Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2021 Supreme(Bom) 89

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
UJJAL BHUYAN, MILIND N. JADHAV, JJ.
Nirajkumar N. Rungta & Anr. - Applicants
Versus
Commissioner of Wealth Tax Bombay City VII, Bombay - Respondent
WEALTH TAX APPLICATION NO.3 OF 1984, WEALTH TAX REFERENCE NO.8 OF 1991, 2 OF 1992, 4 OF 1993, 3 OF 1994, 8 OF 1994. 102 OF 1998. 11 OF 2000, INCOME TAX APPEAL NO.362 OF 2003, INCOME TAX APPEAL NO.608 OF 2003, WRIT PETITION NO.793 OF 2005
Decided on : 05-05-2021

Advocate Appeared:
For the Appellant :Mr. Ashish Kamat a/w. Anoshak Davar, Ms. Kausar Banatwala, Gauri Sakhardande, Advocates i/by Mr. Tushar Goradia
For the Respondent: Mr. Suresh Kumar a/w. Ms. Mohinee Chougule, adv

Point of Law: Taxation - Assessment - Benefit of exemption from including value of gold - Direction to Income Tax Appellate Tribunal to refer the 5 questions of law arising out of its orders in WTA for the assessment years 1961-62 to 1975-76. By order, this court admitted above Wealth-tax Application and restricted rule.

Headnote:
Wealth Tax Act, 1957 - Section 7 and 27(3)(b) - Gold Control Rules 1962 - Rule 126-L(16) - Documentary evidence - Value of assets how to be determined - Seeking return, release and investment of seized gold in Gold Bond Scheme - Whether Tribunal erred in law in including market value of said gold in computation of net wealth of original petitioner - Whether Tribunal erred in law in rejecting assessee's submissions that even if said gold were to be included innet wealth, value thereof to be taken ought to be NIL or ought to be arrived at, bearing in mind liability for confiscation, fine and penalty and bearing in mind that what had to be valued was price which assessee claim to be restored possession of said gold would fetch, if sold in open market - Whether Tribunal erred in law, in rejecting Assessee's claim that the matter had to be considered on footing of Assessee having invested said gold in Gold Bonds which were exempt from Wealth-tax - Whether Department having knowingly and consciously prevented Assessee from investing gold in purchase of Gold Bonds under Gold Bond Scheme which was then in operation, can in law charge Assessee to wealth-tax on footing that Assessee continues to be owner of said gold (and not Gold Bonds) and was thus liable to wealth-tax on value of gold - Whether Tribunal erred in law in holding that rules and principles of equity would have no application to present case.
Finding of the court: That there cannot be any market value ascribed for valuation of seized gold on respective valuation dates in view of the fact that the gold being seized was in the custody of the Central Excise Authorities on the respective valuation dates and the right of the original assessee was in jeopardy. Thus, we do not agree with the findings returned by the Tribunal in its order in so far as the issue of valuation is concerned - A perusal of recovery notice dated 22.09.2004 does not evince confidence in the Court as the same is inadequate in terms of any details. Therefore, we are inclined to set aside the notice of recovery dated 22.09.2004 with liberty to the respondents/Revenue/Income Tax department to issue a fresh notice in accordance with law and if permissible in law to the legal heirs of the original assessee. If such a recovery notice is issued, it shall be open to the petitioners to contest the same whereafter law will take its own course.
Result: Writ petition disposed of

JUDGMENT :

MILIND N. JADHAV, J.

1. Heard Mr. Ashish Kamat a/w. Mr. Anoshak Davar, Ms. Kausar Banatwala, Ms. Gauri Sakhardande, Advocates i/by Mr. Tushar Goradia, Advocate for the appellants/petitioners and Mr. Suresh Kumar a/w. Ms. Mohinee Chougule, Advocates for the respondents.

Proceedings before the Court :-

2. The appellants have filed Wealth-tax Application No.3 of 1984 under the provisions of section 27(3)(b) of the Wealth Tax Act, 1957 (hereinafter referred to as "the said Act") for a direction to the Income Tax Appellate Tribunal, Bombay Bench 'C', Bombay to refer the 5 questions of law arising out of its orders dated 19.07.1983 in WTA Nos.598 to 612(BOM)/1981 for the assessment years 1961-62 to 1975-76. By order dated 28.08.1984, this court admitted the above Wealth-tax Application and restricted rule to the following two questions of law :

"(i) Whether, on the facts and in the circumstances of the case the Tribunal erred in law in including the market value of the said gold in the computation of net wealth of the original petitioner ?

(ii) Whether, on the facts and in the circumstances of the case the Tribunal erred in law in rejecting the assessee's submissions that even if the said gold were to be included in the net wealth, the value thereof to be taken ought to be NIL or ought to be arrived at, bearing in mind the liability for confiscation, fine and penalty and bearing in mind that what had to be valued was the price which the assessee claim to be restored possession of the said gold would fetch, if sold in the open market ?"

2.1. The Income-Tax Appellate Tribunal, 'B' Bench Bombay (hereinafter referred to as "the Tribunal") in seven separate Wealth-tax References i.e. WTR Nos.8/1991, 2/1992, 4/1993, 3/1994, 8/1994, 102/1998 and 11/2000 filed at the instance of the assessee, referred to us the following two questions as questions of law for our opinion under section 27 (1) of the said Act in respect of Assessment Years 1961-62 to 1975-76, 1979-80 and 1980-81, 1981-82 to 1984-85, 1986-87 to 1988-89, 1990-91 and 1991-92 and 1989-90, 1992-93 and 1993-94 :

"(i) Whether on the facts and in circumstances of the case, the Tribunal erred in including the market value of the gold to the computation of net wealth of the original petitioner i.e. Chiranjial Shrimal Goenka?

(ii) Whether on the facts and in circumstances of the case, the Tribunal erred in rejecting the assessee's submissions that even if the said gold was included in the net wealth the value thereof to be taken ought to be NIL or to be arrived at bearing mind liability for confiscation, fine and penalty and bearing in mind that what had to be valued was the price which the assessee claim to be restored possession of the said gold would fetch if sold in open market ?"

2.2. Income Tax Appeal No.362 of 2003 has been filed by the assessee under the provisions of Section 27-A of the said Act to challenge the order dated 25.11.2002 passed by the Income Tax Appellate Tribunal, Bench - H, Mumbai in Wealth Tax Appeal Nos. 178, 179 and 180/Mumbai/2002 for the assessment years 1996-97, 1997-98 and 1998-99. Income Tax Appeal No.608 of 2003 has been filed by the assessee under the provisions of Section 27-A of the said Act to challenge the order dated 04.03.2003 passed by the Income Tax Appellate Tribunal, Bench - E, Mumbai in Wealth Tax Appeal Nos.221 and 222/Mum/2002 for the assessment years 1994-95 and 1995-96.

2.3. Income Tax Appeal Nos.362 of 2003 and 608 of 2003 have been filed under the provisions of Section 27A of the said Act to challenge the order dated 25.11.2002 and 04.03.2003 passed by the Tribunal in WTA Nos.178, 179 and 180/Mumbai/2002 for the assessment years 1996-97, 1997-98 and 1998-99 and WTA Nos.221, and 222/Mumbai/2002 for the assessment years 1994-95 and 1995- 96. There were admitted by this court on 08.09.2006 and 20.10.2006 for determination of the following common questions of law:-

"(1) Whether, on the facts and in the circumstances of the case, the Tribun

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2021 Supreme(Bom) 89

Cases Referred (3)