COMMISSIONER OF WEALTH-TAX Vs. TIKAM CHAND AGRAWAL

JUDGEMENT

(1.) Under Section 27(3) of the Wealth-tax Act, 1957, the Tribunal has stated the following question :

(2.) The assessee is a Hindu undivided family. Sri Tikam Chand Agrawal is its karta. The assessment years concerned are 1963-64 to 1969-70, both inclusive, seven years in all. Sri Tikam Chand Agrawal was a partner in a firm, Messrs. Chittar Mal Ram Dayal, in his capacity, as the karta of the assessee-Hindu undivided family. In the Income-tax assessment of the said firm, Messrs. Chittar Mal Ram Dayal, in his capacity as the karta of the assessee-Hindu undivided family. In the income-tax assessment of the said of the said loans as income of the firm. The assessee's share in the said amounts was sought to be treated as wealth of the Hindu undivided family in the relevant assessment years under the Wealth-tax Act. The assessee filed an appeal against such additions. Meanwhile, appeals preferred by the firm under the Income-tax Act were also pending. In the appeals preferred by the assessee under the Wealth-tax Act, the Commissioner of Wealth-tax (Appeals) deleted the said additions with the following observations :

(3.) Against this appellate order, both the assessee and the Revenue filed seven appeals each, which were considered together and disposed of under a common order by the Tribunal on June 26, 1975. By this date, evidently, the appeals preferred by the firm under the Income-tax Act had been decided finally. The firm's case was accepted in respect of some hundi loans and rejected in respect of some others. The Tribunal held that in so far as the amounts which had been deleted in the firm's assessment accepting its explanation are concerned, no question can arise of adding any portion thereof in the wealth-tax assessment of the assessee-Hindu undivided family. The Tribunal then dealt with those hundi loans which were held not to have been properly explained in the income-tax assessment of the firm and which, according'to the observations of the Commissioner of Wealth-tax (Appeals), were liable to be taken into account in the wealth-tax assessment of the assessee-Hindu undivided family. Even on this score, the Tribunal held that no additions are permissible. The reasoning of the Tribunal is that the credits were in the books of the firm and until and unless the money was put at the disposal of the partners by the firm, no share of those credits could be treated as the net wealth of the assessee. The Tribunal also observed that the additions made on account of cash credits were in the nature of intangible additions and the share in such additions could not be treated as the net wealth of the assessee. Reliance was placed upon the decision of the Kerala High Court in Annamma Paul Perincherry v. CWT [1973] 88 ITR 204. The Tribunal also observed that no creditor of the firm could obtain a decree in the civil court to attach the said credits and, even if such decree is obtained, it could not be enforced against the said credits on the basis of the finding with respect to their genuineness recorded in income-tax proceedings. Accordingly, the Tribunal allowed the appeals preferred by the assessee and dismissed those preferred by the Revenue. Aggrieved by the findings of the Tribunal, the Revenue obtained this reference.