Full Judgment
M.A. Bakshi, V.P.
The appeal of the assessee for assessment year 1988-89 is directed against the order dated 30-6-1992, of Commissioner (Appeals)-XXIII, Mumbai. Rival contentions have been heard and record perused.
2. The relevant facts in this case are that the appellant was born on 7-1-1972 and, therefore, was a minor till assessment year 1988-89, The return for assessment year 1988-89 was filed on 25-7-1990, after the assessee had attained the age of majority. A declaration under the Amnesty Scheme had been filed under the Wealth Tax Act, 1957, on 31-3-1987, when the assessee was a minor. The silver utensils weighing 145.010 kgs. had been disclosed in the wealth-tax return. The description of the silver utensils as per the valuation report is as under :
Total weight
Item wise weight
Description
I
5.010 kgs.
1.165 kgs.
Five glasses
.418 kgs.
One Atra Thal
.746 kgs.
One bed room set of 3 pcs.
.291 kgs.
One Laxmiji statute
.834 kgs.
One silver box
.904 kgs.
One Ladeo Gopalji with Singhasan
.603 kgs.
Six sweet dish bowl with spoon
.49 kgs.
Babbi 2 pcs.
II
140 kgs.
2 Dinner set of 40 pcs. each, twenty-four thal, katori-96 pcs., Four lemon set, tea-set-3,Ice-cream with tray, Supari Dan, Glasses 120 pcs, etc., and misc. household utensils, Puja utensils and ornaments
3. In the previous year relevant to assessment year 1988-89, the silver utensils weighing 97,549 kgs. with the following description had been sold on behalf of the minor :
2 Dinner sets of 40 pcs. Each
32.865 kgs.
Thal 24 pcs.
32.370 kgs.
Supari Dan, Glasses 120 Pcs. misc. household utensils
32.314 kgs.
97.549 kgs.
4. The assessee did not offer any income by way of capital gains on the sale of silver utensils on the ground that these were personal effects and, therefore, the capital gain was not payable in respect of such assets. The assessing officer rejected the claim of the assessee on the following grounds :
(1) That as per the decision of the Supreme Court in the case of H.H. Hemant Singhji v. CIT : [1976]103ITR61(SC) at page 64, the expression 'personal effects' as intended by the legislature to mean such articles which are intimately and commonly used by the assessee. Thus, the assessee cannot be said to have used the silver utensils intimately and commonly.
(2) That the assessee was a minor till assessment year 1988-89.
(3) That the assessee had disclosed total silver utensils weighing 145.010 kgs in assessment year 1987-88 as per the return filed on 31-3-1987, under the Amensty Scheme. Substantial quantity of silver utensils weighing 97.549 kgs. was sold on 11-9-1987, i.e., just after few months of the disclosure. It has been pointed out by the assessing officer that normally personal effects would be sold only in crisis. Since the assessee was a minor in the year of sale, she was wholly dependent on the parents and it cannot be said that she was in crisis. The assessing officer has also pointed out that the sale proceeds have been utilised in advancing loan to Okhla Steel Ind. (P) Ltd.
(4) That the assessee had sold the silver utensils immediately after the disclosure and proximity of the events show that the silver utensils were the capital assets and not the personal effects as claimed by the assessee.
(5) That the assessee has also sold silver utensils weighing 18.948 kgs. in assessment year 1989-90. This, according to the assessing officer, establishes that the silver utensils were not held by the assessee as personal effects.
(6) That the assessee is a member of family consisting of herself, father, mother, sister and brother. The father did not own any silver utensils. However, other family members owned silver utensils weighing 173.038 kgs. It has been pointed out by the assessing officer that the returned income and the household expenses as per records are not commensurate with the social status claimed by the family.
(7) Relying upon the decision of the Madras High Court in the case of N. Ramanathan Chettiar v. CIT (1985) 152 ITR 439 it has been held that the revenue is entitled to investigate whether the articles which are claimed to be personal effects were required for the personal use of the assessee or whether the articles are in excess of the requirement of personal use so as to fall within the definition of capital assets under section 2(14) of the Act.
(8) The decisions of the Bombay High Court in the case of CIT v. Sitadevi N. Poddar : [1984]148ITR506(Bom) and in the case of Jayantilal A. Shah v. CIT : [1985]156ITR448(Bom) have been held to be distinguishable on facts.
5. The assessing officer accordingly assessed the sum of Rs. 2,01,186 as capital gains on sale of 97.549 kgs. of silver utensils. The assessee appealed to the Commissioner (Appeals) but without any success.
6. The learned counsel for the assessee contended that the assessee had filed wealth-tax returns under the Amnesty Scheme and disclosed the silver utensils. The silver utensils were personal effects of the assessee. The assessee has sold part of the silver utensils during the year under appeal and since the sale of personal effects does not attract capital gains the assessing officer was wrong in charging tax on the gains made by the assessee on the sale of silver utensils. Relying upon the decision of the Bombay High Court in the case of Sitadevi N. Poddar (supra), it was contended that it is not necessary that the articles which were claimed to be personal effects are ordinarily used so. Even if the articles are used occasionally by the assessee, these will qualify to fall within the expression 'personal effects'. The decision of the Bombay High Court in the case of Jayantilal A. Shah (supra) has also been relied upon in support of the contention that the articles of personal effects need not be of daily use. Reliance has also been placed on the decision of the Kerala High Court in the case of CIT v. Smt. Ammini Varoo : [1988]173ITR57(Ker) in support of the aforementioned proposition of law. Relying upon the decision of the Calcutta High Court in the case of CIT v. Benarashilal Kataruka : [1990]185ITR493(Cal) the learned counsel contended that the Thalis have been held to be personal effects of the assessee. Reliance has also been placed on the decision of the Hyderabad Bench of the Tribunal in the case of ITO v. Uppala Bhaktavatsala Rao (1983) 12 Taxman 40 (Hyd) in support of the contention that the nature of the articles are to be taken into consideration for deciding as to whether the utensils were personal effects. The status of the family is also to be kept in mind in deciding the issue. Reliance was also placed on the decision of the Delhi Bench of the Tribunal in the case of Maneka Gandhi v. ITO in support of the contention that the quantum of weight of the utensils sold cannot lead to inference adverse to the assessee. It was pointed out that the facts of this case are some what similar to the facts of assessee's case. Referring to the decision of the Madras High Court in the case of N. Ramanathan Chettiar (supra) relied upon by the department, it was contended that the said decision is not applicable in view of the decisions of the jurisdictional High Court in the case of Sitadevi N. Poddar (supra) and in the case of Jayantilal A. Shah (supra). Relying upon the decision of the Bombay High Court in the case of State of A.P. v. CTO : [1988]169ITR564(AP) , it was contended that when the decision of the jurisdictional High Court is available, the decisions of other High Courts are to be ignored. It was accordingly contended that the appeal of the assessee may be accepted and the addition deleted.
7. The learned Departmental Representative on the other hand sought to support the orders of the revenue authorities. The findings of the Commissioner (Appeals) in para No. 5 at page Nos. 5 and 6 have been relied upon in particular. It was further contended that the sale of personal effects would have taken place under desperate circumstances. The facts and circumstances of this case clearly establish that the assessee had utilised the Amnesty Scheme for the benefit of disclosure of capital assets. It was accordingly urged that the appeal of the assessee may be dismissed.
8. We have given our careful consideration to the rival contentions. The Amnesty Scheme of 1985 was meant to give a chance to the tax-payers to come out clean and pay taxes on the undisclosed income and wealth. Whereas the department is duty-bound to honour the disclosures in letter and spirit, they are not precluded from making enquiries in the event of misuse of the scheme. The appellant was a minor even in the year under appeal. The mere fact that she had filed the return under her signature after attaining the age of majority will not deflect us from the fact that she was a minor during the previous year relevant to assessment year under appeal. The ownership of silver utensils as on 31-3-1987, cannot be questioned in view of the Amnesty Scheme. However, when these assets disclosed under the Wealth Tax Act are sold, the assessing officer is free and in fact duty-bound to enquire and examine the subsequent utilisation of the assets. In this case, the assessee has claimed that the silver utensils which were disclosed under the Amnesty Scheme and sold soon after the disclosure, were in fact the personal effects in respect of which capital gain was not chargeable. This claim of the assessee has not been accepted by the assessing officer for the reasons enumerated in para No. 4 above and the Commissioner (Appeals) has also confirmed the view of the assessing officer.
9. The facts stated by the revenue authorities have not been disputed before us. The only contention advanced before us is that the nature of the utensils is such on the basis of which one can easily draw the conclusion that these are the assets for personal use. The decisions of the Bombay High Court referred to elsewhere in this order have been cited along with the decisions of the Kerala and Calcutta High Courts in support of the claim that the silver utensils sold by the assessee were personal effects. As held by the Supreme Court in the case of Hemant Singhji (supra) the personal effects would be such assets which are intimately and commonly used by the assessee. The question to be decided in this case is, therefore, of a fact. There is no direct evidence available in support of the claim of the assessee. One has, therefore, to consider the circumstantial evidence in order to arrive at a reasonable conclusion. The composition of the family of the assessee is father, mother, brother and sisters. Since, the appellant was minor in the year under appeal, she was dependent upon her father. The family was run by her father and, therefore, the utensils owned by the assessee could not have been required for the personal use from time to time. As per the list of silver utensils disclosed by the assessee it is observed that 140 kgs. of silver utensils comprised of 2 dinner sets of 40 pcs. each, 24 Thalis, 96 Katoris, 4 lemon sets, 3 tea sets, ice-cream tray, Supari Dan, 120 glasses, miscellaneous household utensils, puja utensils and ornaments. When we look at this list in the background of the appellant being a minor even in the year under appeal, it cannot be said that these silver utensils were personal effects of the assessee. It is also evident from the fact that soon after the disclosure made on behalf of the minor, a major portion of the silver utensils have been sold. As rightly pointed out by the assessing officer, the sale of silver utensils was not on account of desperate circumstances but for better utilisation of capital (the money has been advanced to a party after realising the sale proceeds). It is claimed by the assessee that the silver utensils of substantial number are required on certain occasions for use of the family. One would be tempted to accept this explanation of the assessee if they had continued to own the silver utensils for the said purpose. If the silver utensils were required for special occasions then the assessee would have replaced the silver utensils after the sale of old utensils. That has not been done. The silver utensils were disclosed under the Amnesty Scheme and soon after sold. The articles of necessity have abruptly become surplus. The facts and circumstances of this case are against the proposition that the silver utensils were the personal effects of the minor (as on 31-3-1988, the assessee was a minor). The claim of the assessee, in our considered view, has rightly been rejected by the revenue authorities. The assessee has sought to extend the benefits of the Amnesty Scheme by making the claim that the silver utensils disclosed under the said scheme were the personal effects so as to escape the levy of capital gains tax, which is not well founded. We, therefore, dismiss the appeal of the assessee.
10. In the result, the appeal of the assessee is dismissed.