TMI Blog1979 (2) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessment years 1966-67 and 1967-68, exemption was sought in respect of jewellery of the value of Rs. 10,15,263. It is stated at the Bar that even in the assessment year 1965-66, the value of the jewellery was the same. The WTO declined to grant exemption as prayed for by the petitioner and he included the value of the jewellery while computing the total wealth assessable to wealth-tax. The petitioner agitated his claim for exemption in respect of the jewellery before the AAC, who also declined to grant exemption. Three appeals filed by the assessee before the AAC in respect of the three assessment orders in question, therefore, came to be rejected. The petitioner then filed three separate appeals before the Income-tax Appellate Tribunal. By the time, the appeals came up for hearing before the Tribunal, the Supreme Court had pronounced its decision in CWT v. Arundhati Balkrishna [1970] 77 ITR 505, in which the Supreme Court had taken the view that the jewellery intended for the personal use of the assessee came within the scope of s. 5(1)(viii) of the W.T. Act, and that the value of all the jewellery of the assessee intended for personal use stood excluded under s. 5(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lating to giving effect to the directions of the Tribunal, it was disclosed to the petitioner's representative that the WTO intended to take into account the retrospective amendment in s. 5(1)(viii) of the W.T. Act and the petitioner would, therefore, not be entitled to claim any exemption. The petitioner's representative failed to convince the WTO that he was not entitled to take into consideration the retrospective amendment made in s. 5(1)(viii). Later, the petitioner through her chartered accountant also informed the WTO in writing that his proposed action was illegal and without jurisdiction. Since the petitioner did not hear anything from the WTO in reply to the letter from her chartered accountant, the petitioner has approached this court under art. 226 of the Constitution of India seeking a direction that the WTO should give effect to the directions given by the Appellate Tribunal and thus work out the exemption claimed by the assessee. The petitioner's case in this petition is that the amendment made by Act No. 32 of 1971 did not apply to the case of the petitioner whose assessment had become final. Alternatively, it was contended in the petition that if the amendment m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5(1)(viii) of the W.T. Act. Reliance is placed by Mr. Mehta on a decision of this court in J. M. Shah v. J. M. Bhatia, AAC of Wealth-tax [1974] 94 ITR 519 (Bom), in support of the proposition that where an assessment has been completed, the WTO could not give effect to the retrospective amendment made by Act No. 32 of 1971 in cl. (viii) of s. 5(1) of the W.T. Act. Now, it cannot be disputed that where a Tribunal has given certain directions to the WTO, the WTO while giving effect to the findings or the directions made by the Tribunal cannot ignore those directions and the scope of the proceedings before the WTO will be controlled and regulated by the directions on which he has to act. The present case, however, is not a case of a mere application of this principle. We have no doubt in this case that a direction was given by the Tribunal which requires the WTO to go into the matter as to which are the articles which are intended for the personal or household use of the assessee. There is also no doubt that the Tribunal has, following the decision of the Supreme Court in Arundhati's case [1970] 77 ITR 505, held that the petitioner will be entitled to the exemption in respect of pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich were pending before the WTO at the time when the WTO decided to take notice of the amended provisions of s. 5(1)(viii) of the W.T. Act. When the Tribunal directed the WTO to ascertain which of the articles were intended for personal or household use of the assesee, it pre-supposed that the WTO had jurisdiction to grant exemption in respect of the jewellery. It is difficult to conceive how the WTO could have given effect to the directions of the Tribunal, if the assessment was closed and completed and had become final as contended for the assessee. It was obviously to overcome this difficulty that the argument in a slightly modified form was put before us that the assessment was final subject to giving effect to the directions given by the Tribunal. When the WTO is required to give effect to the findings or directions given by the AAC or the Tribunal, there is no time-limit prescribed under the provisions of the W.T. Act. Indeed, express provision is made in s. 17(2) of the W.T. Act that the time limit prescribed in s. 17(1) for reopening the assessment where net wealth has escaped assessment will not apply in such a case. Sub-s. (2) of s. 17 reads as follows : " 17. (2) No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f s. 5(1)(viii), which according to Parliament was deemed to be on the statute book from 1st April, 1963. It is difficult to see how he could have ignored the provisions which factually must be deemed to exist on every day after 1st April, 1963. The net result of the retrospective amendment is that the provision on the basis of which the petitioner had claimed exemption did not exist at all. The original provision must be taken as non-existent, and if any direction requiring the WTO to give effect to such a non-existent provision is given, it would clearly be ignoring the legislative intent and would be contrary to the principles governing the construction of retrospective legislation. Indeed, there was no other provision to which the WTO could turn for ascertaining whether the petitioner was entitled to any exemption. It is in this context that it was vehemently urged before us that the scope of the proceedings before the WTO would be restricted by the order of the Tribunal. As already pointed out, this position could not originally have been disputed, but then Parliament had intervened. A new provision has been made, the effect of which is, in substance, that the order of the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year 1969-70, the assessee was assessed to wealth-tax on the total wealth of Rs. 6,07,690 including jewellery and ornaments of the value of Rs. 4,12,942 by an assessment order dated 11th February, 1970. An appeal was preferred against that order by the assessee. Before the AAC of wealth-tax, it was contended that jewellery and ornaments intended for the personal use of the petitioner were exempt from wealth-tax by reason of the provisions of s. 5(1)(viii) of the Act, relying upon Arundhati's case [1970] 77 ITR 505 decided by the Supreme Court. In view of that decision, the AAC by an order dated 26th June, 1970, allowed the appeal of the assessee and excluded from the net wealth of the assessee, jewellery and ornaments of the value of Rs. 4,15,942. No further appeal was taken against that decision either by the assessee or by the department, and the order of the AAC had become final after the period provided for the appeal had expired. When the retrospective amendment brought in by Act No. 32 of 1971 was made, the AAC served a notice on 3rd February, 1972, to the effect that he proposed to rectify the wealth-tax assessment of the petitioner in respect of the jewellery and orna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on a point which arose in those cases, and directly arose in the case before him. The learned judge then observed that he was not called upon to express any opinion as to which of those views was correct. The learned judge then proceeded to observe ( [1974] 94 ITR 519, 533) : " Suffice it to say, that I am not prepared to hold that a view contrary to that which the revenue authorities have taken in the present case is unarguable, as Mr. Joshi (counsel for the revenue) would have us to hold. In my opinion, it is a debatable point of law as to whether the amending provision applies to a completed assessment against which no further proceedings were pending at the date of enactment of the amending provision in the case before us. Following the view taken in Volkart Brothers' case [1971] 82 ITR 50 (SC), already cited above, I must, therefore, hold that the Appellate Assistant Commissioner had no jurisdiction to rectify his original order dated the 26th of June 1970." In a separate but concurring judgment, my learned brother, Desai J., has observed as follows : " After a perusal of all these cases, it is impossible to hold that the submissions made by Mr. Palkhivala are unarguab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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