1985 (12) TMI 92 - AT - Wealth-tax

Summary

Issues Involved:
1. Inclusion of 1/4th share of interest of the assessee in the net assets of the firm M/s G. S. Atwal & Co. (Asansol) for the assessment year 1961-62.
2. Validity of the disclosure made in November 1965 and its impact on the assessee.
3. Admissibility of additional evidence and the Departmental report obtained by the assessee.

Detailed Analysis:

1. Inclusion of 1/4th Share of Interest in Net Assets:
The primary issue in the appeal is the inclusion of the assessee's 1/4th share in the net assets of the firm M/s G. S. Atwal & Co. (Asansol) as of the valuation date, 31st Dec. 1960, for the assessment year 1961-62. The Wealth Tax Officer (WTO) initially included this share in the total wealth of Rs. 7,05,212. The assessee objected, arguing that he ceased to be a partner on 31st Dec. 1960, as per the partnership deed dated 3rd March 1961. However, the WTO rejected this contention, noting that the assessee's minor sons were admitted to the benefits of the partnership and the capital contribution was sourced from the assessee's account. The Appellate Assistant Commissioner (AAC) upheld the WTO's decision, stating that the assessee remained a partner until 31st Dec. 1960, making Rule 2 applicable for determining the interest in the firm.

2. Validity of the Disclosure Made in November 1965:
The assessee contended that the disclosed amount of Rs. 46.15 lakhs should be excluded from the assessment as the disclosure was made in November 1965, after he had retired from the firm. The disclosure was attributed to the activities of Late G. S. Atwal, and the assessee claimed no knowledge or consent regarding it. The WTO, however, found evidence suggesting the assessee's active association with the disclosure and included the 1/4th share of the disclosed amount in the assessment. The AAC also rejected the assessee's contention, noting that the disclosed amount related to the firm's business activities during the years the assessee was a partner.

3. Admissibility of Additional Evidence and Departmental Report:
The assessee sought to introduce a Departmental report dated 10/13th Sept. 1969, which was not considered by the AAC. The report indicated that the disclosed amount belonged to Late G. S. Atwal, supporting the assessee's claim of having no interest in the disclosed amount. The Revenue objected to the admission of this report, arguing that it was obtained surreptitiously and was not part of the original remand order. The Tribunal considered the relevance of the report, noting that it related to the same subject matter and could substantiate the assessee's claims. Citing the Supreme Court's decision in Magraj Patodia, the Tribunal held that the report's admissibility should not be barred solely because it was obtained by questionable means.

Conclusion:
The Tribunal set aside the AAC's order, directing a fresh disposal of the appeal by the AAC. The AAC was instructed to consider all grounds raised by the assessee, including the Departmental report, and to provide both parties with adequate opportunities to be heard. The Tribunal emphasized the need for substantive justice and requested the AAC to expedite the disposal of the appeal due to its age. The appeal by the assessee was treated as allowed for statistical purposes.