1980 (7) TMI 31 - HC - Wealth-tax

Summary

Issues Involved:

1. Competency of the Tribunal to question the genuineness of a will already probated by the High Court.
2. Justification of the Tribunal in holding the will as not genuine under section 273 of the Indian Succession Act, 1925.
3. Justification of the Income-tax Appellate Tribunal in confirming penalties under section 18(1)(c) of the Wealth-tax Act, 1957.

Issue-wise Detailed Analysis:

1. Competency of the Tribunal to Question the Genuineness of a Probated Will:

The first issue addressed whether the Tribunal was competent to question the genuineness of a will that had already been probated by the High Court. The court emphasized that the grant of probate is a judgment in rem, binding on all persons. It was noted that the probate was granted on December 7, 1976, and the Tribunal had to consider this fact. The court referred to several precedents, including the Supreme Court's decision in Surinder Kumar v. Gian Chand, which established that a probate judgment is conclusive and cannot be challenged by parties who were not part of the probate proceedings. The court concluded that the Tribunal was not competent to question the genuineness of the will once probate had been granted, as it was binding on all parties, including the revenue authorities.

2. Justification of the Tribunal in Holding the Will as Not Genuine:

The second issue was whether the Tribunal was justified in holding the will as not genuine under section 273 of the Indian Succession Act, 1925. The court reiterated that the probate judgment conclusively established the validity and execution of the will, as well as the testamentary capacity of the testator. The court cited various cases, including Hiralal Chatterjee v. Sarat Chandra Chatterjee and Saroda Kanta Das v. Gobind Mohan Das, to support the principle that a probate judgment is conclusive and binding on all parties. The court concluded that the Tribunal was not justified in holding the will as not genuine, as the probate judgment was binding and conclusive.

3. Justification of the Income-tax Appellate Tribunal in Confirming Penalties:

The third issue concerned the justification of the Income-tax Appellate Tribunal in confirming penalties under section 18(1)(c) of the Wealth-tax Act, 1957. The Tribunal had sustained the penalties on the ground that the will was not genuine. However, the court noted that the IAC, in his remand report, had found that the assets left by the deceased actually belonged to the assessee, and the will was a device to conceal the particulars of the asset. The court observed that the Tribunal had not adjudicated on whether the IAC had jurisdiction to make such a finding or whether the finding was based on evidence. The court referred to the Supreme Court's decision in CIT v. Indian Molasses Co. P. Ltd., which provided guidance on how to address such situations. The court concluded that the Tribunal was not justified in confirming the penalties solely on the ground that the will was not genuine. The Tribunal was directed to reconsider the issue of penalties by determining whether the deceased left any assets that could be covered by the will and whether the IAC's findings were based on evidence.

Conclusion:

The court answered the first and second questions in the negative, in favor of the assessee, concluding that the Tribunal was not competent to question the genuineness of the probated will and was not justified in holding the will as not genuine. Regarding the third question, the court directed the Tribunal to reconsider the issue of penalties in light of the evidence and the IAC's findings. The parties were directed to bear their own costs.