1982 (12) TMI 77 - AT - Wealth-tax

Summary

Issues Involved:
1. Whether the non-consideration of the Tribunal's order in the quantum appeals constitutes a mistake apparent from the record under section 35(1)(e) of the Wealth-tax Act, 1957.
2. Whether the Tribunal's order dated 16-11-1981 deserves to be altered in light of the above consideration.

Detailed Analysis:

1. Whether the non-consideration of the Tribunal's order in the quantum appeals constitutes a mistake apparent from the record under section 35(1)(e) of the Wealth-tax Act, 1957:
The assessee filed a miscellaneous application under section 254(2) of the Income-tax Act, 1961, seeking rectification of the Tribunal's order dated 16-11-1981, which upheld penalties under section 18(1)(c) of the Wealth-tax Act, 1957, for the assessment years 1973-74 to 1975-76. The assessee claimed that certain facts and submissions were not considered, and the Tribunal's quantum appeals order, which favored the assessee, was ignored.

The Tribunal initially rejected the assessee's contention that the facts recorded in para 5 of the Tribunal's order were incorrect, emphasizing that these facts were based on submissions by the departmental representative and the paper book filed by both parties. However, the Tribunal found merit in the contention that the Tribunal's quantum appeals order dated 17-7-1978 for the assessment years 1972-73 to 1974-75, which was material to the penalty determination, was not considered. This omission was deemed a mistake apparent from the record.

The Tribunal's quantum appeals order had held that the debts outstanding were not for more than 12 months and thus deductible, meaning the assessee had no wealth to the extent of the liabilities outstanding. This finding was crucial for determining whether penalties under section 18(1)(c) were warranted. The Tribunal concluded that the non-consideration of this order constituted a mistake apparent from the record, necessitating rectification under section 35(1)(e) of the Wealth-tax Act.

2. Whether the Tribunal's order dated 16-11-1981 deserves to be altered in light of the above consideration:
The Tribunal's order dated 16-11-1981, which upheld the penalties, was based on the assumption that the assessee had concealed wealth. However, the Tribunal's quantum appeals order clarified that the liabilities were deductible, significantly affecting the net wealth computation. The Tribunal acknowledged that the order in the quantum appeals was essential material that should have been considered when determining the penalties.

The Tribunal found that the assessee's wealth had depleted due to liabilities arising from a settlement with the Commissioner, and the assessee had not concealed any wealth during the relevant years. The Tribunal also noted that for the assessment years 1974-75 and 1975-76, the wealth assessed was negative, and for 1973-74, the net wealth was minimal after considering liabilities. Consequently, the Tribunal concluded that no penalties were exigible for any of the three assessment years.

The Tribunal's detailed analysis, considering the quantum appeals order and other relevant facts, led to the conclusion that the earlier order dated 16-11-1981 should be rectified. The Tribunal substituted paragraphs 9 to 12 of its original order with new findings, stating that the assessee had not concealed wealth and that the penalties under section 18(1)(c) were not warranted.

Conclusion:
The Tribunal rectified its earlier order, acknowledging that the non-consideration of the quantum appeals order constituted a mistake apparent from the record. The revised order concluded that the assessee had not concealed wealth, and the penalties under section 18(1)(c) were not justified for the assessment years 1973-74 to 1975-76. The miscellaneous application was partly allowed, and the penalties were canceled.