1994 (10) TMI 123 - AT - Wealth-tax

Assessing Officer High Court Income Tax Mistake Apparent From Record Set On Supreme Court Tax Liability Wealth Tax Act

Summary

Issues:
1. Deduction under section 2(m) of the Wealth-tax Act on account of liability of income-tax under Voluntary Disclosure Scheme of 1977.
2. Refusal of deduction by Assessing Officer based on Gujarat High Court decision.
3. Petitions filed under section 35 of the Wealth-tax Act.
4. Reversal of Gujarat High Court decision by Supreme Court in 1981.
5. Delay in processing petitions by Assessing Officer.
6. Order passed by W.T.O rejecting rectification application.
7. Dy. CWT (Appeals) decision in favor of assessees.
8. Departmental appeal challenging Dy. CWT (Appeals) decision.

Analysis:
1. The appeals involved different assessees claiming deduction under section 2(m) of the Wealth-tax Act due to income-tax liability under the Voluntary Disclosure Scheme of 1977. The Assessing Officer initially denied the deduction citing a Gujarat High Court decision. The assessees filed petitions under section 35 of the Wealth-tax Act, highlighting an unreported decision of the I.T.A.T. and the subsequent Supreme Court reversal of the Gujarat High Court decision in 1981.

2. The Departmental Representative argued that the Assessing Officer's decision was based on the available legal position at that time, with conflicting judgments on the issue. The representative relied on the principle that rectification should not be granted if there is no apparent mistake from the record. The assessees' counsel contended that the Assessing Officer should have followed a circular allowing rectification based on later Supreme Court decisions, emphasizing the binding nature of Supreme Court decisions on all courts in India.

3. The Tribunal held that the Departmental appeals should be dismissed. It emphasized that decisions of the Supreme Court become the law of the land and must be followed. The Tribunal highlighted the significance of Supreme Court decisions in settling legal interpretations and the binding nature of such decisions on all courts within India. The Tribunal also referenced a Circular directing authorities to act on rectification applications based on later Supreme Court decisions, emphasizing the obligation to follow such directives.

4. The Tribunal concluded that the Assessing Officer was obligated to allow the assessees' petitions under section 35 of the Wealth-tax Act based on the Supreme Court decision and the Board's circular. It noted that the Assessing Officer's delay in addressing the petitions did not absolve the obligation to rectify based on the updated legal position. The Tribunal held that the Department was not justified in rejecting the assessees' claims post the Supreme Court decision, especially when a circular mandated adherence to updated legal interpretations.

5. Ultimately, the Tribunal dismissed the departmental appeals, affirming the Dy. CWT (Appeals) decision in favor of the assessees. The Tribunal underscored the importance of following Supreme Court decisions and circulars issued by the Board, emphasizing the binding nature of such directives on income-tax authorities.