9911796707
TMI Blog2012 (9) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the assets, wherever located, belonging to the assessee on the valuation date. Thus, for the purpose of computing the net wealth of an assessee, the assets have to belong to the assessee on the valuation date corresponding to the said assessment year. In the present case, on each valuation date in relation to the assessment years under consideration, admittedly the subject assets stood forfeited. The forfeiture came to an end only on 24.6.1992 when the order of competent authority came to be set aside by the Appellate Tribunal for Forfeited Property. However, till then, the same stood vested in the Central Government. Under the circumstances, when the subject assets did not legally belong to the assessee during the period under consideration, the same could not have been included while computing his net wealth. As during the relevant valuation dates, the order of forfeiture had been stayed by the higher forum. In support of such contention, the learned counsel had placed reliance upon a communication dated 6.11.1992 addressed by the assessee to the Assistant Commissioner of Wealth Tax where it is nowhere stated therein that the High Court had granted interim stay against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been placed by the assessee whereby silver was confiscated on 8.6.1979 was not final and the assessee had right of appeal against such order. He was of the view that by exercising right of appeal, the assessee had moved the appellate forum, which eventually, on 24.6.1992 had set aside the order of competent authority and the silver was restored to the assessee. It, therefore, could not be said that under order of the competent authority, the assessee had lost legally the silver in question. The Commissioner (Appeals), accordingly, upheld the inclusion of the value of subject assets in the net wealth of the assessee for the assessment years under consideration. The assessee carried the matter in further appeals before the Tribunal. By the impugned order, the Tribunal allowed the appeals by holding that in light of the order of forfeiture dated 8.6.1979, the assessee could not be treated as the owner of the silver bars. These silver bars stood confiscated and forfeited and were thus the property of the Central Government. According to the Tribunal, till the order of forfeiture was set aside by the Appellate Tribunal for Forfeited Property vide order dated 24.6.1992, it remained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht to be subjected to exercise of appellate jurisdiction by the Supreme Court. It is only if the application is allowed and leave to appeal granted then the finality of the decree or order under challenge is jeopardised as the pendency of appeal reopens the issues decided and Court is then scrutinising the correctness of the decision in exercise of its appellate jurisdiction. It was submitted that the order of the competent authority being subject matter of scrutiny by the Appellate Tribunal, had not attained finality, and as such during the pendency of the appeal, the assessee continued to remain the owner of the subject assets till the proceedings attained finality. It was, accordingly, urged that the Tribunal was not justified in holding that the value of the subject assets could not be added while computing the net wealth of the assessee. 4.1 The learned counsel vehemently contended that the Tribunal has equated confiscation with forfeiture and while doing so has failed to consider the distinction between the two expressions. In support thereof, the learned counsel placed reliance on the decision of Supreme Court in the case of State of W.B and others v. Sujit Kumar Rana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and as such, could not be included in the net wealth of the assessee for the assessment years under consideration. According to the learned counsel, wealth tax being an annual levy, what is relevant is as to whether or not such assets belong to the assessee on the valuation date. In the present case, on the respective valuation dates corresponding to the assessment years under consideration, the subject assets [did not belong to the assessee and as such, the Tribunal was justified in holding so. 5.1 In support of his submissions, the learned counsel placed reliance upon the decision of a Division Bench of this Court in the case of Jayantilal Amritlal v. Commissioner of Wealth-tax, [1982] 135 ITR 742, wherein the assessee had not included the value of gold in his net wealth on the ground that as the gold was seized and proceedings were pending, their value as on the valuation date was "nil". The Wealth Tax Officer had rejected the assessee's contention and assessed the market value of the gold and included it in the value of the net wealth of the assessee in each of the assessment years. The Appellate Commissioner as well as the Tribunal confirmed the view taken by the Wealt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority had not attained finality as the appeal was pending and therefore, the subject assets belonged to the assessee during the relevant period, the learned counsel for the assessee placed reliance upon the decisions of the Supreme Court in Kedarnath Jute Mfg. Co. Ltd v. Commissioner of Income-tax (Central), Calcutta, [1971] 82 ITR 363, in Commissioner of Income-tax v . Kalinga Tubes Ltd., [1996] 218 ITR 164 and in Commissioner of Income-tax v. Bharat Carbon and Ribbon Manufacturing Co. P. Ltd., [1999] 239 ITR 505 to which reference shall be made at an appropriate stage. It was contended that in the absence of any stay having been granted against the order of forfeiture, the same would continue to operate and as such, the assessee having no legal right over the said assets during the relevant period, the same having vested in the Central Government free from all encumbrances, such assets could not be included in the net wealth of the assessee. It was, accordingly, submitted that the impugned order passed by the Tribunal being just, legal and proper, does not call for interference by this court. 6. Before adverting to the merits of the case, it may be necessary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t wealth" and would not be chargeable to wealth tax. 9. Thus, what is required to be examined in the present case is as to whether the subject assets belonged to the assessee as on the respective valuation dates so as to be liable to be included while computing his net wealth for the purpose of deciding his liability to pay wealth tax for the corresponding assessment years. 10. It may be recalled that 518 kgs of silver bars belonging to the assessee came to be forfeited by an order dated 8.6.1979 passed by the competent authority under the SAFEMA, in exercise of powers under section 7 of the said Act. Section 7 of the SAFEMA provides for forfeiture of property in certain cases. Sub-section (3) thereof, which is relevant for the present purpose, postulates that where the competent authority records a finding under the said section to the effect that any property is illegally acquired, it shall declare that such property shall, subject to the provisions of the Act, stand forfeited to the Central Government free from all encumbrances. Thus, in the light of the provisions of subsection (3) of section 7 of the SAFEMA, upon the passing of the order under section 7 of the Act, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he dictionary meaning of the term "forfeiture" is loss of all interest in the property in consequence of a crime. In Jayantilal Amritlal ( supra ), this court has observed that if the articles were confiscated, the assessee would have lost the ownership over the same. Applying the aforesaid legal position to the facts of the present case, it is amply clear that upon the order of forfeiture being passed by the competent authority, the subject assets property stood vested in the Central Government free from all encumbrance and as such, the assessee ceased to have any legal interest in the subject assets during the period when the said order of forfeiture was in operation. 13. At this juncture reference may be made to the decision of the Supreme Court in Sujit Kumar Rana ( supra ), on which strong reliance has been placed by the learned counsel for the appellant. The said decision was rendered in context of the provisions of the Forest Act, 1972 as amended by the State of West Bengal. The question involved in the said case was as regards the applicability of section 482 of the Code of Criminal Procedure, 1973 for quashing a proceeding for confiscation of forest produce etc. un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpasses the valuation dates corresponding to the assessment years under consideration, the subject assets stood vested in the Central Government free from all encumbrances. During such period, though the assessee had challenged the order of forfeiture before the Appellate Tribunal for Forfeited Property, the assessee could not claim to be the legal owner of the subject assets nor could it be stated that the goods belonged to him. As noted earlier, for the purpose of computing the net wealth of an assessee what is to be taken into consideration is the aggregate value of all the assets, wherever located, belonging to the assessee on the valuation date. Thus, for the purpose of computing the net wealth of an assessee, the assets have to belong to the assessee on the valuation date corresponding to the said assessment year. In the present case, on each valuation date in relation to the assessment years under consideration, admittedly the subject assets stood forfeited. The forfeiture came to an end only on 24.6.1992 when the order of competent authority came to be set aside by the Appellate Tribunal for Forfeited Property. However, till then, the same stood vested in the Central Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en filed, the judgment, decree or order against which leave to appeal has been sought for, continues to be final, effective and binding as between the parties. Once leave to appeal has been granted, the finality of the judgment, decree or order appealed against is put in jeopardy though it continues to be binding and effective between the parties unless it is a nullity or unless the court may pass a specific order staying or suspending the operation or execution of the judgment, decree or order under challenge. 17. In Kalinga Tubes Ltd. ( supra ), the Supreme Court held that when the assessee is following the mercantile system of accounting in the case of sales tax payable by the assessee, the liability to pay sales tax would accrue the moment the dealer made sales, which are subject to sales tax. At that stage, the obligation to pay the tax arises. Raising of dispute in this connection before the higher authorities would be irrelevant. 18. In Bharat Carbon and Ribbon Manufacturing Co. P. Ltd. ( supra ), the Supreme Court in facts of the said case wherein the liability had accrued over the accounting period because of the demand notice issued by the Excise Department, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein that the High Court had granted interim stay against the order passed by the competent authority under section 7 of the Act. From the facts as emerging from the record, it is apparent that against the order passed by the competent authority under the SAFEMA, the assessee had preferred an appeal before the Appellate Tribunal for Forfeited Property. Before the Tribunal, no order staying the order passed by the competent authority appears to have been placed on record. Under the circumstances, on the basis of above communication addressed by the assessee, it is not possible to accept the say of the learned counsel that the order of forfeiture was stayed during the pendency of the appeal before the Appellate Tribunal. More so because, the Tribunal, in the impugned order has specifically observed that the order of forfeiture remained in operation till it was set aside by the Appellate Tribunal for Forfeited Property vide order dated 24.6.1992. As to whether or not the order of the competent authority was stayed during the pendency of the appeal is a question of fact. The above communication dated 6.11.1992 is sought to be brought on record during the course of hearing of the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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