order passed by the Commissioner under Section 25 of the Wealth-tax Act, 1957, which sought to correct an error in a re-assessment order dated March 28, 1981. The original assessment order was framed on June 16, 1978. The ITAT held that the Commissioner's revisional power could not be exercised if the error sought to be corrected was already present in the original assessment order, and the limitation period for revision should be considered from the date of the original order, not the re-assessment order.

What did the High Court hold?

The High Court answered the reference by holding that if the issues on which the revisional power is sought to be exercised by the Commissioner under Section 25 of the Wealth Tax Act were the subject matter of re-assessment proceedings, then the limitation to revise the order will commence from the date of the re-assessment order. Conversely, if the issues were not part of the re-assessment proceedings, the limitation would be from the date of the order originally passed. The Court relied on the Supreme Court judgments in Commissioner of Income Tax Vs. Sun Engineering Works P. Ltd. and Chettinad Corporation P. Ltd. Vs. Commissioner of Income-Tax. These judgments clarified that reassessment proceedings do not wipe out the original assessment entirely; they are confined to 'escaped assessment' or 'underassessment'. An order made in relation to escaped turnover does not affect the operative force of the original assessment if it has acquired finality. Therefore, the limitation for revision under Section 25(2) is dependent on whether the error being revised was addressed in the re-assessment or if it persisted from the original assessment.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that an erroneous order passed during supplementary proceedings under Section 17 of the Wealth-tax Act, repeating an error from the original assessment, could not be the subject matter of revision under Section 25(2) of the W.T. Act, because the limitation for revision should be reckoned from the date of the original assessment order? Assessee's Contention: The assessee argued that if the error sought to be revised by the Commissioner under Section 25(2) of the Wealth-tax Act already existed in the original assessment order, then the limitation for exercising such revisional power should be calculated from the date of the original assessment order, not from the date of a subsequent re-assessment order that merely repeated the same error. Revenue's Contention: The revenue contended that the revisional power under Section 25(2) could be exercised against the re-assessment order, and the limitation period should commence from the date of that re-assessment order, even if it repeated an error from the original assessment.

Which sections of the Income-tax Act were involved?

Section 17,Section 25(2),Section 25,Section 147,Section 22(2),Section 148,Section 39

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH **** W.T.R. No.38 to 39 of 1990 Date of Decision:27.11.2006 The Commissioner of Wealth Tax, Jalandhar .....Petitioner Vs. Shri Rakesh Kumar Jairath, Jalandhar .....Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE RAJESH BINDAL Present:- Dr. N.L.Sharda, Advocate for the revenue. ****

JUDGMENT Following question of law has been referred for the opinion of this Court by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar arising out of its order dated 25.11.1983 in WTA Nos.45 and 46(ASR)/ 1983, for the assessment years 1976-77 and 1977-78:- “Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that erroneous order passed during supplementary proceedings under section 17 of the Wealth-tax Act repeating the error committed while completing the original assessment could not be the subject matter of revision under section 25(2) of the W.T.Act, because of limitation being available from the date of original assessment order?”

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