TMI Blog1980 (1) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... lery was liable to be assessed. He took Rs. 69,705 as the value of the jewellery in each of these assessment years. The assessee appealed to the AAC and the contention before him was that the WTO should not have included in the total wealth the value of the various ornaments and pieces of jewellery amounting to Rs. 69,705 since the same would be exempt from taxation under s. 5(1)(viii) of the W.T. Act as held in CWT v. Mrs. Arundhati Balkrishna [1968] 70 ITR 203 (Guj). The AAC agreed with the assessee's contention and pointed out thus: " The details of the jewellery filed before me show that they are gold and diamond bangles, gold and diamond necklaces and chains, ear and nose screws, etc. These undoubtedly are articles intended for the personal use by the appellant, the appellant being a lady. In the circumstances, I would agree with the appellant's claim that the total value of the jewellery would require to be excluded from the total wealth. " On 24th December, 1979, the AAC issued a notice under s. 35 of the W.T. Act proposing to restore the assessment. By the Finance (No. 2) Act, 1971, an amendment was made to s. 5(1)(viii). The provision, in so far as it is material, befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal and came to the conclusion that there was no rectifiable error. Against this order of the AAC refusing to rectify his earlier order dated April 30, 1970, the WTO filed appeals before the Tribunal. The Tribunal relying on two decisions, one of the Bombay High Court and the other of the Gujarat High Court to be noticed presently, came to the conclusion that the AAC rightly dropped the proposed action under s. 35 for both the years. The appeals of the department were dismissed. At the instance of the Commissioner, the question set out earlier has been referred to this court. Section 35 of the W.T. Act provides the power for rectification of any order passed among others by the AAC which contains any mistake apparent from the record. The question for our consideration is whether there was any mistake apparent from the record which could have been rectified by the AAC, but which he did not do. There can be no dispute about the fact that the amended provision has retrospective effect from April 1, 1963. Therefore, jewellery stood excluded from the exemption under s. 5(1)(viii) with effect from April 1, 1963. The assessment years under consideration are subsequent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istake. At page 147, the contention of the assessee has been set out in the following words: " The argument for the respondent is that the assessee had obtained right under the order passed by the Income-tax Officer to claim credit for the specified amount under section 18A(5) and the said right cannot be taken away by the retrospective operation of section 13 of the Amendment Act. The same argument is put in another form by contending that the finality of the order passed by the Income-tax Officer cannot be impaired by the retrospective operation of the relevant provision. " This contention was disposed of by their Lordships as follows (pp. 147, 148): " In our opinion, this argument does not really help the respondent's case because the order passed by the Income-tax Officer under section 18A(5) cannot be said to be final in the literal sense of the word. This order was and continued to be liable to be modified under section 35 of the Act. What the Income-tax Officer had purported to do in the present case is not to revise his order in the light of the retrospective amendment made by section 13 of the Amendment Act alone, but to exercise his power under section 35 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the assessee in respect of the jewellery and ornaments. The assessee filed a writ petition challenging the rectification order. The Bombay High Court held that it was a debatable point of law as to whether the amending provision applied to a completed assessment against which no further proceedings were pending at the date of enactment of the amending provision, as in the present case. As the applicability of the Amendment Act to the completed assessment was itself, according to the learned judges, a debatable point, it was held that there was no mistake apparent from the record, and that the AAC had no jurisdiction to rectify the original order dated June 26, 1970. In the course of the judgment, reference was made to the decision of the Supreme Court in M. K. Venkatachalam, ITO v. Bombay Dyeing and Manufacturing Co. Ltd. [1958] 34 ITR 143. This decision was sought to be distinguished by the learned counsel for the assessee by taking up the following submissions (p. 527 of 94 ITR): " (1) the said case does not dissent from the well-settled principle that a debatable point of law cannot be the subject of rectification since ex hypothesis, the error could not possibly be cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e construed as intending to affect even completed assessments..." (Underlined by us). The above disposes of the first proposition and part of the fourth proposition put forward by the learned counsel for the petitioner in that case. As far as the second proposition was concerned, the learned judge observed at pages 527 and 528 : His second comment in regard to that case is clearly correct, in so far as the said case cannot be considered to be an authority for the proposition that full retrospective effect must be given to all such deeming pro visions. As far as the third proposition is concerned, it is true that what the Supreme Court did in the said case was to construe a particular provision of a particular amending Act, but in so far as there is a great similarity in the language used in the Amending Act in the said case and in the present case in regard to the retrospective operation of the amending Provision, the said case does undoubtedly support Mr. Joshi's (learned counsel for the revenue) contention before us that such provisions must be held to affect even completed assessments." (Emphasis added). This case accepts that a retrospective amendment may affect a complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is Padmavati Jaikrishna v. CWT [1976] 105 ITR 115 (Guj). In that case, the assessee claimed exemption in respect of jewellery on the ground that they were articles intended for personal use falling within s. 5(1)(viii) of the W.T. Act before its amendment. The assessee filed a list along with her return where two categories of jewellery were broadly mentioned, one category dealing with ornaments studded with precious stones and the second category dealing with gold ornaments simpliciter. The WTO rejected her claim for exemption by his order dated 19th May, 1962. He held that the articles should not be treated as articles intended for personal use. The assessee appealed to the AAC who, following the decision of the Gujarat High Court in Arundhati Balkrishna's case [1968] 70 ITR 203, held that she was eligible for exemption. By the time the Tribunal was called upon to decide this question, the decision of the Gujarat High Court was confirmed by the decision of the Supreme Court in CWT, v. Arundhati Balkrishna [1968] 77 ITR 505. The Tribunal, therefore, confirmed, the order of the AAC. After the retrospective amendment by the Finance (No. 2) Act, 1971 of s. 5(1)(iii), the WTO made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting the reopening and rehearing of the appeal afresh, would be merely to pass consequential orders and directions. We do not think that it can be said by any stretch of imagination that when the Tribunal will decide what articles claimed by the assessee as jewellery are jewellery or not and what articles should be included in the net wealth of the assessee for purposes of the assessment year in question or subsequent years and what articles should be brought into the net wealth in assessment years after April 1, 1972, the Tribunal would be merely making consequential orders. The learned Advocate General was, therefore, perfectly justified when he urged that the question of extent of retrospectivity may assume importance from the incidental question of the meaning of the term 'jewellery' in debate and discussion. It may be that after scrutinising the relevant provisions of the Wealth-tax Act as amended from time to time and after hearing the arguments on both the sides, the Tribunal may accept and prefer one view or the other, but that decision of the Tribunal would be on the merits. The Tribunal is, therefore, not justified, as rightly contended by the learned Advocate General, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee was based on s. 5(1)(viii) which did not contain any exclusion of jewellery jewellery was separately provided for as an exempted item in another clause, namely, cl. (xv) of s. 5(1). The contention of the department before the Gujarat High Court was that what the assessee claimed was exemption in respect of the articles shown in the list furnished by the assessee, namely, jewellery and ornaments and, therefore, the only clause which could be applied was cl. (xv) of s. 5(1). The court held at page 220: " If an assessee is the owner of any jewellery and such jewellery cannot be described as an article intended for the personal use of the assessee, that jewellery must fall within clause (xv); and exemption to the extent of Rs. 25,000 only will apply in the case of such jewellery . But the question is whether if there are articles of ornaments or jewellery which can be described as articles intended for the personal use of the assessee, they will or will not fall within clause (viii)." In that case, the jewellery were held to be articles intended for personal use, and therefore, exempted and this decision was confirmed by the Supreme Court. Thus, the basis of the claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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