TaxTMI 
TaxTMI 
1984 (7) TMI 162
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.... regular assessment order was passed by the WTO for the assessment year 1981-82, which is the foundation for the latter appeal. 2. Now let us deal with the former of the appeals first. Originally, the assessment for 1980-81 was completed by the WTO on 29-11-1980, accepting the returned net wealth of the assessee at Rs. 4,20,700. Subsequently, the WTO found the following two mistakes which, according to him, are mistakes apparent from record : 1. Life insurance amount received on the death of Shri Ch. Somaraju (the assessee's father) was not included in the net wealth. 2. Excess deduction of estate duty payable on the death of Shri Ch. Somaraju was allowed to the assessee. Notice under section 35 was issued calling upon the objectio....
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....ate of accrual, which is crucial in the mercantile system of accountancy, should be ignored for the purpose of ascertaining the wealth of the assessee in a particular assessment year. To put it more clearly even though the accrual of the liability arose in a particular assessment year, the mere fact that the actual payment was received in an accounting year relevant to subsequent assessment year would take out the accrued income from the net wealth of the assessee for the former assessment year. The Andhra Pradesh High Court in CWT v. Pachigolla Narasimha Rao [1982] 134 ITR 640 held as follows : " Accrued interest is 'property' as defined in section 2(e) and is liable to be valued as an 'asset' for the purpose of computation of net wealt....
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....essee was Rs. 7,10,380. There is also no dispute that the father of the assessee bequeathed only an amount of Rs. 71,653 to the assessee under the terms of the will. Admittedly, the total estate duty liability was Rs. 1,33,879. The assessee claimed full deduction of Rs. 1,33,879 under section 2(m)(iii) of the Act. The WTO granted the exemption for the whole of the estate duty amount in his original assessment completed for the assessment year 1980-81. Subsequently, it was realised that it was a mistake and only a proportionate estate duty payable on Rs. 71,653 obtained by the assessee under the terms of the will only should be allowed, i.e., according to the department. An amount of Rs. 14,503 representing the estate duty payable over Rs. 7....
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.... It is argued by him that the assessee is, undoubtedly, an accountable person and he discharged the whole of the estate liability raised against the estate of his father. Therefore, according to the above provision, the 1953 Act contemplated certain occasions where one accountable person paying more than what is due from him and in such cases the Legislature empowered the person who overpaid to recover the excess from the co-legatees of the will. Even if this argument is to be accepted, the excess amount paid would have to be considered as a debt due to the assessee from other accountable persons and, therefore, it certainly does form part of the net wealth of the assessee as the debt due to the assessee is one of the assets in his hands.....
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.... to pay estate duty only on Rs. 71,653 received by him under the terms of the will towards estate duty. Therefore, in our opinion, the excess payment is not legally recoverable by the revenue from the assessee towards estate duty payable on the death of Ch. Somaraju, the assessee's father. Assuming, without admitting, that it is also payable by the assessee, the excess payment becomes the value of the debts due to the assessee from the co-legatees under the will. So, in either view of the matter, allowing Rs. 1,19,069 towards estate duty in the original assessment, in our opinion, forms a mistake apparent on record and we, therefore, hold that the lower authorities are quite correct in withdrawing that excess allowance by the orders passed ....