Per Shri S. K. Chander, Accountant Member - These appeals are directed against the various orders made by the AAC on 28-1-1982 relating to the assessment years 1969-70 to 1975-76. In order to project the issues and grievances of the assessee juxta position the factual background of the case, we record the facts which are relevant for their determination.
2. Late Shri Ardaman Singh of village Bagria, advanced a sum of Rs. 1,43,573 to his daughter Smt. Harinder Kaur. He also advanced to his son-in-law, Darshan Singh Chawla, husband of Harinder Kaur, a sum of Rs. 22,992 on 10-2-1965. When these amounts were advanced, no documents as such were executed by way of promissory notes, etc. After these advances were given, there was no recovery. Thus, before any recovery could be effected. Darshan Singh Chawla, died on 31-8-1972. the limitation for recovery of the loan in both the cases had expired on 10-12-1968.
3. Shri Ardaman Singh died on 25-12-1976. But during his lifetime in the year 1966-67, he had advanced a sum of Rs. 15,970 to Delhi Land & Finance Co. Ltd. It appears, there were further advances to this company and by the end of the financial year 1966-67, i.e., on 31-3-1967, the amount advanced to the abovesaid company was Rs. 37,937.
This was for purposes of a purchase of plot of land from the said company. This figure has been rounded off to Rs. 38,000 and shown as advance given to the said company.
4. For the assessment year 1969-70, original assessment was made on 24-3-1979 in which net wealth of the assessee was computed at Rs. 7,34,610. For the assessment years 1970-71 and 1971-72 the original assessment was completed on 29-3-1979. For the assessment years 1972-73 to 1975-76 original assessments were completed on 31-3-1979. All these assessments were under section 16(3) of the Wealth-tax Act, 1957 (the Act). However, the assessee filed appeals for all the abovementioned assessment years before the AAC, on account of various additions made to the net wealth declared for each of the assessment years concerned.
The AAC after taking into consideration the submissions made before him by the learned counsel for the assessee, set aside the assessments years 1969-70 to 1975-76 vide order dated 11-4-1980 with the directions that these be made de novo in accordance with law after taking into consideration the contentions raised before him which were communicated to the WTO. The impunged assessment now made are as a consequence of the above directions issued by the AAC.5. In the consolidated order for these assessment years made by the WTO on 28-2-1981, he has considered the claim of the assessee that the debts amounting to Rs. 1,43,573 and Rs. 22,992 be considered as bad debts not recoverable and as such not includible in the net wealth of the assessee. It had been projected to him that due to limitation, the amounts had become irrecoverable in law. However, the WTO referred to some order made by the AAC for the assessment years 1964-65 to 1968-69 dated 22-2-1980 and relying upon the observations of the AAC that in the type of advances under consideration, the Limitation Act, 1963 could not apply, held that the mounts were not hit by limitation and as such, could not be excluded from the wealth of the assessee. This decision of his, however, was applied wholly to the assessment years 1969-70 to 1972-73. Since Shri Darshan Singh Chawla had died on 31-8-1972, the WTO conceded that the amount of Rs. 22,992 could not be recovered even by the legal heirs as they could not enter into any litigation after the death of Darshan Singh Chawla. He, therefore, excluded, this sum from the assessment of the year 1973-74 to 1975-76.
Therefore, before us now for the assessment years 1960-70 to 1972-73, the assessee in the first ground of appeal challenges the sustention of these amounts of Rs. 1,43,573 and Rs. 22,992 as part of the net wealth and for the assessment years 1973-74 to 1975-76 also the sustention of Rs. 1,43,573 is challenged.
6. The amount of Rs. 37,937 which has been rounded off to Rs. 38,000 was included in the net wealth of the assessee for the assessment years 1969-70 and 1970-71 and this was accepted. As such, there is no dispute about this amount in the assessment years 1960-70 and 1970-71. However, for and from the assessment year 1971-72, the assessee claimed that this amount was also irrecoverable due to limitation operating from 31-3-1970. The assessee projected before the WTO that this amount was advanced, as stated earlier, for purchase of plot of land in Faridabad but the said company neither allotted any plot of land to the assessee not refunded the money. It was projected to the WTO that the said company neither allotted any plot of land to the assessee nor refunded the money. It was projected to the WTO that the said Delhi Land & Finance Co. Ltd. did not function and was ultimately closed down. The WTO held that there was no documentary evidence for these contentions and as such they could not be accepted. The sum of Rs. 38,000 was, therefore, included in the net wealth of the assessee for each of the assessment years 1971-72 to 1975-76. This was disputed in appeal but was confirmed.
7. The WTO had taken the value of agricultural land in villages Rounta and Talwandi at Rs. 70,000 and Rs. 7,000, respectively. it was contended that the land in village Rounta was in adverse possession of the tenants who were not paying anything to the assessee and as such the value thereof could not be anything at all includible in the net wealth of the assessee. It was contended before the WTO and before the AAC that the value thereof be taken as nil. However, the value of land in village Rounta taken at Rs. 70,000 was confirmed by the AAC. This addition is in dispute for the assessment years 1974-75 and 1975-76.
8. It was contended before us by the learned counsel for the assessee that so far as the amounts of Rs. 1,43,573, Rs. 22,992 and Rs. 38,000 are concerned, they are barred by limitation and the considerations of mutual relationship and regard cannot stand in the way of application of the law of limitation. These have, therefore, wrongly been included in the net wealth of the assessee who are now the legal heirs of the deceased Ardaman Singh. It was contended that the value of the agricultural land could also not be included because the land being in adverse possession of the tenants could not fetch anything in the open market. On the facts of the case, it was submitted that the ratio decidendi of the judgment of the Madhya Pradesh High Court in the case of CWT v. Abdul Hussain Mulla Mohd. Ali [1976] 103 ITR 400 is applicable and, therefore, these sums are not includible in the net wealth of the assessee.
9. With regard to the value of the land in village Rounta, it was submitted that out of this land which admeasured 16 acres and 5 marlas, about 5 acres, 6 kanals and 5 marlals were gairmumkin, i.e., not irrigable land. Even other lands were in adverse possession of the tenants and as such no value could be taken from these lands as part of the net wealth of the assessee for any of the years under appeal.
10. These submissions were strongly opposed by the revenue and with regard to the amounts given to the daughter and son-in-law of late Ardaman Singh, it was contended that to such transactions, the law of limitation is not applicable for the reasons given by the authorities below. It was further emphasised that there was no proof either of demand of the money or repayment thereof and as such the amounts cannot be excluded from the net wealth of the assessee. It was further contended that under section 7(1) f the Act, the value of these lands had to be taken by considering a special hypothetical market for them.
11. It was further contended that insofar as the amount of Rs. 38,000 is concerned, the details of the company which did not return the amount had not been given and as such the amount could not be allowed.
With regard to the value of the land in village Rounta, it was submitted that the fact that the land was in adverse possession of the tenants would not make the land on the basis of market value as having no value at all. It was further contended that the assessee had for the assessment year 1969-70 himself accepted the value of these lands at Rs. 70,000. As such, thereafter the value of the land under the same circumstance could not become nil. The orders of the authorities below are fully justified and may be confirmed.
12. We have given careful consideration to the rival submissions.
Insofar as the amounts of Rs. 1,43,573 and Rs. 22,992 are concerned, there is no dispute that these are advances as loans. The loan of Rs. 22,992 has been held as irrecoverable by the WTO himself for and from the assessment year 1973-74 onward. In other words, its market value was taken as nil for purposes of wealth-tax assessment of the assessee.
However, for earlier assessment year this amount has not been excluded from the net wealth of the assessee. The amount of Rs. 1,43,573 has been included in all the impugned assessments. This, to our mind, is not justified. This us so because both amounts were hit by limitation.
13. the authorities below have reasoned that limitation does not apply to such loans. Even the senior departmental representative contended so before us. But we have not been shown any provisions of the Limitation Act saving such loans from the bar of limitation. Mere filial love cannot take the loans out of limitation. it is clear that both these amounts were hit by limitation before the valuation dates of the impugned assessment. Lack of action for recovery cannot be made a ground for inclusion of these amounts as part of net wealth for any of the assessment years as the market value for them would be nil, and in fact, was nil. Hence, these are excluded from the net wealth of the assessee wherever these were included in the impugned assessment now before us.
14. Now coming to the sum of Rs. 38,000, we find that the assessees advance for purchase of a plot of land was not repaid. The assessee gave the name of the company and place where it was functioning. The grievance of the authorities below is that no documentary evidence was given. When the company to which the amount was advanced has become defunct, what documentary evidence would be necessary we have not been shown. This amount was given in financial year 1966-67 and as on 31-3-1967, the amount due from the Delhi Land & Finance Co. Ltd stood at Rs. 37,937. It is hit by limitation long back. The person who advanced the loan is dead and the company to whom it was advanced is defunct. Its value for wealth-tax purposes, therefore, cannot be anything. It is in deed not includible in the net wealth of the assessee for any of the assessment years under appeal. it is excluded from net wealth for and from the assessment years 1971-72 to 1975-76.
15. So far as the value of land in dispute before us is concerned, we find that the assessee had accepted the same value of the same land in the assessment year 1969-70. Even in that assessment year, the lands were in adverse possession of the tenants. Now the facts remaining the same, we have not been shown by the assessee how the market value thereof has gone down for the assessment years under appeal before us on this issue. We find force in the arguments of the revenue that on such facts and circumstance of the case, there is no case for an interference in the orders of the authorities below. This value and its addition in the net wealth is confirmed in the assessment years 1974-75 and 1975-76.
16. Appeals for the assessment years 1969-70 to 1973-74 allowed in full and for years 1974-75 and 1975-76 allowed in part.