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TMI Blog1994 (10) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise, Delhi, had levied the penalty of Rs. 25 lakhs for contravention of the said provisions. The gold found during the search was also confiscated under rule 126-L of the said Rules. The order levying the penalty was confirmed, in the order of revision passed by the Special Secretary to the Government of India.The assessee had challenged the levy of penalty by way of writ petition filed before the Hon'ble High Court, which had stayed the recovery of the penalty. The said writ petition is stated to be still pending. The ld. advocate for the assessee had admitted that the amount of penalty has yet not been paid by the assessee. 4. During the assessment proceedings, the assessee had claimed deduction in respect of the amount of penalty on the basis that the same is an outstanding liability. The Assessing Officer did not accept the assessee's claim. The assessee preferred appeal before the CWT (A). It was noticed by him that similar point had come up for consideration before the Tribunal in the assessee's own case for the A. Ys. 1966-67 to 1981-82 and the assessee's claim was rejected by the Tribunal. Following that order of the Tribunal, the ld. CWT(A) upheld the action of the A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .K. Cotton Mfrs. Ltd. the Hon'ble Supreme Court has held as under: "The scheme emerging from the key provisions of the WT Act, 1957, viz., ss. 2(m) and 3, clearly shows that barring those debts which fall within the exclusionary part of section 2(m), all other debts owed by the assessee have to be deducted from the aggregate value of the assets belonging to him on the valuation date. In other words, in order to get disqualified for the purposes of deduction, a debt must fall within the exclusionary part and there Is nothing in the exclusionary part which suggests that the debt must either be relatable to any asset at all or if it is relatable to any asset such asset must be included in the books of account or the balance-sheet of the assessee before a deduction in respect thereof is allowed. If such were the intention of the Legislature the exclusionary part of s. 2(m) would have made a specific provision in that behalf by adding an appropriate sub-clause therein. Sections 2(m)(i) and 2(m)(ii), 4(3), 5 and 6 are merely provisions dealing with typical situations or special categories of assets. From these particular or special provisions no such general principle can be deducted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed by the Excise Authorities did not come to an end merely because the recovery was stayed by the Hon'ble High Court. Since the liability was outstanding on the relevant valuation date, it was a debt owed as held by the Hon'ble Supreme Court in the above-mentioned decision and that being so, the deduction claimed by the assessee has to be allowed. 11. In view of what has been discussed above, we accept the assessee's claim for deduction of the liability amounting to Rs. 25 lakhs. 12. The next issue in both the appeals relate to the addition on account of the value of 9295 kgs. of silver. As already stated above, the Central Excise Department had carried out search operations at the residential premises of the assessee at Chhoti Sadri, Rajasthan, in the month of August 1965. During the course of search operations 9295 kgs. of silver bars and coins were found buried under the earth. Some of the silver bars found during the search operations had foreign markings. The silver found by the Central Excise Authorities during the search operations was handed over to the District Collector, Chittorgarh, who initiated proceedings under the Indian Treasure Trove Act and declared the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aluation date the title of the assessee in respect of the said silver was injeopardy. He has highlighted the point that as per order of the Board of Revenue passed in the year 1975, which was in force on the relevant valuation date, the silver was held to be a Treasure' and, therefore, it cannot be held that it was an asset belonging to the assessee. Therefore, it was urged that the value of the silver on the relevant valuation date should not be included in the assessee's net wealth and in any case its value should be taken at 'Nil'. In the alternative, it was contended, that if any value is to be included, then the same should be taken at a discounted value, which should be 25% of the total value. In that connection reference was made to the provisions contained in section 12 of the Indian Treasure Trove Act, 1878. It has been argued that as per the provisions of the said section, if the finder and the person claiming title to the find have not entered into any agreement with regard to disposal of the treasure, 3/4th of the treasure shall be allotted to the finder and residue to the person claiming title thereto. He has also pointed out that in the appeal pertaining to the A.Y. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he value of the entire silver should be included in the net wealth of the assessee and no discount should be allowed, we stand fortified by the decision of the M.P. High Court rendered in the assessee's own case, which is reported in CWT v. Meghji Girdharilal [1989] 176 ITR 63. 18. For the reasons discussed above, we find no merit in the assessee's appeal on the point. 19. The third issue in both the appeals relate to the addition made on account of the value of 123 kgs. of gold. The Authorities of the Central Excise Department and Customs Department had raided the residential premises of the assessee-HUF at Chhoti Sadri and also at Neemuch on 3/4th June, 1965, and again from 29th July to 20th August, 1965. In the second raid, huge quantity of gold bullion and silver bullion was found by the authorities after digging earth at the residential premises of the assessee at Chhoti Sadri. The assessee's case was that after the said raid, Shri Gunvantlal son of the then karta Late Chhaganlal was carrying out repairs of the residential premises. While digging earth in connection with the repair work, he found 51 gold bars, each weighing 3 seers. This gold was found some time in the mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat value of 123 kgs. of gold should not be included while computing his net wealth. It was the case of the assessee that 57 kgs. of gold, recovered from Ganpatlal is still in possession of the Police and has not been delivered to him. The said gold bars had foreign markings and as such it was prohibited article and thus, the assessee had lost the ownership of the said gold and the same was not an asset belonging to the assessee. As regards 66 kgs. of gold, it was contended that the same cannot be treated as an asset of the assessee because the same has not been returned to him by Ganpatlal Others nor the same could be traced by the Police. These contentions of the assessee were not accepted by the Assessing Officer. He, therefore, included the value of the said gold, while computing net wealth of the assessee. 20. The assessee appealed before the CWT(A). Placing reliance on the order of the Tribunal rendered in the assessee's own case for the A. Ys. 1966-67 to 1981-82, excluding the two years under consideration, the ld. CWT (A) rejected the assessee's claim and upheld the addition. Dissatisfied, the assessee is in further appeal before the Tribunal. 21. The ld. Counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the reason that the addition was sustained by the Tribunal in its order dated 23rd August, 1988. The contention advanced on behalf of the assessee, was opposed by the ld. Departmental Representative and it was contended that the issue stands concluded in favour of the Revenue by the abovementioned decision of the Tribunal. 22. We have given our anxious consideration to the submissions advanced before us and have gone through the orders passed by the Revenue Authorities. A perusal of the order passed by the A.O. makes it abundantly clear that the addition was made in respect of the gold, which the assessee had claimed to have been entrusted to Shri Ganpatlal Hiralal. No addition was made in respect of any gold, which the assessee might be in possession. In the given circumstances, we are of the opinion that the addition can be sustained or deleted only in respect of the gold, which was the subject of assessment. The Tribunal, in our opinion, is not empowered to make any addition in respect of an asset, which was not the subject of assessment. No addition in respect of any new source can be made by the Tribunal or even by the CWT(A). In taking this view, we stand fortified by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the notice of the Tribunal at the time of disposal of the appeal which was decided on 23rd Aug., 1988. Since the value of that gold has already been assessed in the hands of Ganpatlal, it was argued that value of the same gold in the hands of the assessee would amount to double taxation and should not be included in the assessee's net wealth. 25. In the alternative, it war, argued that the assessee's title to 57 kgs. of gold is in jeopardy and on account of clog and hazards of litigation only a nominal value may be added. 26. The above submissions of the assessee were opposed by the ld. Departmental Representative and it was contended that since the assessee was claiming ownership of the gold, its value was rightly included, while computing the net wealth of the assessee. He has also submitted that the issue stands concluded in favour of the Revenue by the earlier decision of the Tribunal. 27. We have considered the rival submissions. It is not in dispute that the assessee was claiming title to 57 kgs. of gold, which was recovered from the possession of Shri Ganpatlal. Since the assessee claimed title to that gold, its value has to be included in the net wealth of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of 'net wealth', the Committee have noted the assurance given by the Minister of Finance that if any asset referred to in the said definition was lost or stolen or destroyed, it would not be included in computing the net wealth of an assessee provided the same had not been insured and that necessary instructions in this respect would be issued to the authorities concerned." 30. In view of what has been discussed above, we hold that value of 66 kgs. of gold is not to be included in the net wealth of the assessee. 31. In the result the appeals stand partly allowed. W.T.A. Nos. 107/Ind/89 and 93/Ind/90: 32. In both the appeals, the first issue relates to the value of 240.040 kgs. of gold bullion, which has been deleted by the CWT(A) from the net wealth of the assessee. It has come in the appeal filed by the assessee that the gold bullion in question was seized from the premises of the assessee and subsequently the same was confiscated by the Collector, Central Excise vide his order dated 24th September, 1966, and the revision filed against that order was also dismissed. The A. O. had included the value of this gold in the net wealth of the assessee. On appeal, the CWT(A) had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced by the parties are the same as were advanced in the appeals pertaining to the A. Ys. 1976-77 and 1977-78. For the reasons already discussed in the said appeals, we are unable to accept the assessee's stand that value of the said silver is not liable to be included in the total wealth of the assessee. That being so, the ground No. 2 of the appeals is rejected. 41. Ground No. 4 in both the appeals relates to the rejection of the assessee's claim for deduction of Rs. 25 lakhs being the penalty levied against the assessee. For the reasons already discussed In the appeals pertaining to the A. Ys. 1976-77 and 1977-78, we hold that deduction for the said amount is admissible and should be allowed. 42. In the result the appeals stand partly allowed. W.T.A. No. 33/Ind/1990 : 43. In Ground No. 1 the assessee objects to the inclusion of the value of 9295 kgs. of silver. For the reasons already discussed in the assessees appeal pertaining to the A. Ys. 1976-77 and 1977-78, we find no merit in the ground and the same is hereby rejected. 44. The second objection relates to the addition of-the value of 57 kgs. of silver. For the reasons already discussed in the appeals for the A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re us, we find no infirmity in the order of the CWT(A). Hence, this ground of appeal is rejected. 53. Ground No. 5 of the appeal reads as under: "On the facts and in the circumstances of the case, the ld. CWT(A) erred in setting aside the assessment on the point of valuation of various properties, viz. : (i) H. No. (old) 266, Vivekanand Marg, Neemuch; (ii) H. No. 266, Baghana; (iii) H. No. 11, Baghana; (iv) Residential house on Sadari Road, Baghana: (v) H. No. 21 (Ginning Factory Godown etc.), Baghana." 54. The CWT (A) was of the opinion that the matter relating to the valuation of the abovementioned properties required further investigation. He, therefore, set aside the matter to the A.O. for a fresh decision. After going through the order of the CWT(A), we are of the opinion that the directions given by him are appropriate and he was justified in setting aside the issue to the A.O. We, therefore, decline to interfere. 55. In the result the appeal stands partly allowed. W.T.A. No. 83/Ind/1989 : 56. Ground No. 1 relates to the addition of the value of 240 kgs. of gold, which has been deleted by the CWT(A). For the reasons already discussed above, we are of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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