COMMISSIONER OF WEALTH TAX VS SOMA WANTI SETHI
2001 P T D 1940
[246 I T R 683]
[Delhi High Court (India)]
Before Arijit Pasayat, C.J. and D.h. Jain, J
COMMISSIONER OF WEALTH TAX
Versus
Smt. SOMA WANTI SETHI
Wealth Tax References Nos. 121 to 125 of 1983, decided on 03/08/2000.
Wealth tax‑‑‑
Voluntary disclosure of, wealth ‑‑‑Reference‑‑‑Assessee a partner in a firm‑‑‑Voluntary disclosure of income by firm‑‑‑Additions to net wealth of assessee on account of disclosure by firm‑‑‑Effect of non‑compliance with S.13(2) read with S.8(1) of Voluntary Disclosure of Income and Wealth Act by firm and whether there had been such non‑compliance not considered by Tribunal‑‑‑Question not arising out of order of Tribunal‑‑‑ qestion returned unanswered‑‑‑Indian Wealth Tax Act, 1957, S.27 ‑‑ .‑Indian Voluntary Disclosure of Income and Wealth Act, 1976, Ss. 13 & 8.
The assessee was assessed in the status of an individual. She was a partner in a firm, S, which made a declaration under the provisions of the Voluntary Disclosure of Income and Wealth Act, 1976. On the basis of the disclosure made by the firm, the Inspecting Assistant Commissioner made an addition to the assessee's net wealth. The Tribunal upheld the order of the Commissioner (Appeals) directing exclusion of the amount. On a reference it was contended that section 13(2) read with section 8(1) of the Voluntary Disclosure of‑Income and Wealth Act was not complied with and as such the declaration could not be accepted:
Held, that the question sought to be raised by the Revenue was not raised before the Tribunal and there was no finding to that effect. The issue before the Tribunal related to the effect of the Explanation to section 13(1). Since the question as to what would be the effect of non‑compliance with section 13(2) read with section 8(1) of the Voluntary Disclosure of Income and Wealth Act was not dealt with by the Tribunal and there was no finding in that regard, the question had to be returned unanswered.
Jamna Prasad Kanhaiya Lal v. CIT (1981) 130 ITR 244 (SC) ref.
Mrs. Prem Lata Barisal for the Commissioner.
Nemo for the Assessee.
JUDGMENT
ARIJIT PASAYAT, C.J.‑‑‑All these references involve a common question which has been referred by the Income‑tax Appellate Tribunal, Delhi Bench "E" (in short "the Tribunal"), under section 27(1) of the Wealth Tax Act, 1957 (in short the "Act") for the opinion of this Court:
"Whether, on the' facts and in the circumstances of the case, the Tribunal was right in holding that no addition could be made to the net wealth of the assessee on account of disclosure of income‑tax made by the firm in which she was. a partner even ‑though the provisions of the Voluntary Disclosure of Income and Wealth Act, 1976, with particular reference to section 13(2) read with section 8(1) of the said Act were not complied with and, as such, disclosure could not be accepted?"
The relevant assessment years are 1965‑66 to 1969‑70. The valuation date in each case was March 31 of the relevant year. The assessee is an individual. She was a partner in a partnership firm styled Gulab Singh Sethi & Sons. The said firm made a declaration Under the provisions of the Voluntary Disclosure of Income and Wealth Act, 1976 (in short the "Voluntary Disclosure Act"), disclosing an income of Rs.31 lakhs stated to have been earned during the accounting years relevant to the assessment years 1961‑62 to 1974‑75. Block assessment in respect of the said voluntary disclosure was made by the Income‑tax Officer and tax was charged accordingly from the firm. On the basis of the disclosure made by the firm, the Inspecting Assistant Commissioner (in short the "IAC"), made an addition of Rs.3,44,000 while computing the assessee's net wealth for each of the years. It was, however, observed that this wealth will later be excluded if the assessee fulfils the conditions laid down in the Voluntary Disclosure Scheme, 1975. It is to be noted that there was no question of the assessee fulfilling any condition, because she had not made any declaration. The conclusion was challenged in the appeals before the Commissioner of Income‑tak. (Appeals) (in short the "CIT(A)"). The said authority was of the view that the action of the Inspecting Assistant Commissioner was not correct and directed exclusion of the amount in question in each year. The matter was carried in appeal before the Tribunal by the Revenue. The Tribunal, with reference to section 13 of the Voluntary Disclosure Act held that the Explanation appended thereto clearly applied and, therefore, the Commissioner's conclusions were in order. On being moved for reference, the question as set out above has been referred for the opinion of this Court.
Learned counsel for the Revenue submitted that the true effect of section 13(2) read with section 8(1) of the Voluntary Disclosure Act was not kept in view and the effect of non‑compliance with the requirements and its consequential bearing on the declarations made were lost sight of.
There was no appearance on behalf of the assessee in spite of service.
The question referred in our opinion does not arise out of the order of the Tribunal. In fact, the Tribunal has concluded as follows:
"The Revenue is aggrieved. Hence, these appeals. Learned Departmental Representative urged that in view of Jamna Prasad Kanhaiya Lai v. CIT (1981) 130 ITR 244 (SC), it is only the declarant who can be given the benefit of exemption and not any other party. In the present case, it was pointed out that it was not the assessee who made the declaration of voluntary disclosure, but a firm in which the assessee was a partner and that firm was a separate entity. We see no force in the Revenue's contention. Section 13 of the said 1976 Act contains the relevant provision as regards exemption from wealth tax in respect of the assets specified in the declaration. The Explanation below section 13(1) reads as under:
Explanation. ‑‑‑Where a declaration under subsection (1) of section 3 is made by a firm, the assets referred to in clause (i) or, as the case may be, the amount referred to in clause (ii) shall not be taken into account in computing the net wealth of any partner of the firm or, as the case may be, in determining the value of the interest of any partner in the firm.
The said Explanation leaves no doubt that if the firm as per columns 4, 5 and 6 of Entry No.6 of Form B of the voluntary disclosure as prescribed under rule 4 of the Voluntary Disclosure of Income and Wealth Rules, 1975, shows that if the income disclosed by the declarant firm included any assets, whether represented by cash, bank deposits, bullion, investment in shares, debts due from other persons, commodities or any other assets, the same had to be detailed by the declarant firm and consequence of the aforesaid Explanation would be that even in the hands of the partner of the firm such assets would be exempt from wealth tax. If, on the other hand the income disclosed by the declarant firm was not represented by any assets as aforesaid, then there would be no room for including the impugned sum in the computation of the assessee individual partner's net wealth even by virtue of section 4(1)(b) read with rule 2, Wealth Tax Rules. In conclusion, we see no merit in the Revenue's appeals and no justification to disturb the Appellate Commissioner's finding. The Revenue fails."
The question now raised does not appear to have been raised before the Tribunal, and, consequently, the Tribunal has not recorded any finding thereon. What was in issue before the Tribunal related to the effect of the Explanation to section 13(1). It was observed that the said provision made it clear that if the firm as per columns 4, 5 and 6 of Entry No.6 of Form‑B of the voluntary disclosure as prescribed under rule 4 of the Voluntary Disclosure of Income and Wealth Rules, 1975 (in short the "VD Rules"), shows that the income disclosed by the declarant firm included any assets, whether represented by cash, bank deposits and other specified assets, the same had to be detailed by the declarant firm. It was the Tribunal's view that the consequence of such explanation would be that even in the hands of the partner of the firm such assets would be exempt from wealth tax: if, on the other hand, the income declared by the declarant firm was not represented by any assets as aforesaid, then there would be no room for including the impugned sum in the computation of the net wealth of a partner assessee, an individual even by virtue of section 4(1)(b) of the Act read with rule 2 of the Wealth Tax Rules, 1957 (in short "the Rules"). The question as to what would be the effect if the declarant firm did not comply with the requirements of section 13(2) read with section 8(1) of the Voluntary Disclosure Act was not in issue before the Tribunal. No finding has also been recorded by the Tribunal in that regard. As the question does not arise out of the order of the Tribunal, we decline to answer the question.
The references are returned unanswered.
M.B.A./517/FC?????????????????????????????????????????????????????????????????????????????????? Order accordingly