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TMI Blog1988 (1) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... f July 1982 seems to have been quite an inauspicious day for this family. It was on that fateful day that the IT authorities appear to have simultaneously carried out search and seizure operations under s. 132 of IT Act, (1961) (the Act) and survey operations under s. 133A of the Act at several places in the individual case of Sri Kantilal Gulab Chand Shah, the Karta of this family. The search operations carried on at Flat No. 5-1, Sai Apartment, Gopipura, existing in the name of Sri Anil Kumar K. Shah and whereat Sri Kantilal G. Shah was living at that time brought out jewellery worth Rs. 2,45,000. The search of Locker No. 2465 with Gujarat Safe Deposit Co. Ltd. in the name of Sri Kantilal G. Shah, opened on 24th July, 1982, brought out jewellery weighing 151.45 Tolas worth Rs. 2,33,827 besides cash amounting to Rs. 11,780. In the disposal of these appeals we are not much concerned with the result of search operation at 10/1024. Limdikui, Gopipura another residence of Sri Kantilal G. Shah and survey operation under s. 133A at Barampuri Bhagol, Surat, the business places of M/s Honest Finance Mart and M/s Silver Steel Works wherein Sri Kantital G. Shah was a partner. 4. It was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral lands and the ancestors were also doing money lending business and that from such income and wealth earning activities the assessee had come to acquire and possess its wealth as declared in various returns. The WTO did not feel satisfied with the explanation offered by the assessee and summed up his conclusions in para 5 of his order as follows: "The assessee has shown value of agricultural lands at Nil in respect of ancestral agricultural lands received by a deed dt. 8th July, 1963. Copy of the deed is filed. All the pieces of land are situated at Village Kara Vyara and Bedkuwa. It appears that Shri Gamanaji—grandfather of Shri Kantilal—had four sons, namely S/Shri Gulabchand, Amichand, Bhagwandas and Chhotalal. There is claimed to be a partitions in about 1943. The particulars of partition are not available. But in view of what is stated in a deed dt. 8th July, 1963, Shri Amichand and Shri Gulabchand jointly became the owner of lands at Kara Vyara and Bedkuwa. AT Kara Vyara there were 30 acres and 31 gunthas of land and at Bedkuwa there were 9 acres and 29 gunthas of land." 7. Though the WTO, while making assessment on protective basis only for all the years under consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that assessments for all the years having been made on `Protective' basis only not resulting either in any enhancement to the amount of net wealth returned or of the wealth tax payable, the assessee could have no cause for any grievance to go in appeal before the AAC as by filing the returns the assessee had accepted its liability to be assessed under the Act. Opposing the effort by the Revenue to raise the additional ground at this stage of proceedings, Mr. N. R. Divatia, the learned Advocate appearing for assessee, vehemently submitted that objection to the power of the AAC to hear the appeal was never raised before the lower appellate authority, though the WTO had actively participated in the proceedings before him and, therefore, it should not be admitted at this belated state. On merits, Mr. Divatia submitted that by making protective assessments the WTO had jeopardised the very right of the assessee to be assessed substantively for the net wealth belonging to it. The assessments, as made by the WTO threatened assessee's rights in and title to the net wealth returned and this mode of assessment, claimed Mr. Divatia, gave every right of appeal for the assessee to deny its liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the determination of the amount of net wealth of an assessee and of the amount of wealth tax payable by him gives rights of appeal to him under cls. (a) and (b) above, respectively. As the assessee before us was not aggrieved against the amount of net wealth determined nor against the amount of wealth tax determined as payable by it, neither of the two cl. (a) or (b) of s. 23(1) stood attracted to its case. Let us proceed further. 14. Clause (c) of s. 23(1) stands attracted to the cases of those persons who deny their very liability to be assessed under the Act. In the language of this clause the vital distinction made by the legislature by using the word "denying" instead of the word "objecting" as has been done in the language of all other clauses may clearly be noted. The word "denying" is wider in its meaning and scope than those of the word "objecting". Whereas all the rest f the clauses of sub-s. (1) of s. 23 give specific rights of appeal to a person to raise his objection against the action of WTO taken with regard to a particular point or done in a particular direction, cl. (c) confers upon a person, who denies his very liability to be assessed under the Act, a ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing officer. 17. That apart, the phrase 'liability to be assessed under the Act' occurring in the language of cl. (c) of s. 23(1) not only refers to the determining of the liability of a person to the charge of wealth tax in respect of an asset but also refers to the mode of assessment as well. The words "under the Act" in this phrase mean "in accordance with the provisions of the Act." Sec. 16 of the Act governs the subjects of making assessment on a person. There is nothing in s. 16 which specifically or by necessary implication entitles the WTO to assess more than one assessee in respect of the same asset. The departmental practice of making "protective" assessments has thus no legal sanction. In the case of a protective assessment, therefore, an assessee may very well say that his liability has not been assessed in accordance with the provision of the act. But at the same time nothing contained in s. 16 prevents the WTO from assessing two different assessees in respect of one and the same asset by including that in the net wealth of both. 18. The necessity of making "protective assessments" generally arises in a case where to different persons may be found to be claimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Revenue by raising as many as six grounds of appeal. The pith and substance of all these grounds is that the learned AAC should not have directed the WTO to treat the assessments made by him in these cases as having been made in the status of the assessee as HUF on substantive basis. The objective is sought to be achieved by assailing various findings of the learned AAC with regard to assessee's possessing agricultural lands and earning agricultural income so as to form circulating capital for any money lending business and thus becoming capable of acquiring jewellery and ornaments, silver vessels and utensils and cash on hand as on the relevant valuation dates. Mr. Vyas heavily relied upon the order of the WTO and contended that the learned AAC, in his approach to the case of the assessee, had failed to bring any cogent evidence on record to prove sufficient sources or funds available to it so as to acquire the large wealth. Mr. Vyas further submitted that obtaining a locker in a bank in the joint names of two or more persons of this family was no proof of the fact that such locker was obtained by the HUF and further that it contained any HUF property in it. Likewise the Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any property. Therefore, to render a property to be the joint property of a Hindu family it is required to be proved that the family was possessed of some property with the income of which the property in question could have been acquired or from which the presumption could be drawn that the property possessed by such family was its joint property, or that it was purchased or acquired with joint family fund such as the sale proceeds of ancestral property, or application of the income of its joint fund or even by joint labour. But none of these factors is a matter of legal presumptions. They are to be proved by evidence in the same way as any other facts. Once it is established or admitted that a family possessed some joint property which from its nature or relative value may have formed sufficient nucleus from which the property in question may have been acquired, the presumption arises that it was joint property and the burden shifts to the party alleging self-acquisition to establish affirmatively that the property was obtained without the aid of joint family. All these facts are required to be determined. On the evidence in a given case. secondly, it must be remembered that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in a position to possess the wealth disclosed by it in its returns for various years. The question is whether these facts are probable and also probabilities the possession of the net wealth by the assessee-HUF at the relevant valuation date. 26. In view of the material on record, the facts as mentioned above can hardly be disputed. It is not disputed by the Department that originally the forefathers of the assessee were living in village and at a time, much prior to the arising of the controversy under consideration, were possessed of vast agricultural land. This fact is fully borne out by the relevant extracts form Revenue record and letters written by the Mamlatdar. It is also not disputed that the said land yielding income either in the form of rent or agricultural produce. The very fact that ultimately, the agricultural land was settled with the ganotias under the relevant provisions of Tenancy Laws, clearly suggests that the said land was yielding income to the assessee and its ancestors. Then again, it is also an established fact that the assessee-HUF comes from Marwari Jain Community. The conditions in which this family was living and earning its livelihood in a villag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kept in the locker to be considered joint property of their HUF later on. No doubt engaging lockers does not suggest that any property was kept in it but at the same time the act of engaging the locker does not also suggest that nothing was kept therein. 29. Then again Bank Account No. 8109 was opened on 18th may, 1982 with Bank of Baroda and later on it was having a credit balance of Rs. 25,701. The case of the assessee in that behalf was that the above amount had been obtained by if from sale proceeds of gold ornaments belonging to HUF. Bill No. 554 dt. 21st May, 1982 issued by M/s Chekshi Haji Ali Mohd. Noor Mohd. and the entries in the Bank A/c standing in the name of sri Kantilal G. Shah and his son Sri Anil Kumar corroborated that fact. The entry dt. 1st July,1982 in the books of Anil K. Shah showed that Rs. 42,501 were deposited with him as HUF fund. Above all, the income tax assessment of the assessee-HUF for asst. yr. 1983-84 shows that accrual of long term capital gain to the assessee-HUF from sale of its ornaments was accepted by the ITO. All these pieces of evidence and instances of conduct of parties go a long way to support the conclusions arrived at by the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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