Late M.A.R. Rajkumar and Petitioner V. Income Tax Appellate Tribunal, Hyderabad Bench 'B'

WP/15938/2000

AI Insights

The case revolves around the inclusion of excess gold jewellery found during a search at the residence of late M.A.R. Rajkumar under the Wealth Tax Act, 1957. The petitioner, who became the 'Kartha' of the Joint Family after Rajkumar's death, challenged the inclusion of 9259.700 gms of gold as part of the family's wealth for the assessment years 1981-82 to 1989-90. The Income Tax Appellate Tribunal had previously included this gold in the wealth of the Rajkumar HUF, rejecting the petitioner's claims that the gold belonged to relatives and friends attending a wedding. The High Court had earlier directed the Tribunal to reconsider this issue, but the Tribunal's subsequent rejection of the petitioner's Miscellaneous Applications led to this writ petition.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 799616 (HC-HYDERABAD)
• Appeal Type: Others
• Pronouncement Date: 11-02-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961, Gold Control Act, 1968, Wealth Tax Act, 1957
• Result in Favour of: Others
• Court: HIGH COURT
• Keywords: Assessment years; Gold jewellery; Income tax appellate tribunal; Miscellaneous petition; Wealth Tax
• Section: 131; 27(1); 35; 27(3)

Judgement Text

"THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE M.S. RAMACHANDRA RAO W.P.No.15938 of 2000 Order : ( per Sri MSR, J ) This Writ Petition is filed challenging the order dated 17.2.2000 of the Income Tax Appellate Tribunal, Hyderabad Bench “B”, Hyderabad (for short “the tribunal”) dismissing Miscellaneous Petition Nos.43 to 51/Hyd/97 in WTA Nos.54 to 62/Hyd/93 filed by the petitioner and WTA Nos.82 to 90/Hyd/93 filed by the Revenue in respect of the assessment years 1981-82 to 1989-90. The petitioner is the son of late M.A.R. Rajkumar, ( for short “Rajkumar”) who died on 19.8.1993. The petitioner became the “Kartha” of the Joint Family of Rajkumar on his death. On 18.10.1975, a search was conducted under Section 131 of the Income Tax Act, 1961 in the premises owned by late Rajkumar. 15,599 gms of gold jewellery was found in the said premises. Rajkumar had already declared 8086 gms of gold under the Gold Control Act,1968 by filing appropriate returns. So 7513 gms of gold found was in excess. Rajkumar explained that this gold belonged to various relatives and friends who came to attend a wedding in the family which was to be celebrated on 19.10.1975 and that the items of gold ornaments did not belong to his family. He also filed returns within a period of 30 days on 15.11.1975 under the Gold Control Act,1968 and declared the excess gold as belonging to his relatives who came to his house to attend a marriage on 19.10.1975. On 21.11.1975, a declaration was also filed by him under the said Act before the M.O.R.-I, Central Excise Department. These gold ornaments were returned to their rightful owners in November 1976 after paying redemption fee of Rs.30,000/-. On 1.12.1976, another declaration was filed before the said authority stating that the gold was returned. The assessing officer under the Wealth Tax Act,1957 was appraised of these facts while completing the assessment of Rajkumar for the assessment year 1976-77 on 31.3.1980 and he completed the assessment after going through all the materials. He held that the excess gold of only 906.700 gms (only it’s value) is liable to be included in the wealth of the petitioner and completed the assessment. Likewise, assessments were completed for the assessment years 1977-78 and 1978-79 including the value of excess gold of 906.700 gms. But from the assessment year 1979-80, the assessing officer started including the entire value of gold of 9259.700 gms as if it is the wealth of the Rajkumar (HUF). Aggrieved thereby, the petitioner filed appeals before the Commissioner of Wealth Tax (Appeals), Vijayawada. He allowed the appeals partly and held that out of gold jewellery belonging to third parties weighing about 9259.700 gms, only 5106.700 gms can be treated as belonging to Rajkumar (HUF) and deleted 4153 gms. Challenging the same, both the petitioner as well as the Revenue filed appeals before the Income Tax Appellate Tribunal. These appeals were numbered as WTA Nos.54 to 62/Hyd/1993 and WTA Nos.82 to 90/Hyd/1993. The Income Tax Appellate Tribunal passed a common order dated 17.8.1995 allowing the appeals of the Revenue and dismissing the appeals of the petitioner. Consequently, it set aside the relief granted by the Commissioner of Wealth Tax (Appeals), Vijayawada and upheld the inclusion of items excluded by him. As Rajkumar died on 19.8.1993 and the petitioner succeeded him as the Kartha of the HUF of late Rajkumar, he filed Reference Application Nos.787 to 795/Hyd/95 before the Income Tax Appellate Tribunal u/s.27 (1) of the Wealth Tax Act,1957 and requested the Tribunal to refer the following two questions of law to this Court : “A) Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in its decision that the gold jewellery found by the Central Excise Authorities on 18.10.1975 in the residential premises of the assessee is includible in the net wealth of the assessee for the assessment years 1981- 82/1982-83/1983-84/1984-85/1985- 86/1986-87/1987-88/1988-89/1989-90 ? B) Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding the evidence available on record that the assessee parted with the gold jewellery by handing over to various persons on different dates as evidenced by the declaration filed on 1- 12-1976 before the Central Excise Authorities ? ” By order dated 9.3.1996, the Tribunal dismissed these applications on the ground that the questions suggested for reference were questions of fact and declined to refer the same to this Court. The petitioner thereupon filed applications for reference to this Court under Section 27 (3) of the Wealth Tax Act, 1957 against the order of the Tribunal dt.18.3.1996 in R.A.No.s 787 to 795/Hyd/95. These applications were numbered as WTC Nos.36,39,40/1996 and WTC SR Nos.34604,34607,34616,34622,34619 and 34625/1996 and WTC Nos.2,3,4,5,6 and 7 of 1997. By a common order dated 3.2.1997, this Court held that there was no specific reference in the order of the Tribunal dated 17.8.1995 in the above WTAs to the plea of Rajkumar that part of the gold found in his premises pursuant to the search operation conducted on 18.10.1975 did not belong to him and that it had belonged to his relatives and others who happened to visit his house in connection with a marriage which took place on 19.10.1975; for the earlier assessment years 1976- 77 to 1978-79, the Wealth Tax authorities had accepted the explanation of the petitioner that the excess gold belonging to him is only 906.700 gms and not 9259.700 gms; such a plea of assessee was part of material placed before the Tribunal and contentions relatable to that plea although raised were not considered by it; the proper course for petitioner is to move the Tribunal by way of a Miscellaneous Applications for bringing to its notice the real position in order to enable the Tribunal to properly appreciate the fact situation and decide questions arising therefrom; within 30 days from the date of the order of High Court if such applications are filed by the petitioner, the same should be disposed of by the Tribunal as expeditiously as possible, in any event not later than three months from the date of filing of such applications. With these observations, the WTCs were closed at the admission stage without giving any notice to the Revenue. The petitioner thereafter filed Miscellaneous Petition Nos.43 to 51/Hyd/97 in WTA Nos.54 to 62/Hyd/93 and WTA Nos.82 to 90/Hyd/93 for the assessment years 1981-82 to 1989-90 pointing out the facts in support of his plea that 9259.700 gms of gold did not belong to him but belonged to his relatives and other persons who came to attend the wedding in the family on 19.10.1975, one day after the search was conducted. He also framed certain issues as mentioned in the said Miscellaneous Application and prayed that the said questions should be gone into and adjudicated by the Tribunal as per the High Court’s order dated 3.2.1997 mentioned above. By common order dated 17.2.2000, the Tribunal rejected the above Miscellaneous Applications stating that it had considered “almost all the factual aspects” raised by the petitioner in its paper books; that they are reflected in the body of the order passed by the Tribunal; that the Tribunal was “unable to understand what is the exact mistake” that is apparent from its order; it is not possible to review the order dated 17.8.1995 passed by the Tribunal or to rehear the appeals; that it did not find any merit in the Miscellaneous Applications . Aggrieved thereby, the petitioner has filed the present Writ Petition. Heard Sri Y. Ratnakar, learned counsel for the petitioner and Sri S.R. Ashok, learned Senior Standing Counsel for the respondents in the writ petition. Sri Ratnakar contended that the order of the Tribunal rejecting the Miscellaneous Applications is unsustainable; it is factually incorrect on the part of the Tribunal to say that it had considered the points raised in the paper books filed by the petitioner in the body of the order passed by it; order of the Tribunal does not say that the matter was examined right from the assessment year 1976-77 onwards; the Tribunal had not considered the papers filed by the petitioner to substantiate his plea; there is no change of circumstances between assessment year 1976-77 and 1981-82 onwards; whatever position then prevailed and accepted by the department continue to prevail for the assessment year 1981-82 onwards; the High Court’s finding was that the Tribunal had not considered whether the entire 9259.700 gms of gold found at the premises of Rajkumar belonged to him; under the Wealth Tax Act, for an amount to be assessed as wealth, it should exist as on the valuation date i.e. 31st March and when the assets did not exist as on 31st March of each year there cannot be taxation of such non- existent wealth; when the High Court had issued a direction to consider all submissions of the petitioner, the Tribunal could not have rejected the applications of the petitioner. Sri S.R. Ashok, learned Senior Counsel for the respondents contended that there was no infirmity in the order of the Tribunal dated 17.8.1995 as it was based on appreciation of the entire evidence on record; although High Court in its order permitted the petitioner to file Miscellaneous Applications before the Tribunal for rectification of errors apparent from the record, it had ultimately closed the WTAs without accepting the contention of the petitioner that the jewellery belonged to third parties; the burden of establishing that there exists a mistake apparent from the record and the same is rectifiable within the purview of Section 35 of the Wealth Tax Act is on the assessee and as he did not discharge the same, the Tribunal was justified in dismissing the Miscellaneous Applications; order dated 17.8.1995 of the Tribunal had become final once the WTCs were closed by the High Court in its order dated 3.2.1997; and the remedy of judicial review under Article 226 of the Constitution of India cannot be stretched to the extent of seeking review of the order passed by another Division Bench of the High Court- may be in reference jurisdiction. He also contended that the scope of rectification jurisdiction under the provisions of the Wealth Tax Act, 1957 were narrow and reappraisal of the evidence on record is not permissible under the scheme of the Wealth Tax Act, 1957; that the Tribunal had given cogent reasons for rejecting the request of the petitioner; and therefore the writ petition should be dismissed. We have noted the respective contentions of the parties. From the facts narrated above, it is clear that for the assessment years 1976-77 to 1978-79, the assessing officers had held that only 906.700 gms belonged to the assessee and not 9259.700 gms excess gold jewellery found at the premises of the assessee in the search conducted on 18.10.1975 under Section 131 of the Income Tax Act, 1961. But from the assessment year 1979-80, particularly for the assessment years 1981-82 to 1988-89, the assessing officer assessed the entire value of 9259.700 gms jewellery as if it is the wealth of the HUF of Rajkumar/assessee. The Tribunal in its order dated 17.8.1995 in the WTA Nos.54 to 62/Hyd/93 and 82 to 90/Hyd/93 took the same view setting the orders of the Commissioner of Wealth Tax (Appeals) in favour of the assessee. When this was challenged by the petitioner by way of reference applications RA Nos.787 to 795/Hyd/95, the Tribunal rejected them by its order dated 9.3.1996. But the High Court in the order dated 3.2.1997 in WTCs 36 of 1996 and batch categorically gave a finding that “ there is no specific reference” in the order of the Tribunal dated 17.8.1995 to the issue whether the excess gold of 9259.700 gms belonged to the relatives of the assessee and not to him; that it is asserted by the petitioner that material placed before the Tribunal in support of the said plea was not considered; the proper course for the assessee is to move the Tribunal by way of miscellaneous applications to bring to its notice the real position to enable it to properly appreciate the fact situation and decide the questions arising therefrom. It directed the Tribunal to consider miscellaneous applications (if filed in 3 months by the petitioner) bringing to it’s notice the real position in order to enable the Tribunal to properly appreciate the fact situation and decide questions arising therefrom. In our opinion, when the High Court had recorded a clear finding that the Tribunal failed to consider the issue as to the ownership of the gold jewellery of 9259.700 gms, it was not open to the Tribunal to say in the impugned order that it is unable to understand what is the “exact mistake” which is apparent from its order and that it had considered “almost all” the factual aspects. Since the Revenue had not appealed against the order of the High Court dated 3.2.1997 in WTCs 36 of 1996 and batch, the order of the High Court had become final and should be given effect to by the Tribunal as an inferior Tribunal. It cannot defy the order of the High Court and imply that it ( Tribunal) had not committed any error. The respondents cannot be heard to contend that the High Court in its order dated 3.2.1997 had closed the WTCs 36 of 1996 and batch and is therefore deemed to have impliedly upheld the order of the Tribunal dated 17.8.1995 in WTA Nos.54/Hyd/1993 and batch. We are also unable to accept the stand of the Tribunal that the purpose of filing the miscellaneous applications would be served only if the order of the Tribunal dated 17.8.1995 is reviewed or the appeals are reheard. In our view the Tribunal is bound to entertain the miscellaneous applications filed by the petitioner as indicated in the order of the High Court dated 3.2.1997 in WTCs 36 of 1996 and batch and then determine whether 9259.700 gms of gold jewellery belonged to the assessee . On the aforesaid analysis, we are of the view that the impugned order dated 17.2.2000 of the Income Tax Appellate Tribunal “B” Bench, Hyderabad in Miscellaneous Application Nos.43 to 51/Hyd/1997 for the assessment years 1981-82 to 1989-90 in the case of late Rajkumar is unsustainable. Accordingly, it is set aside. The Miscellaneous Application Nos.43 to 51/Hyd/1997 for the assessment years 1981-82 to 1989-90 in the case of late Rajkumar shall stand restored to the file of the Tribunal and shall be considered by it as directed by this Court in its order dated 3.2.1997 in WTC Nos.36,39,40/1996 and WTC SR Nos.34604,34607,34616,34622,34619 and 34625/1996 and WTC Nos.2,3,4,5,6 and 7 of 1997. This exercise shall be completed by the Tribunal within four months from the date of receipt of a copy of this order. The writ petition is allowed to the above extent. No costs. JUSTICE GODA RAGHURAM JUSTICE M.S. RAMACHANDRA RAO Dt: 11-2-2013 kk THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE M.S. RAMACHANDRA RAO W.P.No.15938 of 2000 11-2-2013 THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE M.S. RAMACHANDRA RAO PD JUDGMENT IN W.P.No.15938 of 2000 For circulation and approval Of the Hon’ble Sri Justice GODA RAGHURAM "