Judgment:
1. The contention in this Revenue's appeal is that the learned Deputy Commissioner of Income-tax (Appeals), Amritsar Range, Amritsar, hereinafter referred as the Dy. CIT(A), erred in deleting the addition of Rs. 1.50 lakhs in respect of F.D.Rs. in the names of the assessee's family members. The assessment year involved is 1984-85 and whereas the order brought in appeal is dated 11-8-1988 the assessment was framed by the WTO, Ward-I, Pathankot on 6-6-1988 under section 16(3) of the Wealth-tax Act, 1957, hereinafter referred as the Act.
2. The Assessing Officer having added Rs. 1,50,000 representing three F.D. Rs. of Rs. 50,000 each, in the names of Smt. Sureshta Rani & Miss Paramjit, Miss Paramjit & Sh. Harbans Lal and Miss Kiran Bala in the wealth of the respondent-assessee, it was contended before the first appellate authority that affidavit had been filed by the assessee's wife Smt. Sureshta Rani on 15th December, 1987 at the instance of the Assessing Officer deposing as follows :-- "1. That 1 own about 24 kilas of agricultural land in Village Itti, Post Office Sujanpur, Tehsil Pathankot.
2. That part of the above-mentioned land was bequeathed by my late mother Smt. Bhag Dai which was transferred in my name after her death and part of the land was given to me as my share after the death of my father along with other heirs.
3. That the above mentioned land is under cultivation and Maize, Paddy, Wheat etc., are grown there.
4. That three FDRs of Rs. 50,000 each were acquired by me in following names which are owned by and belong to me vide details as under- 5. That I also got Rs. 10,000 and Rs. 24,000 as compensation in 1965 and January, 1983 respectively as a result of acquisition of my land.
6. That the above-mentioned FDRs were acquired from savings of my agricultural income derived from agricultural land transferred in 1961 and 1981 in my name on the death of my father and mother respectively.
7. That the compensation amount mentioned above was also invested in FDRs mentioned above.
8. That I had earlier deposited compensation amount and savings of my agricultural income in FDRs which were renewed as per dates mentioned in the FDRs. 9. That I have no other source of income except agricultural and interest from bank." The Dy. CIT(A) deleted the addition representing three FDRs. (supra) by observing that having called for the affidavit of Smt. Sureshta Rani, the WTO had not controverted the contents in the deposition as no cross-examination had been done nor any opportunity accorded before rejecting the contents of the affidavit. For his decision, the learned Dy. C1T(A) referred to the judgment of the Hon'ble Supreme Court in the case of Mehta Parikh & Co. v. CIT [1956] 30 ITR 181 and also the decision of the Hon'ble Allahabad High Court in the case of Sri Krishna v. CIT [1983] 142 ITR 618.
3. Before us, Shri C.L. Wali, D.R., very vehemently contended that the Dy. CIT(A) was not justified in giving relief. For the respondent Shri L.R. Vasudeva, Advocate, with equal vehemence pleaded that any other approach than the one taken by the learned first appellate authority would have been wrong.
4. We have closely perused the facts on record and like to bring in close focus the assessment order on the issue :-- "During the discussion it was contended that these 3 FDRs have been purchased by Sureshta Rani along with her daughter from her own sources. In this connection the learned counsel for the asscssec was requested to file copies of FDRs or account which were held by Smt.
Sureshta Rani before 27-4-1983 when the FDRs of 1,50,000 are claimed to have been purchased by her. Shri Vasudevn, Advocate, filed an affidavit of Smt. Sureshta Rani in which she has deposed that she along with her two daughters are jointly holding 3 FDRs from 28-4-1986. When Shri L.R. Vasudeva, counsel for the assessee appeared last it has been contended that the copies of DRS held by Smt. Sureshta Rani prior to 28-4-86 are not available. The assessee has declared the FDRs of 150000 in his original return of wealth filed on 30-5-1985. In fact the assessee alongwith his brother Shri Hans Raj and mother Smt. Janki Devi became entitled to Rs. 14,24,172 for additional compensation and interest on the land of his father acquired in 1964, these amounts were as per arbitration award and were paid to the assessee before 27-4-1983 an amount of 4,74,724 came to the share of the assessee and the FDRs of 3,75,000 were purchased by the assessee including FDRs of 150000 in the name of his wife Smt. Sureshta Rani and two minor daughters. The details of these FDRs are as under :-- Since all of these FDRs including 3 FDRs of 50,000 each were purchased on 22-6-1983 and are from the share of additional compensation and interest received by the assessee as above, the amount of Rs. 1,50,000 is, therefore, to be assessed in the hands of Shri Harbans Lal though FDRs have been purchased in the names of his wife and minor daughters and the source of purchase is from the compensation received by the assessee.' 5. In the context of the above, para 5 and para 8 of the Affidavit, the contents of which we have reproduced in the order, assume importance.
On a cursory glance of the affidavit and reading of para 4, one may get the impression that FDRs were acquired in 1986 but the later part of the deposition make the position clear. In the face of categorical assertion of the assessee's wife by deposition, the onus shifted on the revenue to prove that the FDRs were the property of the respondent assessed as Individual, which was not done, 6. Even assuming the Assessing Officer's version to be correct that the FDRs were purchased by the assessee in the names of his wife and children even than in view of the Benami Transaction (Prohibition) Act, 1988 and related Supreme Court judgment in the case of Mithilesh Kumari v. Prem Behari Khare [1989] 177 ITR 97 and the Hon'ble Punjab & Haryana High Court judgment in Narinder Kumar Jain v. Munisubrat Dass Jain [1990] 181 ITR 305, the F.D.Rs. had because the absolute property of the persons in whose names these stood and, therefore, on such score alone the value of the FDRs cannot be assessed in the Wealth-tax assessment of the respondent.
7. Therefore, though our reasons are different, we agree with the ultimate decision of the DCIT(A) and uphold deletion of addition.
9.1 have gone very carefully through the proposed order passed by my learned Sr. Colleague, the JM, but I am not able to persuade myself to agree to his conclusion that the FDRs of Rs. 1,50,000 (Rs. 50,000 each in the name of Smt. Sureshta Rani W/o the assessee and his 2 minor daughters) are not includible in the total wealth of the assessee.
10. The factual position, as discussed in the Asstt. order, has been reproduced in para 4 of the proposed order of my learned Sr. Colleague, the JM, and is undisputed. However, the conclusion arrived at in paras 5 & 6 by my learned Sr. Colleague, does not appear to be correct on the following reasoning and analysis.
11. The undisputed facts are that the assessee along with his brother Sh. Hans Raj and mother Smt. Janki Devi became entitled to Rs. 14,24,172 on account of Compensation/Additional Compensation/Interest etc. on account of the land of his father, acquired in 1964 and the above amounts were paid to the assessee, his brother and his mother before 27-4-1983 as per the award. An amount of Rs. 4,74,724 came to the share of the assessee and out of this amount the assessee purchased FDRs of Rs. 3,75,000, which included three FDRs of Rs. 50,000 each in the name of Smt. Sureshta Rani W/o the assessee and his two minor daughters.
While filing the Wealth-tax return for the Assessment year 1984-85 on 30-5-1985, the assessee declared net wealth of Rs. 4,63,835, which included these three FDRs of Rs. 50,000 each. However the above wealth-tax return was revised on 12-12-1985 in which return the above 3 FDRs of Rs. 50,000 each were excluded. During the course of assessment proceedings, it was claimed that the 3 FDRs of Rs. 50,000 each in the name of Smt. Sureshta Rani W/o the assessee and his 2 minor daughters Miss Kiran Bala and Miss Paramjit, were their separate properties and as such were not liable to be included in the total wealth of the assessee and in support of that an affidavit of Smt. Sureshta Rani was filed, which has been reproduced by my learned Brother in para 2 of his proposed order. However, the Assessing Officer, after perusal of the affidavit, asked the assessee to file copies of the FDRs or the accounts which were operated by Smt. Sureshta Rani and 2 minor daughters prior to 27-4-1983 because the averment in the Affidavit were only with respect to the FDRs held by Smt. Sureshta Rani and her two minor daughters amounting to Rs. 50,000 each as on 28-4-1986, which will be relevant only to assessment year 1987-88 and not to assessment year 1984-85. To this querry the assessee's counsel Sh. L.R. Vasudeva, Advocate, could not give any satisfactory explanation and simply staled that copies of the FDRs held by Smt. Sureshta Rani prior to 28-4-1986 are not available and from this the Assessing Officer concluded that the FDRs of Rs. 1,50,000 (Rs. 50,000 each held in the name of Smt, Sureshta Rani and her two minor daughters) which were purchased out of the compensation money received by the assessee in the names of his wife and two minor daughters and he accordingly assessed the same as the wealth of the assessee.
12. The learned Dy. CWT(A) deleted the addition simply on the fact that the Assessing Officer has not cross-examined Smt. Sureshta Rani, who has filed an Affidavit to the effect that the FDRs in the name of Smt.
Sureshta Rani and her two minor daughters are out of her agricultural income and since the Assessing Officer has not cross-examined Smt.
Sureshta Rani, contents of the Affidavit should be accepted as correct and the FDRs in the name of Smt. Sureshta Rani and 2 minor daughters could not be included in the wealth of the assessee.
13. My learned Sr: Colleague, the J.M., has endorsed the view of the Dy. CWT(A) and has further justified the exclusion of Rs. 1,50,000, representing the value of 3 FDRs of Rs. 50,000 each in the name of Smt.
Sureshta Rani and her 2 minor daughters, after referring to the decision of Hon'ble Supreme Court in the case of Mithilesh Kumari (supra) the decision of Hon'ble Supreme Court in the case of Mehta Parikh & Co. (supra).
14. The decision of Hon'ble Supreme Court in the case of Mehta Parikh & Co. (supra) cannot be construed to lay down the proposition that unless the deponents arc cross-examined, the Affidavits cannot be rejected. It only lays down that if there is no material, whatsoever, on record for doubting the veracity of the statements made in the Affidavits and if the deponents have also not been subjected to cross-examination for bringing out the fallacity of their statements, the Tribunal would not be justified in doubting the correct ness of the statements made by the deponents in the Affidavits.
The above view of Hon'ble Supreme Court was further explained by Hon'ble Madhya Pradcsh High Court in the case of Smt Gunwantibai Ratilal v. CIT [1984] 146 ITR 140 wherein it is held as under:-- "An Affidavit is a piece of evidence which, along with the other material on record, has to be taken into consideration by the Tribunal before arriving at a finding.
A statement by a deponent can be held to be unreliable by the Tribunal either on the basis of a cross-examination of the deponent or by reference to other material on record leading to the inference that the statement made in the affidavit, cannot be held to be true." 15. In the present case, as has been discussed earlier, the FDRs of Rs, 50,000 each in the financial year relevant to the Asstt. year 1984-85 were purchased by the assessee in the name of Smt. Sureshta Rani W/o the assessee and 2 minor daughters, out of the compensation money amounting to Rs. 4,74,724, which came to the assessee's share as a result of arbitration award and as such the FDRs in fact belonged to the assessee and as such were rightly includible in the wealth of the assessee in view of the provisions of section 4(1)(a) of the Wealth-tax Act, 1957. Reliance of my learned Senior Colleague, the J.M. on the decision of Mithilesh Kumari's case (supra) is misplaced because of the specific provisions of section 4(1) of the Wealth-lax Act, 1957, which specifically brings to charge the wealth held by the individual in the name of spouse and minor children.
16. Accordingly, I will hold that the learned Dy. CWT(A) was not justified in deleting the addition of Rs. 1,50,000 from the wealth of the assessee and his order is reversed and that of the Assessing Officer is restored.
ORDER U/S 24(11) OF THE WEALTH-TAX ACT, 1957 READ WITH SECTION 255(4) OF THE INCOME-TAX ACT, 1961 There being difference of opinion between the two Members, who heard the appeal, the following point of difference is refrained for reference to the President of the Income-tax Appellate Tribunal under section 24(11) of the Wealth-tax Act, 1957 read with section 255(4) of the Income-tax Act, 1961:-- "Whether the Judicial Member's proposed order dismissing the Revenue's appeal in respect of addition of Rs. 1,50,000 can be said to be justified or the view taken by the Accountant Member that in view of the provisions of section 4(1)(a) of the Wealth-tax Act, 1957, the amount of Rs. 1,50,000 representing F.D.Rs. were assessable in the hands of the respondent can be said to be legally correct?" There being difference of opinion, the following point of difference was referred to me for decision: "Whether, the Judicial Member's proposed order dismissing the revenue's appeal in respect of addition of Rs. 1,50,000 can be said to be justified or the view taken by the Accountant Member that in view of the provisions of section 4(1)(a) of the Wealth-tax Act, 1957 the amount of Rs. 1,50,000 representing FDRs were assessable in the hands of the respondent can be said to be legally correct?" 2. The facts are that the assessee disclosed investment of Rs. 1,50,000 in three F.D.Rs. in the names of his wife Smt. Sureshta Rani and daughters Miss Paramjit and Miss Kiran Bala. The assessee thereafter filed revised return excluding these three F.D.Rs. It was contended before the Assessing Officer that Smt. Sureshta Rani purchased these F.D.Rs. alongwith her daughters from her own sources. The Assessing Officer thereupon asked the counsel of the assessee to produce copies of FDRs purchased before 27-4-1983 on which date the assessee received a sum of Rs. 4,74,724 as additional compensation and interest on the basis of Arbitration Award. The learned counsel was not able to produce any evidence but filed an affidavit of Smt. Sureshta Rani in which it was deposed that these FDRs were purchased by her jointly with her daughters. The Assessing Officer however found that the assessee received Rs. 4,74,724 as part of additional compensation and interest on 27-4-1983. Thereupon the assessee purchased three FDRs in the names of his wife and two minor daughters on 27-4-1983. Over and above, he also purchased another FDR for Rs. 1,25,000 on 30-4-1983 and for Rs: 1 lakh on 13-5-1983 making a total of Rs. 3,75,000. The Assessing Officer accordingly included Rs. 1,50,000 as forming part of the net wealth of the assessee.
3. On appeal, the learned Dy. CIT (Appeals) deleted the addition observing that having called for the affidavit of Smt. Sureshta Rani, the WTO had not controverted the contents in the deposition as no cross-examination had been done nor any opportunity has been accorded before rejecting the contents of the affidavit. Relying on the decision in the case of Mehta Parikh & Co. (supra), and also the decision in the case of Sri Krishna (supra), he deleted the addition on this technical ground.
4. Aggrieved by the said order, the revenue took up the matter in appeal before the Tribunal. The learned Judicial Member upheld the order of the Dy. CIT(Appeals) and also further held that even if it is treated as purchase by the assessee, then in view of the Benami Transaction (Prohibition) Act, 1988 and related Supreme Court judgment in the case of Mithilesh Kumari (supra) and that of the Hon'ble Pb. & Har. High Court in Munisubrat Doss Jain's case (supra) these assets will become the absolute property of the persons in whose name these stood and, therefore, on such score also the value of the FDRs cannot be assessed in the wealth-tax assessment of the assessee.
5. On the other hand, the learned Accountant Member held that the addition cannot be deleted merely on the basis of the decision of the Hon'ble Supreme Court in the case of Mehta Parikh & Co. (supra), as explained by the Hon'ble Madhya Pradesh High Court in the case of Smt.
Guinvantibai Ratilal (supra) and held that the piece of evidence is to be considered but the Tribunal is not bound if it is unreliable, depending on other material on record, leading to the inference that the statement made in the affidavit cannot be held to be true.
According to him the assessee in this case received a sum of Rs. 4,74,724 as compensation money which was invested in FDRs in the names of Smt. Sureshta Rani and his two minor daughters. The FDRs in fact belonged to the assessee and as such it is includible in the wealth of the assessee in view of the specific provisions of section 4(1)(a) of the Wealth-tax Act, 1957. It was further held by him that the decision in the case of Mithilesh Kumari (supra) is not applicable in view of the specific provisions of the Wealth-tax Act. He accordingly held that the amount of Rs. 1,50,000 has been rightly added to the wealth of the assessee.
6. On this difference of opinion, the question extracted above has been referred to me for decision. At the hearing before me Shri S.C. Pahwa learned Sr. D,R. appeared for the revenue and Shri L.R. Vasudeva, learned counsel for the assessee. They were heard at length. On careful consideration of the rival submissions in the light of the material on record, I am of the view that the order of the learned Accountant Member is in order and has to be upheld. The assessee in this case received a sum of Rs. 4,74,724 on 27-4-1983. Out of this there is no dispute about the investment of Rs. 2,25,000 by the assessee on 30-4-1983 and 13-5-1983. In regard to the remaining amount or Rs. 1,50,000, it is the claim of the assessee that the FDRs were purchased by Smt. Sureshta Rani from her own sources. At one stage, the A.O.asked the assessee to produce the copies of the FDRs to prove the purchase of these FDRs on or before the date of receipt of compensation money by the assessee. The assessee could not produce any evidence.
Later on it was claimed that these FDRs were re-investment of the old FDRs but the same also could not be proved. Even admitting that this investment of Rs. 1,50,000 was made by Smt. Sureshta Rani from her own sources, the fact remains that the assessee received Rs. 4,74,724 and this amount of Rs. 1,50,000 has not been shown either in cash or otherwise. Therefore, the addition of Rs. 1,50,000 in any case has to be treated as assets of the assessee. I hold accordingly and uphold the finding of the learned Accountant Member.
7. The matter will go back to the regular Bench for decision according to majority opinion.