Dadamchand Vs. Wealth Tax Officer - Court Judgment

Excerpt:
1. all these appeals by the assessee arise out of the orders passed by the cwt.(a), in relation to asst. yrs. 1986-87 to 1989-90 and 1992-93, since common issues are involved in all these appeals, we are, therefore, proceeding to dispose them of by this consolidated order for the sake of convenience.2. briefly stated, the facts of this case are that a survey was conducted under section 133a of the act at the premises of the assessee on 6th dec, 1985 in which incriminating diaries and loose papers were impounded. the assessee applied for settlement of matter under the amnesty scheme and the iac determined the amount to be surrendered as income in the impounded diaries and loose papers for asst. yrs. 1984-85 to 1986-87. the assessee surrendered the income as per iac's order and paid tax thereon. the ao reopened the assessments for asst. yrs.1984-85 to 1986-87 vide notice under section 148 of the act. the assessee filed writ petitions before the hon'ble jurisdictional high court for these three years and obtained a stay of proceedings under the it act for these three years. the ao issued notice under section 17 of the wt act for all the years in question in response to which the returns were furnished. in the asst. yr. 1986-87, the ao vide para 3 of his order noted that the diaries, found during the course of survey, impounded from the assessee's business premises, contained certain cash credit, entries, entries for speculation business and adat income which were not recorded in the regular books of account. on the basis of such entries in the asst. yrs. 1984-85 to 1986-87, the ao included a sum of rs. 10,96,862 in the total wealth of the assessee.in the first appeal, the assessee assailed the inclusion of this amount in the net wealth for the reason that the assessments were not finally made. the learned cwt(a), not convinced with the assessee's submissions, confirmed the additions.3. we have heard the rival submissions and perused the relevant material on record. the narration of facts in the above para goes to show that for asst. yrs. 1984-85 to 1986-87, the income-tax proceedings have not yet attained finality because of the stay granted by the hon'ble jurisdictidnal high court. it was conceded by the learned authorised representative that the assessee had withdrawn its petitions for asst. yrs. 1985-86 to 1986-87 but the petition for asst. yr.1984-85 was still pending adjudication. it shows that the additions made with reference to the income for asst. yr. 1984-85 cannot be said to have attained finality for the reason that the hon'ble high court has stayed the proceedings for the said assessment year under the it act. it is no doubt true that the proceedings under the income-tax and wealth-tax are different. but where the subject-matter of wealth-tax is a direct derivation from the outcome of the income-tax proceedings, which is still in a state of dispute, it cannot be said that the income-tax proceedings have no bearing on the wealth-tax liability. on the perusal of the assessment orders passed under the wt act for all the years under consideration, it is noted that the ao had included the income resulting from the income-tax proceedings for asst. yr. 1984-85.since those proceedings under the it act for asst. yr. 1984-85 are yet to take a final shape, the addition made in the wealth-tax assessments on the basis of such proceedings cannot hold good because the very foundation of these additions is the income-tax assessment for the said asst. yr. 1984-85, which is still inconclusive. in our considered opinion, such additions cannot be made and the assessment order cannot be finalized till the proceedings for asst. yr. 1984-85 under it act are concluded. by setting aside the impugned orders, we restore the matter to the file of the ao for deciding the inclusion of wealth relating to the income-tax proceedings for asst. yr. 1984-85 only when such proceedings under the it act are concluded. while finalizing the assessment, the wto would allow a reasonable opportunity of being heard to the assessee to make his defence against all the additions proposed to be made.4. in the result, all the appeals of the assessee are allowed for statistical purposes.

Judgment:
1. All these appeals by the assessee arise out of the orders passed by the CWT.(A), in relation to asst. yrs. 1986-87 to 1989-90 and 1992-93, Since common issues are involved in all these appeals, we are, therefore, proceeding to dispose them of by this consolidated order for the sake of convenience.

2. Briefly stated, the facts of this case are that a survey was conducted under Section 133A of the Act at the premises of the assessee on 6th Dec, 1985 in which incriminating diaries and loose papers were impounded. The assessee applied for settlement of matter under the Amnesty Scheme and the IAC determined the amount to be surrendered as income in the impounded diaries and loose papers for asst. yrs. 1984-85 to 1986-87. The assessee surrendered the income as per IAC's order and paid tax thereon. The AO reopened the assessments for asst. yrs.

1984-85 to 1986-87 vide notice under Section 148 of the Act. The assessee filed writ petitions before the Hon'ble jurisdictional High Court for these three years and obtained a stay of proceedings under the IT Act for these three years. The AO issued notice under Section 17 of the WT Act for all the years in question in response to which the returns were furnished. In the asst. yr. 1986-87, the AO vide para 3 of his order noted that the diaries, found during the course of survey, impounded from the assessee's business premises, contained certain cash credit, entries, entries for speculation business and Adat income which were not recorded in the regular books of account. On the basis of such entries in the asst. yrs. 1984-85 to 1986-87, the AO included a sum of Rs. 10,96,862 in the total wealth of the assessee.In the first appeal, the assessee assailed the inclusion of this amount in the net wealth for the reason that the assessments were not finally made. The learned CWT(A), not convinced with the assessee's submissions, confirmed the additions.

3. We have heard the rival submissions and perused the relevant material on record. The narration of facts in the above para goes to show that for asst. yrs. 1984-85 to 1986-87, the income-tax proceedings have not yet attained finality because of the stay granted by the Hon'ble jurisdictidnal High Court. It was conceded by the learned Authorised Representative that the assessee had withdrawn its petitions for asst. yrs. 1985-86 to 1986-87 but the petition for asst. yr.

1984-85 was still pending adjudication. It shows that the additions made with reference to the income for asst. yr. 1984-85 cannot be said to have attained finality for the reason that the Hon'ble High Court has stayed the proceedings for the said assessment year under the IT Act. It is no doubt true that the proceedings under the income-tax and wealth-tax are different. But where the subject-matter of wealth-tax is a direct derivation from the outcome of the income-tax proceedings, which is still in a state of dispute, it cannot be said that the income-tax proceedings have no bearing on the wealth-tax liability. On the perusal of the assessment orders passed under the WT Act for all the years under consideration, it is noted that the AO had included the income resulting from the income-tax proceedings for asst. yr. 1984-85.

Since those proceedings under the IT Act for asst. yr. 1984-85 are yet to take a final shape, the addition made in the wealth-tax assessments on the basis of such proceedings cannot hold good because the very foundation of these additions is the income-tax assessment for the said asst. yr. 1984-85, which is still inconclusive. In our considered opinion, such additions cannot be made and the assessment order cannot be finalized till the proceedings for asst. yr. 1984-85 under IT Act are concluded. By setting aside the impugned orders, we restore the matter to the file of the AO for deciding the inclusion of wealth relating to the income-tax proceedings for asst. yr. 1984-85 only when such proceedings under the IT Act are concluded. While finalizing the assessment, the WTO would allow a reasonable opportunity of being heard to the assessee to make his defence against all the additions proposed to be made.

4. In the result, all the appeals of the assessee are allowed for statistical purposes.