N.N. Mathur, J. - (1.) THESE three reference applications under Section 27(3) of the Wealth-tax Act, 1957, hereinafter referred to as "the Act of 1957", which pertain to the assessment years 1987-88, 1981-82 and 1984-85 have been filed at the instance of the Revenue seeking mandamus to the Tribunal for drawing up the statement of case and refer the following question of law, for the opinion of this court : "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally justified in allowing the claim of the tax liabilities of earlier years under Section 2(m) of the Wealth-tax Act, 1957, when though the assessee was not disputing the liability, the same was not paid within the statutory period ?"
(2.) THE assessee is an individual. THE Assistant Commissioner of Wealth-tax "A" Circle, Udaipur, estimated the value of the jewellery for the various years, as follows ; JUDGEMENT_447_ITR252_2001Html1.htm The above estimate was made in view of the rise in price of gold as compared to preceding years. The Assessing Officer rejected the claims of the assessee for deduction of tax liabilities of earlier years as per the provisions of Section 2(m) of the Act of 1957. The assessee preferred separate appeals to the Commissioner of Wealth-tax (Appeals). The Appellate Commissioner, impressed by the undisputed fact that a substantial portion of the estate of the deceased, in the form of gold ornaments and jewellery is lying seized with the Department and the fact that the assessee without disputing the liability, requested several times to adjust liabilities, observed that the assessee could not be punished for the fault of the Department. Accordingly, the Commissioner of Wealth-tax (Appeals) directed the Assessing Officer to allow the tax liability of the earlier period to the extent of assets lying seized with the department. The Department preferred separate appeals to the Tribunal. By a common order, the Tribunal rejected the appeals. The Tribunal also rejected the application under Section 27(2) of the Act for reference to this court. Mr. Bhandawat, learned counsel appearing for the Revenue, submitted that the assets were seized during the course of search as undisclosed assets, accordingly the assessee cannot derive any benefit on account of seized jewellery even if the same is not adjusted against the tax liability of the Department. It is further submitted that when the assessee has not paid the liabilities so determined within the statutory period, the same should not have been allowed as deduction while computing the net wealth. On the other hand, Mr. Sanjeev Johari, learned counsel for the assessee, has supported the order of the Tribunal and the Commissioner of Wealth-tax (Appeals). We have considered the rival contentions. Section 2(m) of the Act defines "net wealth", which reads as follows : "(m) 'net wealth' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than- (i) debts which under Section 6 are not to be taken into account; (ii) debts which are secured on, or which have been incurred in relation to, any property in respect of which wealth-tax is not chargeable under this Act ; (Hi) the amount of the tax, penalty or interest payable in consequence of any order passed under or in pursuance of this Act or any law relating to taxation of income or profits, or the Estate Duty Act, 1953 (34 of 1953), the Expenditure tax Act, 1957 (29 of 1957), or the Gift-tax Act, 1958 (18 of 1958),-- (a) which is outstanding on the valuation date and is claimed by the assessee in appeal, revision or other proceeding as not being payable by him ; or (b) which, although not claimed by the assessee as not being payable by him, is nevertheless outstanding for a period of more than twelve months on the valuation date ; Explanation 1.--A building or part thereof referred to in Clause (iii), Clause (iiia) or Clause (iiib) of Section 27 of the Income-tax Act shall be includible in the net wealth of the person who is deemed under the said clause to be the owner of that building or part thereof ; Explanation 2.--Where a debt falling under sub-clause (ii) is secured on, or has been incurred in relation to, any asset which is not to be included wholly or partly in the net wealth by virtue of the provisions of Sub-section (1A) of Section 5, the amount of such debt shall, for the purposes of the said sub-clause, be limited to the value of the said asset which is not includible in the net wealth under Sub-section (1A) of Section 5 ;" The provision nowhere says that only those debts will be allowable which are paid by the assessee. The debt as standing on the valuation date has to be adjusted against the gross wealth and accordingly the net wealth is required to be determined. That an income-tax liability is a debt within the meaning of Section 2(m) of the Act is settled by a series of decisions of the apex court beginning from Kesoram Industries and Cotton Mills Ltd. v. CWT [1966] 59 ITR 767 and R.K. Deo v. CWT [1992] 196 ITR 128. In the instant case, on account of death of the assessee, the assessment has been made in the hands of the legal heir. The liability of the legal heir has to be restricted to the assets inherited and whatever movable assets were inherited and lying in the custody of the Department. The assessee cannot be held responsible for delay in making the payment for more than one year, particularly when the legal heir-assessee without disputing the liability, repeatedly requested the Department to adjust the liabilities out of the seized assets. Since the Tribunal has decided the appeal following the decision of the apex court referred to above, no further referable question of law remains to be answered by this court. The Tribunal rightly declined to refer the question posed for the opinion of this court.
(3.) CONSEQUENTLY, these applications under Section 27(3) of the Act of 1957 are rejected.;