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TMI Blog1980 (7) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, the Income-tax Appellate Tribunal was justified in law in confirming the penalties of Rs. 1,716 (assessment year 1962-63), Rs. 309 (assessment year 1963-64), Rs. 265 (assessment year 1964-65), Rs. 442 (assessment year 1965-66), Rs. 427 (assessment year 1966-67), Rs. 3,45,716 (assessment year 1968-69) and Rs. 3,56,612 (assessment year 1969-70), under section. 18(1)(c) of the Wealth-tax Act, 1957 ? The years involved are assessment years 1962-63, 1963-64, 1964-65, 1965-66, 1966-67, 1968-69 and 1969-70, for which the respective valuation dates were Dewali days of Sambat years 2018, 2019, 2020, 2021, 2022, 2024 and 2025. In the wealth-tax assessments of the assessee for the years under consideration, the WTO had included in the " net wealth " of the assessee the market value of the estate of his deceased son, Satyanarayan Agarwalla, from his first wife. The assessee had not shown these assets left by his deceased son in the wealth-tax returns for those years in question. The deceased, Satyanarayan Agarwalla, was being assessed at Raigarh up to the assessment year 1957-58, while the assessee was assessed at Calcutta. The assessee had also been a wealth-tax assessee since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at is to say, after the death of Prohladrai Gupta, Kenai, Gupta nephew of Prohladrai Gupta, discovered the will while going through the papers of Prohladrai Gupta. According to that will, Smt. Ratni Debi, step-mother of the deceased. Satyanarayan, was the only heir and the assessee had no interest in the estate or the asset left by Satyanarayan Agarwalla, deceased . The ITO rejected the story set up by the assessee as he doubted the genuineness of the will. The ITO, accordingly, included the income from the estate of the deceased, Satyanarayan Agarwalla, in the total income of the assessee for the accounting period relevant to the assessment year 1966-67. This view of the ITO was upheld by the AAC in his order dated 18th June, 1974. In the wealthtax assessment of the assessee for the year under consideration the assessee took up a similar plea for non-inclusion of the net value of the estate of the deceased and the said stand of the assessee was also rejected. The value of the estate of the deceased, Satyanarayan Agarwalla, was, therefore, included in the net wealth of the assessee for the year under consideration. Having come to the said conclusion, the WTO initiated proceedings f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at further investigation is necessary about the genuineness of the will in question. The assessee submitted the form, E.D No 1, claiming himself to be the sole heir of his son Satyanarayan Agarwalla but his plea has been that the will came to light later on from the records of Prohladrai Aggarwal after his death. Adverse inference in the assessments were drawn against the assessee on the grounds of difference in age as given in the will and the death report but it is nobody's case that Satyanarayan Agarwalla did not die. The will was produced before the ITO in the assessment proceedings for the assessment year 1966-67. A copy of the will produced before us shows that the will was attested by a notary public who gave the date of attestation. Smt. Ratni Devi applied to the High Court at Calcutta and has obtained letters of administration. Prima facie the grant of letters of administration by the High Court supports the assessee's contention about the genuineness of the will but the department's case is that it has been obtained by Smt. Ratni Devi in collusion with her husband, the assessee. It has been held in the case of CIT v. Khoday Eswarsa and Sons [1972] 83 ITR 369 (SC), that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e alleged will was not a bona fide will. The IAC further held that Satyanarayan Agarwalla was illiterate and, according to the assessee, Satyanarayan Agarwalla was separated due to stepmotherly relation with the assessee's second wife, Sm. Ratni Debi. At the time of separation in 1948, Satyanarayan Agarwalla's age must have been 17 and by that time the assessee, Gopi Chand Gupta, already bad a few children by his second wife, Sm. Ratni Debi. In such a setting the relations between the son and his stepmother did not normally undergo a change from a strained position to "very happy and sweet tenderly relation", so much so that the stepson gave away all his assets by way of will to the step-mother. The IAC observed that, if such a change for the better did happen, then it was the duty of the assessee to show by direct circumstantial evidence that a happy change really occurred. The IAC observed that there was no evidence of such a change and, therefore, it was an abnormal story. It was further noted that Satyanarayan Agarwalla was illiterate and hence it was rather impossible for him to write the will on his own. Nothing had been stated about the person who prepared the will for Satya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is reasonable to conclude that the money introduced in the garb of ornaments sale as well as the business were really owned by Satyanarayan's father, and the assessment was sought to be made in the name of the son, only with the ultimate motive to evade adequate assessment in the hands of the assessee, Sri Gopichand Gupta. In some of the years, speculation profits were shown by Satyanarayan for the assessment years 1950-51 and 1951-52, but here again no conclusive evidence in support thereof were produced before the ITO, Raigarh. Satyanarayan's main income was from interest from investments made with various concerns by his father. In the assessment year 1951-52, interest was received from Devi Devisahai Parmanand of Muzaffar Nagar. This firm belonged to the assessee's brother. The position was more or less similar in other years. In the assessment years 1954-55 to 1956-57, the income was entirely derived from interest earned on deposits. It, therefore, follows that the income and the assets of Satyanarayan actually belonged to the assessee." Therefore, the IAC concluded that the assets left by the deceased did not in effect belong to Satyanarayan. According to him, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a device for concealing the particulars of the asset in question in his wealth-tax returns for the years under consideration. Penalty is, therefore, exigible against him under section 18(1)(c) of the Act. The amounts of the penalty levied are fair and reasonable and call for no interference." The Tribunal thus held that the conclusion of the IAC that the signature purporting to be that of Satyanarayan Agarwalla on the will was not his signature, had not been proved to be wrong by the assessee. The Tribunal further held that the will in question was not genuine and it had been set up as a device by the assessee in order to serve his own interest. To complete the narration of events, it must be mentioned that probate was granted to the said will on 7th December, 1976, and the probate was produced before the Tribunal which will appear from the order dated 20th January, 1977, of the Tribunal at p. 70 of the paper book. Thereafter, a remand report was called for, as indicated before. Thereafter, the Tribunal disposed of a miscellaneous application filed by the assessee by its order dated 19th July, 1979. There, the Tribunal held that it was never urged by the assessee that the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal under s. 30 of the Indian I.T. Act, 1922. But the mere existence of a dispute as to the title, even where a suit had been filed, could not of itself hold up an assessment until the final determination of the suit. In a suit for declaration of title and partition a consent decree was passed declaring that the plaintiff being the assessee in that case, and the defendant were equally entitled to the residue of the estate of a deceased person and a Commissioner for partition was appointed. The parties were jointly given liberty to realise the rents of the joint estate on joint receipt and to meet the necessary expenses thereout. The I.T. authorities treated the assessee and the defendant as owners of the properties in equal shares and levied income-tax on the assessee on half of the annual value. In that context, Panckridge J., on behalf of the Division Bench, made the aforesaid observations which we have mentioned before. Basing on the aforesaid decision, in an unreported decision in I.T. Ref. No. 203 of 1975, judgment delivered on 16th February, 1978 (since reported in Mahamaya Dassi v. CIT [1980] 126 ITR 748), I had observed that the powers of the ITO, so far as revenue purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y residing at No. 10, Narayan Prasad Babu Lane, Calcutta, was duly proved registered and letters of administration of the property and credits of the said deceased were granted to Smt. Ratni Debi, the beneficiary under the said will in accordance with law. Under s. 2(f) of the Succession Act, probate means the copy of the will certified under the seal of a court of competent jurisdiction with a grant of administration to the estate of the testator. So in the eye of law, the grant of letters of administration with a copy of the will annexed and the grant of probate stand on the same footing. The matter relating to grant of probate or letters of administration, in our opinion, is concluded by the decision of the Supreme Court in the case of Surinder Kumar v. Gian Chand, AIR 1957 SC 875. There, the facts are more or less identical and a claim was made out against a third party. In the High Court the will was produced but as it was not probated the will was not taken note of. Before the Supreme Court, an application was made for the admission of additional evidence indicating that there had been a grant of probate. There was an adjudication as to the admission of additional evidence an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proceedings there, or whether it was attempted in a court of appeal during the pendency of an appeal against a judgment by which the will had been pronounced to be a forgery. The essence of the matter was that the question in controversy affected not merely the parties before the court, but also others who were bound by the decree, though not represented before the court. In the case of Chandra Kishore Roy v. Prasanna Kumari Dasi [1911] ILR 38 Cal 327, the judicial Committee of the Privy Council reiterated that the grant of administration with the will annexed was, within the meaning of s. 3 of the Act of 1865, a grant of probate which was a compliance with the provisions of s. 187 of that Act. The grant of probate and grant of letters of administration with the copy of the will annexed stand on the same footing and, in this connection, reference may also be made to the Bench decision of this court in the case of Charu Chandra Pramanik v. Nahush Chandra Kundu, AIR 1923 Cal 1, where Sir Asutosh Mookerji also reiterated the same principle at p. 3 of the report. In the case of Kailash Chandra v. Nanda Kumar, AIR 1944 Cal 385, Mr. Justice B. K. Mukherjee, as the learned judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consent establishing a will in solemn form did not bind a party who, though served with citation to appear in the proceedings had not appeared or represented at the hearing, so as to prevent him from taking proceedings to revoke the probate. As a matter of fact, Halsbury noted that the judgment in rem by consent to certain extent was a self-contradiction in term. In this case, it was a mistake to state that the letter of administration was granted by consent. Citation is normally issued when an application is made either for a grant of letters of administration or for a grant of probate to the necessary parties. Instead of serving citation if the parties consent to the order then the only effect is not that the probate is granted by consent of the parties but the process of serving citation is no longer necessary and the period is shortened, even then, it is to be presumed by law that the court must be satisfied about the genuineness of the will. Indeed, the recital of the certified copy of the grant of letters of administration, in this case, recites that the will having been proved in this case the grant was made. The grant was not made because the father of the next of the kin h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re Prasad Narain Singh v. Promoda Behari Singh, AIR 1944 Patna 182, where the Division Bench reiterated that the probate did not amount to any adjudication but it only recited the fact that the adjudication had been already made. It was held that the grant of a probate was not a decree. It was observed that the same could not be revoked except by the court which granted it, and unless the probate was revoked, no useful purpose would be served by going into the question as to whether the will was a forgery in a subsequent suit. So long as the probate stood, no effective relief could be obtained by the parties to the subsequent suit, therefore, the court was of the view that disallowing evidence sought to be adduced to prove that the will was a forgery was not improper. In the case of R. Viswanathan v. Abdul Wajid AIR 1963 SC 1, the Supreme Court has considered about the conclusiveness of a foreign judgment in the context of s. 13 of the CPC. In considering whether a judgment of foreign court was conclusive, the courts in India would not enquire whether the conclusions recorded thereby were supported by the evidence, or were otherwise correct, because the binding character of the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that no probate of the will had been taken out. To clear up the point, the court sent for the papers from the original side, but did not find from them that probate was granted to any one. Letters of administration with a copy of the will annexed to the application, appeared to have been given to the widow on the renunciation of the executors named in the will. Such letters of administration were equivalent to probate, there was no judicial finding that the will was true one and no proof in solemn form was required by law. The court in its remand order appeared to have thought that probate had been granted. The facts of the present case are that the certified copy of the grant of letters of administration clearly establishes that the record of the will was proved. Reliance was placed on certain observations in Phipson's Evidence, 11th edn., p. 1340, that in so far as the judgment in rem regarding probate is concerned or letters of administration is concerned, in our opinion, the said observations do not advance the position any further. In the illustration an example is given that if A obtained a probate on B's will in proceedings between strangers the probate was neither concl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the assets really belonged to the assessee. It was contended by the assessee that that was not the case before the original ITO nor was it the case before the IAC or the Appellate Tribunal at the first stage. Therefore, it was argued that the IAC had really gone beyond his jurisdiction to make such a finding. It was secondly urged that such a finding of the IAC was against the preponderance of the evidence on record. The Tribunal, however, on this aspect has not given its decision; the Tribunal has not decided whether the IAC had jurisdiction to go into this question or whether the findings of the IAC that the deceased had no estate or assets left, which could be covered by the will, nor whether such finding of the IAC was beyond the evidence on record because the Tribunal felt that the matter was concluded and further investigation was not necessary. On this aspect of the matter, the Tribunal had not adjudicated. Learned advocate for the assessee contended that in view of the observations of the House of Lords in the case of Craddock (Inspector of Taxes) v. Zevo Finance Co. Ltd. [1946] 27 TC 267, this question was no longer open for investigation. The said decision, in our opini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable thereto. It will be open to the Tribunal to dispose of the appeal under section 66(5) of the Income-tax Act, 1922, in the light of the observations made by this court after determining the questions which ought to have been decided." On this basis, in our opinion, the appropriate manner in which question No. 3 should be disposed of in this case is to say that the Tribunal was not justified in law in confirming the order of penalties on the ground that the will was not genuine. But the Tribunal would be free to determine whether the order of penalty could be confirmed or not by consideration of the facts whether the deceased left any asset which could be covered by the will and in considering that question the Tribunal should consider whether the Tribunal was competent to take into consideration the remand report of the IAC of Wealth-tax and whether such finding of the IAC was based on evidence on record. After considering this aspect, the Tribunal will, accordingly, dispose of the appeal in accordance with law. The questions are answered in the manner indicated above. In the facts and circumstances of the case, the parties will pay and bear their own costs. SUDHIND ..... X X X X Extracts X X X X X X X X Extracts X X X X
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