1. These wealth-tax appeals preferred by the revenue relate to the assessment years 1978-79 and 1979-80. In these two years the wealth returned by the assessee was accepted and the assessments were completed under Section 16(1) of the Wealth-tax Act, 1957 ('the Act').
The assessee appealed to the AAC claiming relief under Section 5(1), read with Section 5(1 A) of the Act, which he accepted. Accordingly, he directed the WTO to allow such exemption from the total wealth computed by him. Against the same the revenue has preferred these appeals.
2. The learned departmental representative strongly urged that when the wealth returned is accepted the assessee is not aggrieved by the assessment orders. Hence, no appeal can be preferred against such orders. The AAC was not justified in entertaining the appeals. The learned counsel for the assessee submitted that Section 23 of the Act does not exclude appeals against orders under Section 16(1). The assessee denies the liability. He submits that Section 246 of the Income-tax Act, 1961 ('the 1961 Act') excludes orders under Section 143(1) of the 1961 Act but that is not the position under the Wealth-tax Act. He strongly urged that even if the assessee has not claimed any exemption the ITO is supposed to make correct assessment and so he is bound to allow the exemption if it is allowable to the assessee and make only a correct assessment. He placed reliance on decisions in Mohan Lal Khemka v. CIT [1971] 81 ITR 89 (All.) and CIT v.Kanpur Coal Syndicate [1964] 53 ITR 225 (SC).
3. The point for consideration is whether an appeal could be preferred against an assessment order made under Section 16(1) wherein the return of wealth is accepted. Section 23 provides for appeals from orders of the WTO. Under Sub-section (1)(a) of Section 23 any person objecting to the amount of net wealth determined may appeal to the AAC. Under Sub-section (1)(b) any person objecting to the wealth-tax determined as payable under this Act may appeal and under Sub-section (1)(c) any person denying his liability to be assessed under this Act may appeal.
There is no specific provision excluding the orders made under Section 16(1). Before the AAC, the assessee has claimed exemption under Section 5(1), read with Section 5(1A). By claiming such exemption the assessee has denied liability to tax. Hence, the assessee would squarely come either under Sub-section (1)(a) or (1)(b) or (1)(c) of Section 23. From mere filing of the return and acceptance of the wealth-tax return it.
cannot be said that the assessee has admitted liability to tax if by mistake a person omits to claim exemption in the return he is not precluded from claiming it before the AAC as his powers are coextensive with that of the WTO. In this connection we may refer to the decision of the Oudh Chief Court in Rani Anand Kunwar v. CIT [1940] 8 ITR 126 wherein it was held that mere filing of return cannot be said to be tantamount to an admission by a person submitting the return that he is liable to assessment. In Kanpur Coal Syndicate's case (supra) the Supreme Court considered the expression 'denial of liability'. It was observed as under : ...Under Section 30 an assessee objecting to the amount of income assessed under Section 23 or the amount of tax determined under the said section or denying his liability to be assessed under the Act can prefer an appeal against the order of the Income-tax Officer to the Appellate Assistant Commissioner. It is said that an order made by the Income-tax Officer rejecting the plea of an association of persons that the members thereof shall be assessed individually does not fall under one or other of the three heads mentioned above. What is the substance of the objection of the assessee The assessee denies his liability to be assessed under the Act in the circumstances of the case and pleads that the members of the association shall, be assessed only individually. The expression 'denial of liability' is comprehensive enough to take in not only the total denial of liability but also the liability to tax under particular circumstances. In either case, the denial is a denial of liability to be assessed under the provisions of the Act. In one case the assessee says that he is not liable to be assessed to tax under the Act, and in the other case the assessee denies his liability to tax under the provisions of the Act if the option given to the appropriate officer under the provisions of the Act is judicially exercised. ... (p. 229) It was held therein that 'denial of liability' would take in not only the total denial of liability but also the liability to tax under all circumstances. In the instant case before us, the liability to wealth-tax is objected. Hence, an appeal could be preferred to the AAC.In Mohan Lal Khemka's case (supra) the Allahabad High Court held that an assessee denies his liability to be assessed under the Act not only when he contends that the Act has no application to him at all but also when he urges that he cannot be assessed in a particular assessment proceeding taken under the Act. It was also held that a provision granting right of appeal should be construed liberally. In Gopi Lal v.CIT [1967] 65 ITR 477, the Punjab High Court at Delhi held that partial denial of liability to be assessed is comprised in the expression 'denying liability to be assessed under this Act'. It was further held that the statutes pertaining to right of appeal have to be given a liberal construction since they are remedial. In CIT v. Ahmedabad Keiser-E-Hind Mills Co. Ltd. [1981] 128 ITR 486 (Guj.) the assessee claimed before the AAC that it was entitled to a rebate under the Finance Act, 1964. This ground was not raised before the ITO. The AAC allowed this point to be raised and directed the ITO to calculate the rebate after verifying the details of export. The Tribunal confirmed the order of the AAC. The Gujarat High Court after referring to the Board's Circular No. 14(XI-35) of 1955 dated 11-4-1955 held that it was incumbent on the ITO to advise the assessee to claim relief under Section 2(5)(a)(iii) of the Finance Act, 1964, if the proceedings or any other particulars before the ITO at the stage of the original assessment indicated that the assessee was entitled to relief under the provisions of the Finance Act, 1964. What was the obligation of the ITO would be the obligation of all officers of the department concerned with the execution of the 1961 Act. In Fida Hussain v. WTO [1981] 12 TTJ 499 (Jp.) the WTO accepted the return of wealth in which the assessee failed to claim exemption under Section 6(ii) of the Act, read with Section 10(4A) of the 1961 Act in respect of deposits of Rs. 2,02,795 under Non-resident (External Account). The assessee appealed to the AAC who declined to interfere as the assessee has not claimed exemption in the return filed by him. Against the same, the assessee appealed to the Tribunal. The Tribunal, Jaipur Bench held that as all the material facts were already before the ITO he should have considered the matter correctly. Secondly, the AAC was also not right in not examining the legal position since under the law an asset exempt from wealth-tax can never be included in the assessable total wealth particularly when the matter has been agitated before him. In the commentary on Law and Practice of Gift-tax and Wealth-tax by C.A.Gulanikar, 1984 edn., page 1.358, the learned author has observed that even if assessment is completed under Section 16(1), an appeal shall lie.
4. The ratio laid down in the above cases would squarely apply. In the instant case, the assessee had life interest in H.E.H. the Nizam's Trusts. The assessee claimed exemption under Section 5(1), read with Section 5(1A) of the Act. The Tribunal in a number of cases had held that exemption under Section 5(1) subject to the limit under Section 5(1A) is permissible in respect of the life interest of a beneficiary where corpus consists of assets referred to in Section 5(1). The AAC following one such order of the Tribunal dated 29-2-1984 in Wealth-tax Appeal Nos. 452 to 454 (Hyd.) of 1983 allowed the assessee's claim for exemption.
5. As noticed above, the assessee is entitled for exemption under Section 5(1), read with Section 5(1A) and so the exempted asset is not includible in the net wealth. Thus, the assessee denies liability to wealth-tax. Thus, in our view an appeal would lie to the AAC even against assessment orders made under Section 16(1) accepting the return of wealth. Thus, the AAC was right in entertaining the appeal. He was justified in following the above order of the Tribunal wherein it was held that exemption under Section 5(1), read with Section 5(1A) is permissible in respect of life interest of a beneficiary where corpus consists of assets referred to in Section 5(1).
6. The decision relied on by the learned departmental representative in Ramanlal Kamdar v. CIT [1977] 108 ITR 73 (Mad.) is distinguishable as that is a case where the assessee had no objection to the rectification proceedings. It is under those circumstances the Madras High Court held that the appeal to the AAC was incompetent. That has no application to the instant case. The decision of the Calcutta Bench of the Tribunal in Official Trustee of W.B. for Trust of Smt. Shitra Dassi v. ITO [1986] 16 ITD 483 is a case under the Income-tax Act where the assessee had no grievance regarding liability under the Act or computation of income-tax or loss or status in which it was assessed. It was under those circumstances that the Calcutta Bench of the Tribunal held that the assessee could not have any grievance. That order has no application to the facts of the case before us. We uphold the order of the AAC.