Retrospective amendment and rectification: disclosed jewellery became taxable, so correction of the assessment was upheld.

A disclosed jewellery asset that was never in dispute as jewellery became taxable after the retrospective amendment excluding jewellery from exemption under section 5(1)(viii) of the Wealth-tax Act, 1957. The High Court held that, on these facts, the assessment had suffered from escapement caused by a mistake apparent from the record, not a debatable issue on the nature of the asset. Rectification under section 35 was therefore valid, and the challenge to the addition failed.

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Issues: Whether the Wealth-tax Officer could validly rectify the assessment under section 35 of the Wealth-tax Act, 1957, in respect of jewellery value disclosed in the return after the retrospective amendment to section 5(1)(viii) by the Finance (No. 2) Act, 1971.

Analysis: The assessee had himself disclosed jewellery valued at Rs. 1,21,835 in the return, and its existence and character as jewellery were never in dispute between the parties. In view of the retrospective amendment excluding jewellery from exemption with effect from 1 April 1963, the amount had become assessable under the wealth-tax law. On those facts, the case was not one involving a debatable question or conflicting views on the nature of the asset, but one of escapement from assessment resulting from a mistake apparent from the record.

Conclusion: Rectification under section 35 was valid, and the challenge to the addition failed.

Ratio Decidendi: Where an asset already disclosed and accepted as jewellery becomes taxable by reason of a retrospective amendment, its inclusion in assessment is a mistake apparent from the record and is rectifiable under section 35 of the Wealth-tax Act, 1957.

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