1970 (8) TMI 29 - HC - Wealth-tax

Summary

Issues Involved:
1. Refusal to rectify orders of assessment under section 35 of the Wealth-tax Act, 1957.
2. Whether the amount claimed as provision for taxation constitutes a "debt owed" under section 2(m) of the Wealth-tax Act, 1957.
3. Whether there was an error of law apparent on the face of the record.
4. Whether the High Court should exercise its discretion under Article 226 of the Constitution.

Issue-Wise Detailed Analysis:

1. Refusal to rectify orders of assessment under section 35 of the Wealth-tax Act, 1957:
The petitioner challenged the refusal of the revenue authorities to rectify the wealth-tax assessment orders for the years 1957-58, 1958-59, and 1959-60. The petitioner argued that there was an error apparent on the face of the record as the amounts claimed for provision for taxation were wrongly disallowed. The Wealth-tax Officer rejected the rectification applications, and the Commissioner of Wealth-tax dismissed the revision applications on the same grounds.

2. Whether the amount claimed as provision for taxation constitutes a "debt owed" under section 2(m) of the Wealth-tax Act, 1957:
The petitioner contended that the provision for taxation was a "debt owed" and deductible in computing net wealth. This position was affirmed by the Gujarat High Court in the case of Commissioner of Wealth-tax v. Raipur Manufacturing Co. Ltd. and the Supreme Court in Kesoram Industries and Cotton Mills Ltd. v. Commissioner of Wealth-tax. The revenue did not contest this position due to the Supreme Court's decision.

3. Whether there was an error of law apparent on the face of the record:
The court noted that a writ of certiorari can be issued where an inferior tribunal's order suffers from an error of law apparent on the face of the record. The assessment orders disallowing the provision for taxation were found to be based on a wrong interpretation of the law, which was clarified by subsequent judicial pronouncements. The court held that these orders disclosed a mistake apparent from the record and were liable to be rectified under section 35 of the Act.

4. Whether the High Court should exercise its discretion under Article 226 of the Constitution:
The revenue argued that the court should not interfere as the petitioner did not adopt the statutory remedy of an appeal. However, the court held that the assessment orders did not become final in the literal sense and were subject to rectification if they disclosed a mistake apparent from the record. The court found that the petitioner's applications for rectification were wrongly denied, and there was a patent error of law on the face of the record. Hence, the court decided to exercise its discretion in favor of the petitioner.

Conclusion:
The petition succeeded, and the rule was made absolute. The court issued a writ of certiorari quashing the impugned orders and directed the Wealth-tax Officer to pass appropriate orders on the rectification applications in accordance with the law and the observations made in the judgment. The respondents were ordered to pay the costs of the petition to the petitioner.