1979 (2) TMI 82 - HC - Wealth-tax

Summary

Issues Involved:
1. Jurisdiction of the WTO to ignore Tribunal's directions.
2. Effect of retrospective amendment introduced by Act No. 32 of 1971.
3. Finality of assessment orders and applicability of retrospective legislation.

Detailed Analysis:

1. Jurisdiction of the WTO to Ignore Tribunal's Directions:

The petitioner contended that the WTO did not have jurisdiction to ignore the directions given by the Tribunal and was bound to give effect to those directions. The Tribunal had directed the WTO to ascertain whether the jewellery in question was intended for personal or household use, following the Supreme Court's decision in *CWT v. Arundhati Balkrishna* [1970] 77 ITR 505. The Tribunal's directions were based on the then-prevailing interpretation of s. 5(1)(viii) of the W.T. Act, which allowed for the exemption of jewellery intended for personal use.

However, the court observed that the principle that a WTO must follow the Tribunal's directions was not applicable in this case due to the subsequent legislative amendment. The retrospective amendment introduced by Act No. 32 of 1971 explicitly excluded jewellery from the exemption provided under s. 5(1)(viii). Thus, the WTO was bound to consider the amended provision, which had the effect of nullifying the Tribunal's directions.

2. Effect of Retrospective Amendment Introduced by Act No. 32 of 1971:

The retrospective amendment to s. 5(1)(viii) of the W.T. Act, introduced by Act No. 32 of 1971, stated that jewellery would not be included in the list of exempted assets, effective from April 1, 1963. This amendment was intended to override the Supreme Court's decision in *Arundhati Balkrishna*.

The court held that the WTO was obligated to apply the amended provision, which was deemed to have been in effect since April 1, 1963. The amendment effectively rendered the Tribunal's order, which was based on the pre-amended law, inoperative. The WTO could not ignore the legislative intent and had to apply the law as retrospectively amended.

3. Finality of Assessment Orders and Applicability of Retrospective Legislation:

The petitioner argued that the assessment had become final and the retrospective amendment could not affect it. The court clarified that the assessment was not final as the Tribunal had directed the WTO to conduct further factual inquiries. The assessment process was still open, and the WTO was required to give effect to the Tribunal's directions, subject to the amended law.

The court noted that s. 17(2) of the W.T. Act allowed for the reopening of assessments to give effect to orders from appellate authorities or the Tribunal, without any time limitation. Therefore, the WTO was within its jurisdiction to apply the retrospective amendment while giving effect to the Tribunal's directions.

The court distinguished this case from the decision in *J. M. Shah v. J. M. Bhatia, AAC of Wealth-tax* [1974] 94 ITR 519 (Bom), where it was held that completed assessments could not be reopened for rectification based on retrospective amendments. In the present case, the assessment was still pending, and the WTO was required to apply the amended law.

Conclusion:

The court concluded that the WTO was fully entitled to give effect to the amended provisions in s. 5(1)(viii) of the W.T. Act, despite the Tribunal's earlier directions. The retrospective amendment nullified the Tribunal's order, and the WTO was bound to apply the law as amended. Consequently, the petition was rejected with costs.