Judgment:
U.L. Bhat, C.J.
1. M. C. C. No. 120 of 1984 is filed by the Commissioner of Income-tax under Section 256(2) of the Income-tax Act, 1961, seeking reference of certain questions of law. The other applications are filed by the Commissioner of Wealth-tax seeking reference under Section 27(3) of the Wealth-tax Act, 1957.
2. The application under Section 256(2) of the Income-tax Act, 1961, relates to the income-tax assessment of Ram Kumar Soni as a Hindu undivided family for the assessment year 1975-76. The other applications relate to the wealth-tax assessment of Ram Kumar Soni as a Hinduundivided family during 1966-67 to 1975-76. On the death of Ram Kumar Soni, his legal representatives have been impleaded as respondents.
3. The family of Ram Kumar Soni is a goldsmith family conducting pawnbroker and money-lending business. The premises of the assessee was raided by the officers of the Central Excise Department on October 22, 1974, and gold and silver ornaments were seized from the front room of the house and from underneath the floor of the first room. Silver slabs weighing 101 kgs., silver ornaments weighing 102 kgs., primary gold coins, gold sovereigns of about 1 kg. and gold ornaments weighing 7 kgs. were recovered from the front room. 152.280 kgs. of silver ornaments and coins valued at Rs. 1,21,800 were recovered from under the floor of the first room. Immediately thereafter, the assessee filed a wealth-tax return for the period mentioned above declaring the entire gold and silver recovered as belonging to the Hindu undivided family. He submitted a revised return claiming that a part thereof belonged to three ladies of the family, namely, Phoolabai, Mullabai and Indirabai, and were their personal effects, and that the share of the father should also be excluded. Parallel contentions were raised in the income-tax assessment case, The Wealth-tax Officer assessed the entire wealth in the hands of the assessee-Hindu undivided family. In appeal filed by the assessee, the Appellate Assistant Commissioner partly allowed the plea regarding part of the ornaments and held that part of the gold and silver ornaments belonged to the three ladies and the Wealth-tax Officer was directed to work out the quantum on the basis of Girvi registers and charts and exclude the same. The Wealth-tax Officer was also directed to work out the quantity of gold and silver ornaments pledged with the assessee. In further appeal by the assessee, the Tribunal confirmed the finding about part of the gold and silver ornaments belonging to the ladies and allowed further deductions for the year 1975-76 holding that silver ornaments weighing 103.5 tolas and gold ornaments weighing 140 tolas were acquired by the Hindu undivided family in the assessment year 1975-76. Deduction was also given in regard to the previous karta. Thereupon, the Revenue filed an application seeking reference of the questions of law relating to silver ornaments weighing 103.5 tolas. The Tribunal dismissed the application.
4. In parallel proceedings, the statutory authorities under the Income-tax Act applied their minds to the questions in controversy. The Income-tax Officer completed his assessment treating the entire gold and silver seized as belonging to the Hindu undivided family. In appeal by theassessee, the Commissioner modified the order and reduced the addition made by the Income-tax Officer in regard to the various claims. In further appeal by the assessee, the Tribunal made further deductions. The Revenue's application for reference of two questions has been rejected. The findings in the income-tax case have been followed by the Tribunal in the wealth-tax appeals.
5. Our attention is invited to paragraphs 16 to 18 of the order passed by the Income-tax Tribunal. In paragraph 16, reference has been made to the fact that in the original return the entire quantity was claimed as belonging to the Hindu undivided family and the claim made on behalf of the three ladies was made belatedly. The Tribunal also commented on the change in the assessee's stand. The Tribunal also noticed the absence of evidence to hold that the jewellery claimed belonged to the three ladies. Paragraph 17 adverts to the claim made by Phoolabai and Mullabai. It refers to the statement of Phoolabai which did not contain any claim regarding jewellery and the answer elicited by a leading question. There is a similar reference to the statement made by Mullabai. Paragraph 17 ends by stating that besides what was indicated above, there was no evidence to suggest that the ladies possessed the above ornaments. Paragraph 18 refers to the possibility of the ornaments belonging to Babulal and Smt. Shyambai and given to the Hindu undivided family as well as the averment made in the revised return that a part of the ornaments belonged to the ladies. Thereafter is the conclusion that silver weighing 338 tolas and 214 tolas be treated as accumulation of the family over a number of years and gold ornaments weighing 383 tolas and silver ornaments weighing 2,070 tolas be treated as belonging to Phoolabai and her family. According to the Revenue, these conclusions are based entirely on surmises and not on any legally admissible material.
6. Whether there is any legally admissible material in reaching a finding can be regarded as a question of law. The Tribunal was in serious error in refusing to state a case for the consideration of the High Court.
7. We, therefore, allow the application and direct the Appellate Tribunal in each of these cases to state the cases to the High Court in terms of Section 256(2) of the Income-tax Act, 1961, and Section 27(3) of the Wealth-tax Act, 1957, respectively. There shall be no order as to costs.