COMMISSIONER OF WEALTH TAX Vs. GURDIAL SINGH

JUDGEMENT

(1.) THESE eight wealth -tax references bearing Nos. 58 to 65 of 1977, have been forwarded by the Tribunal by a consolidated statement of the case. They concern asst. yrs. 1962 -63 to 1969 -70. The following question in each of these references has been submitted at the instance of the CWT for the opinion of this Court :

(2.) THE assessee, Shri Gurdial Singh is a director of the Green Finance (Indian) (P) Ltd., in which he holds 1,670 shares of Rs. 100 each. Besides this, he is also partner in M/s Green Motors and M/s Capital Diesel Engineering Works. For the previous year relevant to asst. year 1965 -66, he is also a partner in Eagle Theatres which firm is having cinemas at Bombay and in New Delhi.

(3.) WHILE disposing of the appeals for these two years, the AAC upheld the recourse to best judgment assessment under S. 16(5) of the WT Act as he found that sufficient opportunities had been allowed to the assessee to file the returns and lead evidence in support of the assets and liabilities disclosed in the statements. The attitude of the assessee was observed to be non -co - operative and, therefore, the WTO was compelled to proceed ex parte. He further found that the names of creditors to whom liabilities were stated to be due, were furnished by the assessee along with the statements, and they showed that the depositors were close relations of the assessee and almost all of them were jointly residing with him. If these liabilities, it was observed, were genuine, the assessee should not have felt any difficulty in adducing satisfactory evidence before the WTO when sufficient opportunity was granted to prove them. He was, therefore, unable to allow the assessee to produce confirmation letters from them at the appellate stage, and after making reference to r. 46A, held that in the circumstances, fresh evidence was not entertainable. At the same time, the AAC was of the opinion that so far as the disclosure made by the Green Finance (India) (P) Ltd. under S. 271(4A) of the IT Act was concerned, he was unable to ascribe any wealth to the assessee on its basis as the so -called bogus creditors could not be linked with him. According to him, there was no positive evidence brought out to hold that the deposits with the company belonged to the directors. To this extent, therefore, he did not approve of the approach of the WTO. However, in the ultimate analysis he came to the conclusion that considering the other circumstances, the estimate of wealth at rupees 7 lakhs in each year was quite adequate and fair. The appeals were dismissed. For the asst. yrs. 1964 -65 to 1969 -70, the facts according to the WTO were similar. In these years also, the assessee did not care to submit the returns. The notices issued under ss. 14 and 17 requiring the filing of the returns again remained uncompelled. Here too all that the assessee did was to file statements in which assets and liabilities as already reproduced above, were mentioned. The WTO was, therefore, constrained to take best judgment proceedings as enjoined under S. 16 (5). Several notices were issued to the assessee to appear and take part in the proceedings. There were as many as ten hearings fixed from 27th Dec., 1971, to 6th Sept., 1974. On most of them, the assessee's representative Daya Ram, accountant, attended and all he did was to seek adjournments on one plea or the other, On one of the hearings, viz., 21st Feb., 1974, he promised 1967 -68 8,03,973 9,26,833 ( -)1,22,860 1968 -69 13,71,352 14,68,022 (+) 96,669 1969 -70 9,86,599 11,00,394 ( -) 13,794 to file WT returns for some years by 21st Feb., 1974, but failed to do so. There were again further defaults in the production of material to substantiate the assets and liabilities shown in the statements. The WTO then noticed that there were liabilities amounting to Rs. 6,78,684 of the assessee which were said to have been connected with the benami disclosure by his relations and friends under the Finance Act No. 2 of 1965. Quite a number of those persons were stated to be minors who could not be deemed to have any source of income out of which they could make those disclosures. The WTO, therefore, estimated the wealth of the assessee at rupees 10 lakhs for each of the asst. yrs. 1964 -65 and 1965 -66, at rupees 11 lakhs for each of the asst. yrs. 1966 -67 and 1967 -68, at rupees 12 lakhs for the asst. year 1968 -69 and rupees 10 lakhs for the asst. year 1969 -70.