1991 (2) TMI 164 - AT - Wealth-tax

Summary

Issues Involved:
1. Inclusion of gold ornaments and silver utensils in the wealth of the assessee.
2. Ownership of the gold ornaments claimed by the smaller HUF of the assessee.
3. Justification for additions in wealth for assessment years prior to the search year.

Detailed Analysis:

1. Inclusion of Gold Ornaments and Silver Utensils in the Wealth of the Assessee:

The appellant submitted wealth-tax returns on 29-5-1985. A search under section 132 of the Income-tax Act, 1961, was conducted at the assessee's premises on 16-1-1982, resulting in the seizure of cash and gold ornaments. The Settlement Commission determined undisclosed investments in jewellery and cash, bifurcating them across assessment years 1977-78 to 1982-83. The WTO rejected the assessee's claim that the gold ornaments and silver utensils belonged to other individuals and included them in the assessee's wealth-tax assessments. The AAC dismissed the assessee's appeals, leading to the present appeals before the Tribunal.

2. Ownership of the Gold Ornaments Claimed by the Smaller HUF of the Assessee:

The assessee contended that the Settlement Commission did not include the value of jewellery claimed as belonging to the smaller HUF in its determination of undisclosed investments. The Settlement Commission's order did not specifically reject the assessee's claim regarding the HUF's jewellery. The HUF had filed separate wealth-tax returns and was assessed for assessment year 1984-85. The Tribunal found no justification for sustaining additions made by the WTO in respect of the gold ornaments claimed as belonging to the HUF of M.S. Patel.

3. Justification for Additions in Wealth for Assessment Years Prior to the Search Year:

The Tribunal considered whether the gold ornaments and silver utensils found during the search could be treated as wealth liable to wealth-tax for assessment years 1977-78 to 1981-82. The charge under the Wealth-tax Act is on the net wealth of an assessee, defined as the value of assets owned on the valuation date. The Tribunal noted that the assets were found during the search in January 1982, with no evidence indicating their existence on the relevant valuation dates for earlier years. The Tribunal emphasized that the burden was on the Revenue to prove ownership and possession of the assets on the valuation dates. The levy of income-tax on bifurcated income was insufficient to establish ownership of the assets on the valuation dates. Consequently, the Tribunal directed the WTO to delete the additions made in the assessee's wealth for the years under appeal.

Conclusion:

The appeals were allowed, and the Tribunal directed the deletion of the additions made by the WTO in respect of the gold ornaments and silver utensils in the assessee's wealth for the assessment years in question.