WEALTH TAX OFFICER Vs. LALLUBHAI JOGIBHAI PATEL

JUDGEMENT

(1.) SINCE all these appeals arise out of a common order dated 15.12.1999 passed by the Income -tax Appellate Tribunal (hereinafter referred to as "the Tribunal") and controversy involved in all the appeals is also common, the same were taken up for hearing together and are disposed of by this common judgement.

(2.) THE assessment years are 1984 -85, 1985 -86, 1988 -89 and 1989 -90. Briefly stated the facts of the case are that silver bars weighing 518 kgs (hereinafter referred to as the "subject assets") came to be seized from the respondent -assessee by the authorities under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976(in short "SAFEMA"). By an order dated 8.6.1979 passed by the competent authority under section 7 of SAFEMA, the subject assets were ordered to be forfeited to the Central Government. The assessee carried the matter in appeal before the Appellate Tribunal for Forfeited Property, New Delhi which came to be allowed on 24.6.1992 and the forfeiture was set aside. In the wealth tax proceedings in relation to the assessment years under consideration, the assessee claimed that the value of the silver bars could not be included in the wealth of the assessee as he was not the owner of the silver bars on the valuation dates corresponding to the assessment years under consideration. The Assessing Officer rejected such contention and included the value of the subject assets in the total wealth of the assessee for the assessment years under consideration. Being aggrieved, the assessee preferred separate appeals before the Commissioner of Wealth Tax (Appeals) against the assessment orders passed by the Assessing Officer. By a common order dated 28.7.1998, the Commissioner (Appeals) dismissed the appeals by holding that the order of the competent authority on which reliance had been placed by the assessee whereby silver was confiscated on 8.6.1979 was not final and the assessee had right of appeal against such order. He was of the view that by exercising right of appeal, the assessee had moved the appellate forum, which eventually, on 24.6.1992 had set aside the order of competent authority and the silver was restored to the assessee. It, therefore, could not be said that under order of the competent authority, the assessee had lost legally the silver in question. The Commissioner (Appeals), accordingly, upheld the inclusion of the value of subject assets in the net wealth of the assessee for the assessment years under consideration. The assessee carried the matter in further appeals before the Tribunal. By the impugned order, the Tribunal allowed the appeals by holding that in light of the order of forfeiture dated 8.6.1979, the assessee could not be treated as the owner of the silver bars. These silver bars stood confiscated and forfeited and were thus the property of the Central Government. According to the Tribunal, till the order of forfeiture was set aside by the Appellate Tribunal for Forfeited Property vide order dated 24.6.1992, it remained in operation. The Tribunal was of the opinion that the order of the Appellate Tribunal could not operate so as to make the forfeiture nonexistent. As the assessee had lost the ownership of the silver bars on the respective valuation dates, the value of silver bars could not be added to the assessable wealth of the assessee. Revenue is in appeal against the order of the Tribunal.

(3.) MRS . Mauna Bhatt, learned senior standing counsel appearing on behalf of the appellant vehemently assailed the impugned order of the Tribunal submitting that in view of the subsequent order dated 24.6.1992 passed by the Appellate Tribunal For Forfeited Property whereby the order of the competent authority under SAFEMA had been set aside, there was no forfeiture of the silver bars which remained of the ownership of the assessee. Thus, the cloud, if any, over the ownership rights of the assessee in the silver bars was removed by the said order of the Tribunal. Against the order under section 7 passed by the competent authority under SAFEMA, the assessee had preferred an appeal before the Appellate Tribunal for Forfeited Property and as such, the order of the competent authority had not attained finality. Such proceedings under section 7 of SAFEMA attained finality only when the order dated 24.6.1992 came to be made by the Appellate Tribunal whereby the order of the competent authority was set aside. Under the circumstances, the subject assets continued to remain the property of the assessee and were assessable as his wealth under the provisions of the Wealth Tax Act. Reliance was placed upon the decision of the Supreme Court in case of Kunhayammed and others v. State of Kerala and another, AIR 2000 SC 2587 for the proposition that mere pendency of an application seeking leave to appeal does not put in jeopardy the finality of the decree or order sought to be subjected to exercise of appellate jurisdiction by the Supreme Court. It is only if the application is allowed and leave to appeal granted then the finality of the decree or order under challenge is jeopardized as the pendency of appeal reopens the issues decided and Court is then scrutinizing the correctness of the decision in exercise of its appellate jurisdiction. It was submitted that the order of the competent authority being subject matter of scrutiny by the Appellate Tribunal, had not attained finality, and as such during the pendency of the appeal, the assessee continued to remain the owner of the subject assets till the proceedings attained finality. It was, accordingly, urged that the Tribunal was not justified in holding that the value of the subject assets could not be added while computing the net wealth of the assessee.