Decided on February 12,1982



S.S. Mehra, Judicial Member - (1.) THE appellant-assessee by these four appeals challenges the consolidated appellate order dated 26-2-1981 of Shri P.N. Pathak, the learned AAC, for the assessment years 1971-72, 1972-73, 1973-74 and 1974-75, inter alia, on the following identical grounds: 1. That the learned AAC erred in confirming the disallowance of tax liabilities of Rs. 30,043 which were ascertained liabilities after completion of assessment as permissible under Section 2(m) of the Wealth-tax Act, 1957 ("the Act").
(2.) That the learned AAC erred in observing that because the returns were filed after relative valuation date pertaining to the assessment year 1971-72, the tax liabilities though finally quantified cannot be claimed as deduction. He erred in holding that such income-tax liabilities accrued and arose much beyond the valuation date. In fact, the time of accrual was earlier than the valuation date but the same was quantified at later date. That the learned AAC ought to have applied the decision of their Lordships of the Gujarat High Court in the cases of CWT v. Kantilal Manilal [1973] 88 ITR 125 and CWT v. Jayantilal Amratlal [1976] 102 ITR 105. He ought to have considered that the process of assessment is a process of quantification of tax liabilities and tax so finally determined, though much after the valuation date, is legally allowable as debt owed within the meaning of Section 2(m) of the Act. 2. All the four appeals are against a consolidated order. The parties, facts and circumstances and the issue involved are common. For the sake of convenience, therefore, we propose to dispose of all the four appeals by this single order. 3. The appellant-assessee is a resident individual/citizen of India and the assessment years involved are 1971-72 to 1974-75. The relevant valuation dates are 31-12-1970, 31-12-1971, 31-12-1972 and 31-12-1973, respectively. A perusal of the assessment orders dated 24-2-1978 shows that the returns of wealth were filed on 23-6-1978. The learned WTO, Shri G.W. Sane, disallowed the assessee's claim in respect of tax liabilities observing that the amounts claimed are not admissible in view of the provisions of Section 2(m)(iii)(a) and (b), and further that the liability claimed was not an ascertained liability on the valuation dates. The deductions claimed appear to pertain to the income-tax liabilities as per the details given below : JUDGEMENT_5669_TLIT0_19820.htm The appellant's claim in the different wealth-tax assessment years is as below : JUDGEMENT_5669_TLIT0_19821.htm The total claim appears to be to the tune of Rs. 3,05,011 with respect to all the years. Since the assessee's claim was negatived during all the years under consideration, the assessment orders, referred to above, were thereafter challenged by the assessee. Shri P.O. Nagar, the learned counsel on behalf of the assessee, argued the case before the learned AAC on the basis of the ratio in the case of V.C. Handi v. WTO [1980] 122 ITR 506 (Kar.), in the case of Kesoram Industries & Cotton Mills Ltd. v. CUT [1966] 59 ITR 767 (SC) and finally in the case of Moti Lal Padampat Sugar Mills Co. (P.) Ltd. v. CWT [1970] 77 ITR 583 (All.). The learned AAC confirmed the assessment orders with the following observations : in the case of the appellant, the relevant income-tax returns were filed for the assessment years 1970-71 to 1972-73 on 24-2-1975, for 1973-74 on 5-1-1976 and for 1974-75 on 30-3-1977. In this context it would be relevant to mention that in the income-tax assessment order dated 1-3-1976 for the assessment year 1973-74, it is clearly stated that the return was filed by the assessee on 5-1-1976 and he claimed to have filed original return on 12-6-1973 vide acknowledgement No. 1385, but it was found that on said date, i.e., 12-6-1973, some other Dak was filed by some other person, which is evident from the income-tax receipt register and, therefore, the ITO concluded that the return for the assessment year 1973-74 is filed on 5-1-1976. Similarly, for the assessment year 1974-75, the ITO in his order dated 30-3-1977 has said that the return was received on 30-3-1977 and no verification of the assessee's claim of the original filed on 27-7-1974 could be made. Thus, according to the appellant himself, these income-tax liabilities accrued and arose much beyond the valuation date.
(3.) THE learned AAC as well conceded that provisions were also not made by the assessee during the relevant accounting periods and, therefore, the learned WTO was justified in rejecting the assessee's submissions.;

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