COMMISSIONER OF WEALTH-TAX Vs. SHEELA DEVI GOEL

JUDGEMENT

(1.) This reference under Section 27(3) of the W.T. Act, 1957, hereafter referred to as " the Act" relates to the assessment years 1964-65 to 1969-70. The respondent-assessee, an individual, was, inter alia, assessed to wealth-tax on the value of the jewellery amounting to Rs. 60,000, Rs. 62,000, Rs. 64,000, Rs. 66,000 and Rs. 70,000 for the aforesaid years, respectively, by the WTO, after repelling her; contention that the jewellery was not liable to tax since the jewellery being for her personal use was exempt under Section 5(1)(viii) of the Act. The AAC, on appeals against those orders, following the decision of the Supreme Court in CWT v. Arundhati Balkrishna [1970] 77 ITR 505, accepted the assessee's contention and directed the exclusion of the aforesaid value of jewellery.

(2.) By Section 32 of the Finance (No. 2) Act, 1971, Section 5(1)(viii) of the Act was amended with retrospective effect from April 1, 1963, and the words "but not including jewellery" were inserted as a result of which jewellery was taken out of the exempted category of wealth, The aforesaid amendment further inserted at the end of Section 5(1)(viii) two provisos and two Explanations giving an enlarged meaning to the word "jewellery". These insertions were to have effect from April 1, 1972. The WTO, in view of this amendment, made an application under Section 35 of the Act before the AAC for a rectification of the appellate order made in the appeals for the aforesaid years. It was stated in that application that the exemption allowed in respect of jewellery in view of the aforesaid amendment was a mistake apparent from the record and hence should be rectified. The AAC rejected that application and, being aggrieved, the revenue preferred appeals before the Appellate Tribunal. The Tribunal by a consolidated order dated 28th June, 1976, dismissed those appeals and hence at the instance of the Commissioner of Wealth-tax and in compliance with the direction issued by this court, the following question of law has been referred for our opinion:

(3.) It was submitted before us on behalf of the department by Sri Ashok Gupta, advocate, that the Appellate Tribunal erred in holding that the mistake occasioned as a result of the amendments made by the Legislature in th" relevant provisions of the Act did not amount to a mistake apparent from the record and that the amending provision involved a debatable question. In our opinion, there is considerable substance in this submission. It would be seen that the amendment made in Section 5(1)(viii) by inserting the words " but not including jewellery " and thereby taking out the jewellery from the exempted category of wealth is to have retrospective effect from April 1, 1963. The provisos and Explanations added to this clause by the aforesaid amendment give an enlarged meaning to the word "jewellery" but these insertions were given prospective effect, i. e., they were to come into effect from April 1, 1972. Relying on the decision of the Bombay High Court in the case of J.M. Shah v. J.M. Bhatia [1974] 94 ITR 519, the Appellate Tribunal took the view that the applicability of the amending provision to a completed assessment is a debatable point and, as such, it could not be said that there was a mistake apparent from the record which could be rectified under Section 35 of the Act. The view taken by the Bombay High Court in the case of J.M. Shah [1974] 94 ITR 519 appears to us to run counter to the view taken by the Supreme Court on this question. In J.M. Shah's case [1974] 94 ITR 519 (Bom) in the wealth-tax assessment of the petitioner-assessee for the assessment year 1969-70, the AAC by his order dated June 26, 1970, excluded from the assessment of the wealth of the assessee a sum of Rs. 4,15,942 being the value of jewellery and ornaments, on the ground that they were intended for the personal use of the assessee within the meaning of the then existing provision of Section 5(1)(viii) of the Act. After the amendments made in the aforesaid provision by the Finance (No. 2) Act, 1971, the AAC passed an order of rectification under Section 35 of the Act on February 22, 1972, withdrawing the exemption granted to the assessee in respect of jewellery and ornaments and including the value thereof in the net wealth of the assessee. The assessee filed a writ petition challenging the rectification order and on behalf of the assessee two submissions were made before the Bombay High Court : firstly, that since the original assessment when made, was in accordance with law, there was no error apparent on the face of the record which the AAC could rectify and, secondly, that the question as to whether the Amending Act applies to assessments which were already completed was, in any event, a debatable question. In regard to the first question it was almost conceded that the matter was concluded by the decision of the Supreme Court in the case of M.K. Venkatachalam v. Bombay Dyeing and Manufacturing Co. Ltd. [1958] 34 ITR 143 and no further argument was advanced. The second contention was pressed on behalf of the assessee and an attempt was made to distinguish the case of Bombay Dyeing Company and the High Court accepted the contention and held that the question as to whether a completed assessment was intended to be affected by the amendment in question was a debatable one and hence the power of rectification under Section 35 could not be invoked. We, however, find that on a reading of the decision in Bombay Dyeing Company [1958] 34 ITR 143 (SC) the controversy considered in J.M. Shah's case [1974] 94 ITR 519 (Bom) does stand resolved.