MEGHJI GIRDHAR (HUF) Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) This reference is under Section 27(1) of the WT Act, 1957, at the instance of the Assessee as well as the Revenue, whereby the Tribunal has referred the following questions to this Court for opinion:

(2.) As per statement of case, the Assessee's case is that after the raid by Central excise authorities in 1965, Shri Gunvantlal son of late Chhaganlal, the then Karta of Assessee HUF, had handed over 51 gold bars each weighing 3 Sers gold for safe custody to Ganpatlal and Hiralal in whom the Assessee had confidence. Subsequently, on asking Ganpatlal had returned only 7 gold bars weighing 19 kgs. for which the Assessee had acquired Gold Bonds. For remaining 123 kgs. of gold, on 9th Dec., 1965, Gunvantlal had lodged a report for the offence of breach of trust under Section 406 of IPC at Police Station, Chhoti Sadri against. Ganpatlal and others. During investigation 57 kgs. of gold was recovered from Ganpatlal and kept in the District Treasury at Chittorgarh. During trial in the criminal case Ganpatlal and Hiralal were convicted by the Court of Addl. Asstt. Sessions Judge, Udaipur, vide judgment dt. 11th Jan., 1975. In appeal, the Addl. Sessions Judge, Udaipur, by order dt. 7th Aug., 1978 acquitted them and their acquittal was maintained by High Court in appeal.

(3.) In the assessment proceedings, for the assessment years under consideration, the Assessee claimed that value of 123 kgs. of gold should not be included in computing his net wealth because 57 kgs. of gold, recovered from Ganpatlal was still in possession of the police and was not delivered to him and he had lost the ownership of this 57 kgs. gold and the same was not an asset belonging to the Assessee. These gold bars had foreign marking and as such it was a prohibited article. As regards remaining 66 kgs. of gold, it was contended that the same cannot be treated as an asset of the Assessee because it was not returned to him by Ganpatlal and others nor the same could be traced by the police. The AO rejected these contentions and included the value of the 123 kgs. gold in net wealth of the Assessee. The addition made by the AO was confirmed in appeal by CWT(A). The appellate order of CWT(A) was set aside by the Tribunal in Assessee's appeal vide its order dt. 3rd Nov., 1982, and matter was remanded back to the CWT(A) for a fresh decision. On remand, the CWT(A) held that on the relevant valuation date, the gold in question was an asset of the Assessee, but placing reliance on the order of the Tribunal dt. 3rd July, 1984, rendered in MA No. 20/Ind/1983, the learned CWT(A) held that the gold in question had "nil" value on the respective valuation date.