COMMISSIONER OF WEALTH TAX VS SMT. ASHA DIGVIJAYA SINGH
1999 P T D 1684
[234 I T R 77]
[Madhya Pradesh High Court (India)]
Before A. K. Mathur, C. J. and S. S. Jha, J
COMMISSIONER OF WEALTH TAX
Versus
Smt. ASHA DIGVIJAYA SINGH
M.C.C. Nos.73 to 76, 80, 81 and 85 of 1991, decided on 06/08/1996.
Wealth tax---
----Reference---Reassessment---Failure to disclose material facts fully and truly ---Assessee disclosing possession of gold ornaments from 1975-76 to 1986-87 but valuing them at same rate throughout---Valuation accepted in original assessments ---Under valuation of gold whether formed basis for reassessment was a question of law---Indian Wealth Tax Act, 1957, Ss. 17 & 27(3).
Held, that an obligation is cast on the assessee to disclose material facts fully and truly. In the instant case, the assessee had disclosed possession of gold ornaments from 1975-76 to 1986-87 but she had valued them throughout of Rs.520 per 10 gins. The questions whether, on the facts and in the circumstances of the case, the Tribunal was justified in law and in holding that there was no under assessment in terms of section 17 of the Wealth Tax Act, 1957, and, whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the Wealth Tax Officer was not justified in taking action under section 17 when there was admittedly under valuation of gold as on the relevant valuation dates had to be referred.
CWT v. Ajay Kumar B. Tody (1983) 143 ITR 148 (MP); Indian Oil Corporation v. ITO (1986) 159 ITR 956 (SC); Indo-Aden Salt Mfg. and Trading Co. (P.) Ltd. v. CIT (1986) 159 ITR 624 (SC); Lokendrasingh v. ITO (1981) 128 ITR 450 (MP); M. V. Kibe v. CWT (1988) 169 ITR 40 (MP); Sahu Dharmatma Saran v. CWT (1971) 90 ITR 194 (All.) and Smt. Shantidevi v. ITO (1996) 217 ITR 776 (MP) ref.
R.D. Jain, Senior Advocate with Sandeep Dubey for the Commissioner
K.K. Lahoti for the Assessee,
JUDGMENT
A.K. MATHUR, C.J.---These are seven references under section 27(3) of the Wealth Tax Act, 1957 (hereinafter referred to as the "Act"), at the instance of the applicant/Revenue arising out of the order of the Tribunal for the assessment years 1979-80, 1980-81, 1981-82, 1982-83, 1983-84, 1984-85 and 1985-86, against the same assessee/non-applicant. They involve common question of fact and law, therefore, they are disposed of by this common order.
For convenient disposal of all the aforesaid seven references the facts given in M.C. No.73 of 1991 are taken up for consideration.
This is a wealth tax reference under section 27(3) of the Act for the assessment year 1979-80 under section 16(1) of the Act. The assessee showed the total value of 3,845 gms. net gold ornaments at the rate of Rs.520 in the assessment year 1975-76 and assessed the value of that gold to 'the extent of Rs.1,69,000, and this was repeated in all the subsequent years. The assessment was made accordingly. Thereafter, this assessment was sought to be reopened under section 17 of the Act and the following reasons were recorded:
"As per return the assessment f( section 16(l) of the Wealth Tax
The 'a' owned various gold ornaments shown at Rs.1,69,000 in all these years. There are no changes in the item of gold ornaments and jewellery, the rates of gold per 10 gms. in these years were as under:
| | (Rs.) |
| 1986-87 | 2,149 |
| 1985-86 | 1, 990 |
| 1984-85 | 1,885 |
| 1983-84 | 1,775 |
| 1982-83 | 1, 785 |
| 1986-87 | 2,149 |
| 1981-82 | 1,600 |
| 1980-81 | 1,220 |
| 1979-80 | 870 |
The "a" has shown value of 3,845 gms, net gold ornaments at Rs.520 in the assessment year 1975-76, net Rs.1,69,000 and the same repeated in all subsequent years; the increase in rate of gold as above is not considered.
I have, therefore, reason to believe that the wealth of the "a" is under assessed.
Issue notice under section 17 for the assessment years 1979-80 to 1986-87."
This was challenged by the assessee before the Commissioner of Income-tax (Appeals), which allowed the appeal and set aside the order of the Wealth Tax Officer. Aggrieved against this order, the Revenue filed an appeal before the Tribunal and the Tribunal came to the conclusion on the basis of various decisions of the Supreme Court as well as High Courts that the assessee is not guilty of any suppression of fact as the assessee correctly disclosed the material fact and if the assessing authority has not properly assessed the value of gold then no fault can be found with the assessee and, accordingly, the Tribunal upheld the order passed by the Deputy Commissioner of Wealth Tax (Appeals), Gwalior, and rejected the appeal of the Revenue.. Therefore, an application was moved by the Revenue for making a reference before this Court and that was declined by the Tribunal. Hence, the Department has approached this Court under section 27(3) of the Act for calling the statement of the case.
We have heard learned counsel for the parties and perused the record. According to section 17 of the Act, what is required of the assessee is to state the material facts truly and correctly. It is correct that the assessee has disclosed the quantum of the gold but the rate which has been given by the assessee of Rs.520 per 10 gins., which was prevalent during 1975-76, has been continued to be repeated for all the aforesaid years. The assessing authority should have properly valued the rate of gold, but it appears that the assessing authority seems to have been misled by the rate given by the assessee. Secondly, it does not appeal to reason that the rate of gold alleged by the assessee as Rs.520 per 10 gins during the year 1975-76, continued to remain the same up to 1986-87. Therefore, it cannot be said that the assessment made by the Assessing Officer was correct. According to section 17 of the Act, there is a duty cast on the assessee also to disclose the material facts truly. In this connection, a reference may be made to a decision of the Supreme Court in the case of Indo-Aden Salt Mfg., and Trading Co. (P.) Ltd. v. CIT (1986) 159 ITR 624 and their Lordships observed (headnote):
"The fact that the Income-tax Officer could have in the original assessment proceedings found out the correct position by further probing did not exonerate the appellant from the duty to make a full? and true disclosure of material facts."
??????????? In the present case, the assessee in the return has shown the value of gold per 10 gins at Rs.520 and this rate has been accepted by the assessing authority for the period from 1979-80 to 1986-87. On the face of it, it appears to be untrue and against common experience. The assessing authority although did not care to examine the rate which was prevalent at the time and totally misled himself on the basis of facts given by the assessee. The assessee was also under obligation to give the correct market rate prevalent during the assessment years, but that has not been given and the Assessing Officer was totally misled on that basis. In this connection, it may also be relevant to refer to the decision of the Supreme Court in Indian Oil Corporation v. ITO (1986) 159 ITR 956, and there also, their Lordships observed (headnote):
"There must be materials to come to the conclusion that there was omission or failure to disclose fully and truly all material facts necessary for the assessment of the year'. This postulates a duty on every assessee to disclose fully and truly all material facts necessary for the assessment. Therefore, the obligation is to disclose facts; secondly, those facts should be material; thirdly, the disclosure must be full and, fourthly, true. What facts are material and necessary for assessment will differ from case to case. In every assessment proceedings, for computing or determining the proper tax due from the assessee, it is necessary to know all the facts which help tile assessing authority in coming to the correct conclusion. From the primary facts in his possession, whether on disclosure by the assessee, or discovered by him on the basis of the facts disclosed, or otherwise, the assessing authority has to draw inferences as to certain other facts. But, on the primary facts, it is for the taxing authority to draw inferences; it is not necessary for the assessee to draw inferences for him. "
Therefore, an obligation is cast upon the assessee to disclose the material facts truly and correctly and the Assessing Officer arrived at the correct conclusion. We are of the opinion that the order passed by the assessing authority for reopening of the assessment under section 17 of the Act cannot be said to be without jurisdiction.
Shri Lahoti, learned counsel for the assessee, has invited our attention to the cases of CWT v. Ajay Kumar B. Tody (1983) 143 ITR 148 (MP); Lokendrasingh v. ITO (1981) 128 ITR 450 (MP); M.V. Kibe v. CWT (1988) 169 ITR 40 (MP); Sahu Dharmatma Saran v. CWT (1971) 80 ITR 194 (All) and Smt. Shantidevi v. ITO (1996) 217 ITR 776 (MP). All these cases are distinguishable on the facts. In the present case, we have examined the facts and find that the facts disclosed by the assessee about the rate of gad -dairrg-19,7546was R-&.620 -per 10 gms and the. same remained up to 1986-87, appear to be non-disclosure of true and correct facts. Therefore, the Income-tax Officer acquired jurisdiction to reopen the assessment order and the view taken by the Tribunal appears to be unjustified. In these circumstances, we are of the opinion that a statement of case be called from the Tribunal on the following questions:
"(1) Whether, on the facts and in the circumstances of the case, the income-tax Appellate Tribunal was justified in law in holding that there was no under assessment in terms of section 17 of the Wealth Tax Act?
(2) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in holding that the Income-tax Officer was not justified in taking action under section 17 when there was admittedly under valuation of gold as on relevant valuation dates?"
Any observation made in this order will not prejudice the rights of the parties before any Court or authority.
All the aforesaid seven references are accordingly disposed of.
M.B.A./2097/FC ??????????????????????????????????????????????????????????????????????????????? Order accordingly.