COMMISSIONER OF WEALTH TAX Vs. RAJ PAUL CHAWLA

JUDGEMENT

(1.) The Income Tax Appellate Tribunal, Delhi, has referred the following question for decision of this court under Section 27(1) of the Wealth-tax Act, 1957 :

(2.) The assessse in question, Shri Raj Paul Chawla, was a partner in the firm, M/s. Diwan Chand Chawla & Co., and the assessment years in question are the years 1960-61, 1961-62 and 1962-63. No return had been filed by the assessed originally, but subsequently he made a voluntary disclosure under Section jS8 of the Finance Act, 1965 , showing Rs. 87,000 as his undisclosed income; on that basis he became liable to pay tax amounting to Rs. 52,200 some time after March, 1965. After the settlement of the Income Tax, liability, proceedings regarding the wealth-tax were taken up and for the three years in question returns showing net wealth of Rs. 1,66,695, Rs. 1,63,230 and Rs, 1,92,442 were submitted. These figures were calculated after including the sum of Rs. 87,000 and deducting there from the tax liability of Rs. 52,200. The WTO added back the tax liability for each of the years on the ground that this amount was not to be deducted.

(3.) On appeal to the AAC, the assessed succeeded in getting the deduction claimed by him. The department then appealed to the Tribunal on the footing that the tax liability did not exist on the valuation date for each of the three assessment years and only arose after the assessed had exercised his option to make a voluntary disclosure under the Finance Act of 1965. It was contended that the liability to pay tax under Section 68 of the Finance Act was independent of the original tax liability. It was further the case of the department that Section 68 of the Finance Act, 1965 , superseded the pro visions of the Income Tax Act and hence the assessed could not claim any deduction on account of Income Tax liability as that liability had been replaced by a different kind of tax liability. The Tribunal, however, upheld the order of the Appellate Assistant Commissioner and dismissed the appeals.