Commissioner of Wealth-tax, Delhi-1 Vs. Mrs. R.B. Patel - Court Judgment

Excerpt:
the case questioned whether the provisions of section 35 of the wealth tax act, 1957, could be invoked to rectify the original assessment and to include the value of the jewellery, thus giving effect to the amendments effected under section 5(1)(viii) of the act - it was found that the assessments were completed for the two assessment years - also, the claim of exemption of the assessed in respect of the jewellery was allowed - it was also found that the value of the jewellery was not included in the net wealth - although, amendment by the finance act, 1971 to section 5(1)(viii) of the said act had made the jewelry liable to the wealth tax - hence, it was held that provision of section 35 of the said act could be invoked in respect of the aforesaid matter - orderarijit pasayat, cj. 1. these two reference applications invoke an identical question, per-taining to assessment years 1968-69 and 1969-70, which has been referred under section 27(1) of the wealth act, 1957 (for short the act) by the income-tax appellate tribunal, delhi bench-e, (for short the tribunal) for opinion of this court: 'whether on the facts and in the circumstances of the case, the provisions of section 35 of the wealth-tax act can be invoked to rectify the original assessment and to include the value of the jewellery, thus giving effect to the amendments effected in section 5(1)(viii) of the wealth-tax act, 1957 by the finance (no.2) act of 1971?'2. since answer to the question would depend upon the scope and ambit of section 35 of the act, a detailed reference to the factual position is unnecessary. in brief, it is as follows: assessments were originally com-pleted for the two assessment years. when such assessments were taken up, the assessed claimed exemption in respect of jewellery valued at rs. 2,90,025/-. assessing officer accepted the assessor's claim and value of jewellery was not included in the net wealth. subsequently, by finance (no.2) act, 1971, an amendment was made to section 5(1)(viii) making jewellery liable to wealth-tax. two explanationns were added to this amended section 5(1)(viii), enlarging the scope of interpretation of the word 'jewellery'. the explanationns were made operative with effect from 1st april, 1972. referring to the amendment, the wealth-tax officer was of the view that non-inclusion of value of jewellery in the original assessments was a mistake apparent from the record. proceedings were initiated under section 35 of the act and orders were passed including value of jewellery in the net wealth of the assessee. appeals were filed before the appellate assistant commissioner (for short the aac). it was contended by the asses-see before him that there is no, scope for bringing in application of section 35 of the act. the assessor's plea was accepted by, the aac. in appeal by the revenue, the order of the aac was sustained by the tribunal. it was held that the question was a debatable one as to whether the amend-ing provisions applied to a concluded assessment against which no further proceedings are pending on the date of enactment of amending provision and, thereforee, section 35 had no application to the case. on being moved for reference, the prayer was accepted by the tribunal. 3. heard learned counsel for the revenue. there is no appearance on behalf of the assessed in spite of service of notice. 4. the point in issue has been directly dealt with and adjudicated upon by the apex court in j.m. bhatia. aac vs . j.m. shah, : [1985]156itr474(sc) , wherein it was held that section 35 had application. following the ratio of the said decision, we answer the question in the affirmative, in favor of the revenue and against the assessee. the reference applications are disposed of.

Judgment:
ORDER

Arijit Pasayat, CJ.

1. These two reference applications invoke an identical question, per-taining to assessment years 1968-69 and 1969-70, which has been referred under Section 27(1) of the Wealth Act, 1957 (for short the Act) by the Income-tax Appellate Tribunal, Delhi Bench-E, (for short the Tribunal) for opinion of this Court:

'Whether on the facts and in the circumstances of the case, the provisions of section 35 of the Wealth-tax Act can be invoked to rectify the original assessment and to include the value of the jewellery, thus giving effect to the amendments effected in section 5(1)(viii) of the Wealth-tax Act, 1957 by the Finance (No.2) Act of 1971?'

2. Since answer to the question would depend upon the scope and ambit of Section 35 of the Act, a detailed reference to the factual position is unnecessary. In brief, it is as follows: Assessments were originally com-pleted for the two assessment years. When such assessments were taken up, the assessed claimed exemption in respect of jewellery valued at Rs. 2,90,025/-. Assessing Officer accepted the assessor's claim and value of jewellery was not included in the net wealth. Subsequently, by Finance (No.2) Act, 1971, an amendment was made to Section 5(1)(viii) making jewellery liable to Wealth-tax. Two Explanationns were added to this amended Section 5(1)(viii), enlarging the scope of interpretation of the word 'jewellery'. The Explanationns were made operative with effect from 1st April, 1972. Referring to the amendment, the Wealth-tax officer was of the view that non-inclusion of value of jewellery in the original assessments was a mistake apparent from the record. Proceedings were initiated under Section 35 of the Act and orders were passed including value of jewellery in the net wealth of the assessee. Appeals were filed before the Appellate Assistant Commissioner (for short the AAC). It was contended by the asses-see before him that there is no, scope for bringing in application of Section 35 of the Act. The assessor's plea was accepted by, the AAC. In appeal by the revenue, the order of the AAC was sustained by the Tribunal. It was held that the question was a debatable one as to whether the amend-ing provisions applied to a concluded assessment against which no further proceedings are pending on the date of enactment of amending provision and, thereforee, Section 35 had no application to the case. On being moved for reference, the prayer was accepted by the Tribunal.

3. Heard learned counsel for the Revenue. There is no appearance on behalf of the assessed in spite of service of notice.

4. The point in issue has been directly dealt with and adjudicated upon by the Apex Court in J.M. Bhatia. AAC Vs . J.M. Shah, : [1985]156ITR474(SC) , wherein it was held that Section 35 had application. Following the ratio of the said decision, we answer the question in the affirmative, in favor of the revenue and against the assessee.

The reference applications are disposed of.