1986 (1) TMI 157 - AT - Wealth-tax

Summary

Issues:
Rectification of assessment orders under section 35 of the Wealth Tax Act for the assessment years 1974-75 and 1975-76 based on a High Court judgment in favor of the assessee for the assessment year 1976-77.

Analysis:

1. The appeals were filed by the assessee against the order of the Appellate Assistant Commissioner (AAC) related to the assessment years 1974-75 and 1975-76. The Wealth Tax Officer (WTO) had withdrawn the refund earlier allowed for these two years under section 35 of the Wealth Tax Act. The net wealth for both years included agricultural lands within urban areas, and additional wealth tax was levied on these urban lands. No appeals were filed against the original assessment orders.

2. For the assessment year 1976-77, the AAC allowed the appeal by the assessee, stating that agricultural lands were business assets and no additional wealth tax could be levied. The Tribunal upheld this decision, leading to the deletion of additional wealth tax for the years 1974-75 and 1975-76. Refunds were issued to the assessee based on this order.

3. Subsequently, the WTO sought to rectify the orders for the years 1974-75 and 1975-76, stating that the refunds were wrongly allowed based on the Tribunal's order for 1976-77. The WTO invoked section 35, claiming it was a mistake apparent from the record. The AAC upheld the WTO's decision to withdraw the refunds for both years.

4. The Revenue had gone in reference before the Punjab and Haryana High Court for the assessment year 1976-77, which ruled in favor of the assessee. The question arose whether the High Court's decision for 1976-77 could impact the rectification of assessments for other years under section 35.

5. The assessee's counsel argued that since the High Court had already decided in favor of the assessee for 1976-77, there was no debate, and rectification orders by the WTO were unwarranted. The departmental representative supported the authorities' decisions, claiming no application for rectification was made initially.

6. The Tribunal analyzed the submissions and referred to the decision of the Punjab and Haryana High Court in a similar case, stating that IT authorities were bound by the High Court's decisions within their jurisdiction. The High Court's ruling for 1976-77 regarding agricultural lands as business assets applied to the earlier years as well. The Tribunal concluded that the orders of the authorities below were incorrect, and the refunds should be allowed to the assessee.

7. Consequently, the Tribunal allowed both appeals, reinstating the orders of the WTO allowing refunds to the assessee for the assessment years 1974-75 and 1975-76.