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TMI Blog1986 (12) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-12-1971, 7-12-1971 and 20-3-1976 on a net wealth or Rs. 25,56, 878, Rs. 34,23,030, and Rs. 33,02,016 and 19,55,133 respectively. 3. The assessee had made a gift of Rs. 1,00,011 on 7-10-1959 to her minor daughter Km. Manjushree Birla. Subsequent to the completion of original assessments for the four assessment years under consideration, it was found by the WTO that out of the said gift of Rs. 1,00,011 the minor daughter of the assessee had initially acquired 3,000 shares of Hindusthan Motors Ltd., valued at Rs. 3,163 and a piece of land valued at Rs. 68,381. In the previous year relevant to the assessment year 1967-68 the minor derived a capital gain of Rs. 24,330 from the sale of the aforesaid shares. The sale proceeds including the capital gain was then invested by the minor in acquiring 3,000 shares of Hindusthan Aluminum Corpn. Ltd. Out of these shares, 1,660 shares were acquired at the original cost price Rs. 31,630 and the remaining 1,340 shares were acquired with the capital gain of Rs. 24,330. In the original returns, the assessee had disclosed the gift of Rs. 1,00,011 made to her minor daughter on 7-10-1959 but did not disclose the fact and particulars about the convers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... four years from the end of the assessment year. It was contended that the provision of section 17(1)(a) did not apply to the assessee's case. It was submitted that the gift of Rs. 1,00,011 made by the assessee to her minor daughter was clearly shown in Annexure XIII of the wealth-tax return. In the return, it was claimed by the assessee that this amount was not to be included in the net wealth of the assessee. The original assessment was accordingly completed. It was also contended that primary facts were disclosed before the WTO. Regarding the sum of Rs. 24,330 the submission made on behalf of the assessee was that on merits also this amount was not includible in the net wealth of the Assessee. In this connection, it was contended that section 4(1)(a)(ii) provided for clubbing the value of the assets held by a minor child to whom such assets have been transferred by her parent. The accretion to the transferred assets cannot be clubbed with the wealth of the minor's mother. In supports of this contention reliance was placed on the decision of the Bombay High in the case of CWT v. Kishanalal Bubna [1976] 103 ITR 56 and the decision of the Madras High Court in Court the case of CWT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he WTO and that he was, therefore, justified in reopening the assessments under section 17[1][a]. It was further submitted that since primary facts necessary for assessments of the assessee's net wealth were not disclosed by the assessee, the WTO rightly assumed jurisdiction for reopening assessments under section 17[1][a]. It was then contended that the disclosure required to be made by the assessee must be full and true and that the disclosure had to be made by the assessee herself and that it was her duty to draw the attention of the WTO to the material facts, which in this case, the assessee had failed to do. It was then contended that non-inclusion of the amount of Rs. 1,00,011 in the net wealth of the assessee in the original assessment for the assessment year 1969-70 was due to erroneous application of law by the WTO and that in such a situation also he was empowered to assume jurisdiction under section 17. It was then submitted that even if necessary facts could have been gathered by the WTO on making an enquiry this would not have absolved the assessee of the legal duty to disclose all the material fact. In support of these contention reliance has been placed on the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the contention that the facts relating to conversion of the gifted amount into shares, transfer of shares and subsequent acquisition of shares with the help of the value of the shares from Hindusthan Motors Ltd. and the capital gains derived by the assessee from transfer of these shares were not required to be mentioned by the assessee in the return. Reliance has been placed on the decision of the Supreme Court in the case of V. D. M. RM. M. RM Muthiah Chettiar. It was submitted that the subsequent decision of the Supreme Court on the point in the case of CIT v. SMT. P. K. Kochammu Amma [1980] 125 ITR 624 did not overrule the decision in the case V. D. M. RM. M. RM. Muthiah Chettiar and that the earlier decision decision by the three Hon'ble judges of the Supreme Court has to be followed, as has been held by the Allahabad High Court in the case of CIT v. Sohan Lal [1983] 143 ITR 901. It was then contended that the legal duty placed upon the assessee was to disclose the particulars regarding the gift made by her in favour of her minor daughter and that those particulars were duly mentioned by her an Annexure XIII of the returns filed by her and that the assessee was under no l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her submitted that material particulars were required to be disclosed by the assessee in the wealth-tax proceedings and that as a result of her failure to do so the WTO was empowered to reopen the assessments under section 17[1] [a]. In support of the contention reliance has been placed on the decision of the Calcutta High Court in the case of ITO v. Sudhir Kumar Bhose [1972] 84 ITR 60. Reference was made to the definition of the word 'property' as contained in Explanation [c] to section 4 to show that it includes any interest in any property and sale proceeds thereof. 12. We have considered the rival contentions made before us and have gone through the record of the case. we have also duly considered all the authorities cited before us on behalf of the parties. As has already been pointed out above in the wealth-tax returns the assessee disclosed the particulars about the gift of Rs. 1,00,011 made by her in favour of her minor daughter on 7-10-1959. This amount was not included by the WTO in the wealth of the assessee in the assessment framed for the assessment year 1969-70, but it was included in her net wealth for the remaining three assessment years. The amount of Rs. 24,330 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result of the transfer of the gifted property. In view of the form prescribed for the return required to be filed by the assessee she was under no legal obligation to disclose facts relating to conversion of the gifted amount into shares and land, transfer of shares, capital gains arising from such transfer and subsequent acquisition of shares with the help of sale proceeds of the shares of Hindusthan Motor Ltd. In taking this view we are fortified by the decision of the Supreme Court in the case of V.D.M.RM.M.RM Muthiah Chettiar. This decision was given by three Hon'ble Judges of the Supreme Court. In that case in the form of returns prescribed under rule 19 of the Indian Income-tax Rules, 1922, there was no clause which required disclosure of the income of any person other than the income of the assessee which was liable to be included in his total income nor was the assessee required under section 22[5] of the Indian Income-tax Act, 1922 to disclose in the return that any income was received by his wife or minor child admitted to the benefits of partnership in a firm of which he was a partner. Their Lordships held that assuming that there were instructions printed in the forms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to in any of the sub-clauses aforesaid are held in the form in which they were transferred or otherwise. Great emphasis was laid on behalf of the department on the words "whether the assets referred to in any of the sub-clauses aforesaid are held in the of form in which they were transferred or otherwise" in support of the contention that the assets held by the minor daughter of the assessee in the changed form acquired out of the gifted amount have to be considered for the purpose of inclusion of the value of the assets in the hands of the assessee under section 4(1) (1) (a) (ii) and that it is the market value of those assets on the relevant valuation dates that would be includible in the net wealth of the assessee. A reading of section 4(1) (a) (ii) goes to show that it is only the value of the assets transferred by the assessee to her minor child that is includible in the net wealth of the assessee. The words 'to whom such assets have been transferred' occurring in sub-clause (ii) of clause (a) of section 4(1) clearly go to indicate that it is only the value of the transferred assets held by the minor child on the valuation date that is to be included in the net wealth of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee need not be discussed as they related to cases arising under section 64 of the Income-tax Act. 15. The provision contained in Explanation (c) to section 4 defining the expression 'property' is not at all relevant for the purpose of the present case. For the purpose of section 4, Explanation (c) defines the expression 'property. In the reassessments the WTO included the sum of Rs. 24,330 in the net wealth of the assessee under section 4(1) (a) (ii) in all the assessment years and further included the sum of Rs. 1,00,011 under the same provision in the first assessment year i.e., assessment year 1969-70. Section 4(1) (a) (iii) does not speak of 'property. It only speaks of assets which is defined under section 2(e) of the Act. So, for interpreting the provision of section 4(1) (a) (ii) we cannot look to the definition of the expression 'property' as given in Explanation (c). Moreover, the Explanation was inserted by the Finance (No. 2) Act, 1971 with effect from 1-4-1972 and, therefore, it will not apply to the cases relating to the assessment years 1969-70 to 1971-72. It will not doubt apply to the assessment year 1972-73. But as we have just pointed out above, the defi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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