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Section 35 of the wealth-tax act, 1957-rectification of mistakes-apparent from record -assessee, an individual, was partner in a firm-in assessment of firm ito disallowed firm's claim for allowance of certain bad debt, but in wealth-tax assessment of assessee, wto failed to include proportionate amount of bad debt disallowed-whether, non-inclusion of such amount of bad debt in assessee's wealth was an error rectifiable under section 35-held, yes. Facts The assessee was a partner in a firm having one-third share therein. In the assessment of the firm the ITO disallowed the firm's claim for allowance of a certain bad debt but in the assessment of the assessee under the Wealth-tax Act the WTO failed to include one-third share of the bad debt in his net wealth. Subsequently the WTO, acting under section 35, included one-third share of the bad debt in the assessee's net wealth. On appeal, the AAC and, on second appeal, the Tribunal upheld the order of the WTO. On reference : Held Under section 4(1)(b) of the Wealth-tax Act, 1957, where the assessee is a partner in a firm, the value of his interest in the firm shall be included in his net wealth. Again rule 2C of the Wealth-tax Rules, 1957, provides that the value of an asset not disclosed in the balance sheet shall be taken to be, in the case of a debt due to the assessee, the amount due to the assessee, and if any debt has been allowed as a deduction under section 36(1)(vii) of the Income-tax Act, 1961, the amount of debt as reduced by the deduction, is required to be allowed in computing the net wealth of the assessee. in the instant case, although the bad debt had been claimed by the firm, it was not allowed by the ITO. It would mean that it was a debt which the firm had a subsisting right to recover. Quite naturally, proportionate amount of the debt must be included in computing the value of the assets of the assessee. Non-inclusion of the proportionate share of the assessee in computing the net wealth was a patent error which could certainly be rectified under section 35. IT REFERENCE CASE NO. 34 OF 1978. S.G. Shivaram for the Applicant. G. Sarangan and H. Raghavendra Rao for the Respondent. ORDER SHETTY, J. -…

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