GOPICHAND GUPTA Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) In the background of certain rather interesting facts, we are asked to answer the following questions referred to us in this reference under Section 27(1) of the W.T. Act, 1957 :

(2.) Whether, on the facts and in the circumstances of the case, the Tribunal, in view of Section 273 of the Indian Succession Act, 1925, was justified in law in holding that the said will executed by late Satyanarayan Agarwalla proved and registered in the High Court at Calcutta in the course of probate proceedings being Matter No. 156 of 1976 was not a genuine will ?

(3.) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in confirming the penalties of Rs. 1,716 (assessment year 1962-63), Rs. 309 (assessment year 1963-64), Rs. 265 (assessment year 1964-65), Rs. 442 (assessment year 1965-66), Rs. 427 (assessment year 1966-67), Rs. 3,45,716 (assessment year 1968-69) and Rs. 3,56,612 (assessment year 1969-70), under Section 18(1)(c) of the Wealth-tax Act, 1957 ?" 2. The years involved are assessment years 1962-63, 1963-64, 1964-65, 1965-66, 1966-67, 1968-69 and 1969-70, for which the respective valuation dates were Dewali days of Sambat years 2018, 2019, 2020, 2021, 2022, 2024 and 2025. In the wealth-tax assessments of the assessee for the years under consideration, the WTO had included in the "net wealth" of the assessee the market value of the estate of his deceased son, Satyanarayan Agarwalla, from his first wife. The assessee had not shown these assets left by his deceased son in the wealth-tax returns for those years in question. The deceased, Satyanarayan Agarwalla, was being assessed at Raigarh up to the assessment year 1957-58, while the assessee was assessed at Calcutta. The assessee had also been a wealth-tax assessee since the enforcement of the Act. On receipt of the income-tax file of the deceased, Satyanarayan Agarwalla, at Calcutta, the ITO issued notices under Section 139(2) of the I.T. Act, 1961, for the accounting period relevant to the assessment year 1962-63, which was served on the assessee on December 6, 1962. Pursuant to the said notice, a return was filed on July 21, 1967, in the name of the estate of the deceased, Satyanarayan Agarwalla, represented by his legal heir, Smt. Ratni Debi Gupta, the stepmother of the deceased. The income-tax assessments and the wealth-tax assessments for the assessment years 1962-63 to 1968-69 were finalised on the basis of similar return. 3. Satyanarayan Agarwalla had died at Calcutta on September 23, 1957, by drowning himself in the river Hooghly. The assessee, the father of the said Satyanarayan Agarwalla, had submitted the account under the E.D. Act, 1953, on March 31, 1958, claiming himself to be the sole legal heir of his deceased son, Satyanarayan Agarwalla. As the real mother, and not the stepmother, about whom we shall presently mention, of the said Satyanarayan Agarwalla had predeceased, the father of the said deceased, the assessee, claimed himself as the legal heir of Satyanarayan Agarwalla. The assessee also applied to the CBDT by his letter dated April 25, 1958, to confer jurisdiction on the Asst. Controller at Calcutta to complete the said estate duty assessment. In that letter also, it was claimed by the assessee that he was the sole heir of the deceased. It was an admitted position that, on the basis of that statement, the estate duty assessment was completed. It also appears that in the income-tax returns for the accounting period relevant to the assessment year 1966-67, which fell much after the happening of the facts stated in the preceding paragraph, the assessee did not include the income from the estate of the deceased son, Satyanarayan Agarwalla. For the said non-inclusion, the stand taken by the assessee was that after the submission of the statement of account under the E.D. Act, 1953, for the estate duty assessment it was found by the assessee that the deceased had made a will on the 10th October, 1956, in favour of his stepmother, Smt. Ratni Debi, at Calcutta and the deceased had been living at Raigarh with one Prohladrai Gupta, who also died in June, 1960, and towards the end of 1961 or in the beginning of 1965, that is to say, after the death of Prohladrai Gupta, Kenai, Gupta nephew of Prohladrai Gupta, discovered the will while going through the papers of Prohladrai Gupta. According to that will, "Smt. Ratni Debi, step-mother of the deceased. Satyanarayan, was the only heir and the assessee had no interest in the estate or the asset left by Satyanarayan Agarwalla, deceased. The ITO rejected the story set up by the assessee as he doubted the genuineness of the will. The ITO, accordingly, included the income from the estate of the deceased, Satyanarayan Agarwalla, in the total income of the assessee for the accounting period relevant to the assessment year 1966-67. This view of the ITO was upheld by the AAC in his order dated 18th June, 1974. In the wealth-tax assessment of the assessee for the year under consideration the assessee took up a similar plea for non-inclusion of the net value of the estate of the deceased and the said stand of the assessee was also rejected. The value of the estate of the deceased, Satyanarayan Agarwalla, was, therefore, included in the net wealth of the assessee for the year under consideration. Having come to the said conclusion, the WTO initiated proceedings for penalty under Section 18(1)(c) of the Act, for having concealed the particulars of the said asset, viz., the estate of the deceased Satyanarayan Agarwalla, from including it in the net value of his wealth for the years under consideration. Since the penalty exigible exceeded Rs. 1,000 for each of the said years, the penalty proceedings were forwarded by the WTO to the IAC, who after considering the contentions raised by the assessee before him pursuant to the show-cause notice, passed an order for the year 1962-63, which had been followed by him in respect of the subsequent penalty order and held that the alleged will of the deceased dated 10th October, 1966, was not a genuine will and penalty was exigible against the assessee under Section 18(1)(c) of the Act as it then stood. He, therefore, levied penalties of Rs. 2,72,815 for the assessment year 1962-63, Rs. 309 for the assessment year 1963-64, Rs. 265 for the assessment year 1964-65, Rs. 442 for the assessment year 1965-66, Rs. 427 for the assessment year 1966-67, Rs. 3,45,719 for the assessment year 1968-69 and Rs. 3,56,612 for the assessment year 1969-70, against the assessee. For coming to the aforesaid conclusion, the IAC held that the facts and circumstances of the case clearly pointed out the guilt of the assessee and concealment of the net wealth punishable under that section. We may also mention that the Income-tax Appellate Tribunal for the assessment year 1966-67 upheld the order of the ITO. The finding of the Income-tax Appellate Tribunal was that the income-tax authorities had clearly established that the will of Satyanarayan Agarwalla was not a genuine document. Further, it was held that no credence could be attached to the so-called will, and the story of the will was clearly an after-thought of the assessee in order to serve his own interest. Thereafter, on the 13th March, 1975, the IAC passed an order for penalty, which we have noted hereinbefore. The assessee went up in appeal before the Tribunal against the penalty orders passed by the IAC and the appeal came up for hearing before the Tribunal on 20th January, 1977. After setting out the facts, which we have mentioned before, and the arguments made, the Tribunal noted in its order dated 20th January, 1977, inter alia, as follows :