TaxTMI 
TaxTMI 
1983 (9) TMI 153
X X X X Extracts X X X X
X X X X Extracts X X X X
....ned in paragraphs 156 to 161 of Chapter of the White Paper on the Indian States issued by the Central Government. In accordance with the contents of paragraph 158 of the said White Paper ' Palaces and other residential buildings ' were earmarked and allocated as private properties of the rulers on the basis of the previous use of the said palaces, etc., and the needs of the ruler and of the Government. Umed Bhavan, Kota, was described as the private property of the Maharao of Kota in the inventory of the private properties allocated to the said Maharao. The relevant entry in the inventory reads as follows : " Umed Bhavan including gardens, rari, buildings, etc., comprising the entire compound." The aforesaid inventory was signed by one Shri C. Ganeshan, Deputy Secretary to the Government of India in the Ministry of States. Certain concessions with regard to the payment of income-tax were given to the rulers of the erstwhile States. One of the concessions given was not to tax the property income from such palaces to be designated by the Government of India, which were declared to be the official residences of the rulers. In pursuance of the powers vested in the Central Government,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ces which have been issued by the Central Government for the purposes of income-tax will, therefore, apply for the purposes of the wealth-tax also and no fresh or further declaration by the Central Government is necessary. In cases where more than one building has been declared by the Central Government as the official residence of a ruler the rulers concerned have to select the particular building in respect of which they would like exemption under section 5(1)(iii) of the Wealth-tax Act. We notice that the Central Government have declared more than one palace as your Highness's official residence. Since the exemption from the wealth-tax is available for only one such building, we shall be grateful if your Highness will please let us know which palace you would like to select for this purpose." The aforesaid letter of Shri Vishwanathan was replied to by Maharao Bhim Singh on 23-1-1958, wherein the Maharao wrote as follows : " With reference to your D.O.F. No. 23/16/57 Poll III dated the 10th instt. I write to request you kindly to move the Government to exempt Umed Bhavan under section 5(1)(iii) of the Wealth-tax Act." Since then ' Umed Bhavan ' is being allowed exemption of s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that no land revenue was payable with reference to the said land." [Emphasis supplied] 7. On receipt of the above information from the Tahsildar the WTO addressed a letter to the assessee on 1-2-1969, wherein he wrote to him, inter alia, as follows : " Revenue authorities of the State Government have given me to understand that the area of the compound surrounding the Umed Bhavan Palace is 2732 bighas and out of this, about 892 bighas is used for agriculture and fruit garden. The rest of the land, i.e., two-third part of the total area is either lying barren or used for keeping various types of forest animals. This fact has also been admitted in your letter .... Under the definition of ' assets ' in Wealth-tax Act, 1957, assets includes ' property of every description, movable or immovable but does not include agricultural land '. According to this definition only the agricultural land is not liable to wealth-tax. The barren land or the land which is used for any other purpose such as for forest animals is not exempt from wealth-tax . . . ." The WTO then drew the assessee's attention to the decision of the Hon'ble Gujarat High Court in the case of Rasiklal Chimanlal Nagri v. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....His Highness. That as the rulers of the various States were not subject to any tax in the States over which they ruled, a guarantee was given by the Government of India as contained in paragraph 240 of the White Paper and article 362 of the Constitution by which the personal rights, privileges and dignities of the rulers were maintained. That in pursuance of this guarantee, the Central Government in exercise of the powers under section 60A of the Indian Income-tax Act, 1922, was pleased to promulgate the Part B States (Taxation Concessions) Order, 1950, under notification No. S.R.O. 998, dated 22nd December, 1950. Under clause 15 of the said order, the bona fide annual value of the palaces of rulers of Indian States which are declared by the Central Government as official residences of such rulers was exempted from payment of income-tax and super tax and also from such income being included in total income or total world income of rulers receiving them. That in pursuance of these provisions of the Part B States (Taxation Concessions) Order, 1950, the Central Government issued notification dated 14th May, 1954, under which it declared Umed Bhavan and the City Palace as the two pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing or a part of a building having valuation of not more than Rs. 1 lakh is so exempted. In one case the unit of a palace cannot be split up irrespective of size or valuation and in other cases a house can be split up and its valuation should not be more than the prescribed valuation. That in view of the above provisions of law it is submitted that entire Umed Bhavan Palace comprised in one compound is one palace and is treated as such in the inventory and in the notification of the Central Government dated 14th May, 1954." The assessee thereafter gave instances of as many as eight palaces of the erstwhile rulers wherein lands up to 400 acres were covered by the palaces and the compounds attached therewith and were, according to the assessee, exempted in terms of section 5(1)(iii). The assessee also drew attention of the WTO to the observations of A.C. Sampath Iyengar in his commentary, The Three New Taxes, vol. 1, 5th edn., wherein the said learned author had observed as follows : ". . .The significance is that, unlike a building, a palace would consist of several buildings, though in a cluster, consisting of main buildings and out-buildings and stables and livery quarters, off....
X X X X Extracts X X X X
X X X X Extracts X X X X
....k 1964-65 In respect of exemption under section 5(1)(iv), in my view, this exemption is not available to the assessee, as the exemption is provided in respect of a house belonging to and exclusively used by him for residential purpose. In fact the assessee is a ruler and has already got exemption under section 5(1)(iii) of the Wealth-tax Act, 1957, in respect of a building occupied by him. He is residing in this building and as such he cannot avail of the concession provided under section 5(1)(iv). [Emphasis supplied] ------------------------------------------------------------------------------------------------------------------------------------------------- 11. It appears that reference of the above exemption under section 5(1)(iii) to Umed Bhavan and the land attached with it and forming its compound was not made in the assessment orders for the assessment years 1965-66 to 1969-70 and, in fact, in returns for the assessment years 1966-67 to 1969-70, the assessee did not declare the said land even in his returns of wealth. 12. With effect from 1-4-1970, there was amendment to the definition of the word ' assets ' as used in the Act and agricultural lands were made subject to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e, the entire land comprising in Umed Bhavan is exempt under section 5(1)(iii) of the Wealth-tax Act, 1957, and the same point has already been finalised in assessment year 1957-58." [Emphasis supplied]. 14. The letter of the Additional Chief Secretary to the Collector of Kota, dated 17-9-1966, referred to above, by the assessee, has been placed by the assessee at pages 21 and 22 of his first paper book. Its relevant part may be extracted as below : " Sub : Personal, property of His Highness the Maharaja of Kota. Ref : Your letter No.Rev./KS/65-3739 dated the 10th June, 1965. Sir, I am directed to say that having regard to the definition of words ' estate ' and ' land ' as given in the Rajasthan Land Reforms and Acquisition of Land Owners Estate Act, 1963, ' Umed Bhavan ' including gardens, rari, building, etc., comprising the entire compound entered in the inventory of the private property of His Highness, Kota, mentioned in the covenant, cannot be regarded as estate for the purposes of the aforesaid Act. Such property cannot, therefore, be acquired .... The land revenue was, therefore, incorrectly assessed on the land failing within the compound of Umed Bhavan, Kota .... The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....st and since then exemption is being allowed. Therefore, we hope your goodself would now be quite satisfied on this point . . . . . As regards Ladpura land out of 310 bighas, 304 bighas is comprising in Umed Bhavan compound and is not agricultural land. Umed Bhavan is official residence of ex-ruler of Kota and, hence, it is exempt under section 5(1)(iii) and as discussed at length as above." [Emphasis supplied] 17. Regarding the other lands, the assessee explained that they had either been sold away or they belonged to some other members of the assessee's family. 18. After receiving the aforesaid reply of the assessee, the WTO reported to the IAC, vide his letter dated 3-1-1978, that there was no discrepancy in the figure of agricultural lands, as had been pointed out by the note of the Accountant General's Audit party. The relevant part of the report of the WTO to the said IAC, may be extracted here for ready reference : " The case of H.H. Bhim Singh of Kota was examined. Assessee had shown agricultural land measuring 1345.12 bighas whereas in the Tehsil records, it has been shown at 5017 1/2 bighas. As per audit report the land has been shown at 4815.02 bighas. The consolida....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ealth-tax Act. 1972-73 Annexure forming Part IV of Annexure ' K ' of the the wealth-tax return. wealth-tax return.List of assets which are not taxable and claimed as exempt, hence, excluded from the wealth-tax return. Item No. 7 --- Umed Bhavan --- This house is an official residence of ex-ruler, hence, value exempt under section 5(1)(iii) of the Wealth-tax Act, 1957. 1973-74 List of land sold to co-operative societies, Kota. Land comprising in Umed Bhavan compound was sold to the following co-operative societies : (a) Shri Grah Nirman Samiti, Kota 30,00,000 (b) Shri Nath Grah Nirman Samiti, Kota 24,50,000 -------------------- 54,50,530 -------------------- Less : Cash received this year 2,40,000 -------------------- 52,10,530 -------------------- Notes 1. The above lands comprising of Umed Bhavan compound were sold to above co-operative societies as per sale agreement dated 18-8-1972. These sale deeds were presented for registration to Sub-Registrar of Kota on 18-8-1972 but the documents have not been realised so far and unless the registration deeds are returned to sellers, the deals are not final and, therefore, the amount is shown under protest. In any case, if f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....You are requested to please produce the bank pass book so that it may be ascertained that on what date and what amount was deposited in the bank. You are requested to produce the relevant documents so as to make sure that this amount of Rs. 4,56,000 has been included in the net wealth declared by you, within five days of the receipt of this letter." 22.2 On 12-6-1979, the assessee attended the office of the WTO and filed before him a letter stating, inter alia, as follows : " With reference to your above referred letter (i.e., 8-6-1979), we submit that advance money received by the assessee has been credited in the cash book of the assessee, and also deposited with the bank. The cash book as well as pass book is ready for your kind verification ...." 22.3 The occasion to make the aforesaid enquiry from the assessee is not clear, but what the record made available to us, however, makes clear is that on 25-6-1979 (i.e., within 13 days of the above proceeding), the WTO submitted proposals under section 25(2) of the Act for the consideration of the Commissioner. The proposals were simultaneously put up for the years 1965-66 to 1973-74. Out of the above years presently under our con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he above noting, however, appears to have been taken. On 31-10-1979, the WTO appears to have sent another letter No. WTO/A/KTK/79-80 dated 31-10-1979 to the Commissioner, a copy of which was also endorsed by him to the Chief Auditor. This letter is not on the file of the Commissioner, produced before us, but reference to it is contained in the letter of the Chief Auditor being D.O. No. M.O. 88/7980/6025 dated 18-12-1979 found placed on the file of the Commissioner for the assessment year 1970-71. In the aforesaid letter, the WTO had brought to the notice of the Commissioner, the dates on which limitation for finalising proceedings under section 25(2) in respect of different years was to expire. 22.6 On 14-11-1979, the WTO again submitted proposals under section 25(2) to the Commissioner in respect of the assessment years 1970-71 to 1977-78. The proposals for the assessment years 1970-71 to 1973-74 were absolutely identical to those submitted earlier, and the contents of which have been noted by us above. Proposals for the assessment years 1974-75, 1975-76 and 1976-77 were also identically worded. It is worth noting at this stage that the WTO did not allege in his proposals for the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... VI Guard file--C. and A.G. report 1976-77-- para 71--Agricultural WT--DP--149/WT---Correspondence with Board and Directorate. 3. DP-149/WT/Vol. VII Guard file--DP--149/WT--C. and A.G's report--para 71--Agricultural WT correspondence with Board. 4. DP-149/WT/Vol. XI C. and A.G's report 1976-77--para 71 Agricultural WT--Correspondence with Board and Directorate." 22.9 On 18-12-1979, the Chief Auditor again wrote to the ITO (Judicial) inviting his attention to the dates of limitation for action under section 25(2) in respect of the various assessment years and requested him as follows : " You may kindly put up the matter to the learned Commissioner so that the action is concluded well in time. The connected records have already been sent to you on 6-12-1979." 23. It appears that the WTO had sent to the Commissioner the following records for his perusal vide his letter No. ITO/A/KTH/79-80/1064 dated 7-11-1979 : 1. Miscellaneous Cover for 1957-58. 2. WT 40 Cover 1957-58. 3. Miscellaneous Covers for the assessment years 1965-66 to 1973-74. 4. WT Covers for the assessment years 1973-74 to 1976-77. He requested the Commissioner for the return of the above record vide his letter ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in not examining the assessment records and to bring to charge the said property to tax is considered by me to be erroneous and prejudicial to the interests of revenue." [Emphasis supplied] On the facts and in the circumstances of the case discussed above, the Commissioner required the assessee to explain as to why action under section 25(2) be not taken by him. 24.3 In respect of the assessment year 1971-72, the case for taking action under section 25(2) was made out by the Commissioner in the show cause notice dated 27-12-1979 in the following words : " A perusal of records of proceedings was made. It is found that you owned 2507 bighas of land in surroundings of Umed Bhavan at Kota. The value of the aforesaid land was not declared in the wealth-tax return filed by you on 28-1-1972. The assessment for the assessment year 1971-72 was made by the WTO on 28-1-1978. The value of the aforesaid property could not be brought to charge because of failure on your part to declare the said asset in the return of wealth filed by you. The WTO did not enquire about the aforesaid property and has also failed to bring to charge the said asset to wealth-tax. The failure on the part of the WTO....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed in the show-cause notice were slightly different and may be extracted as follows : " A perusal of records of proceedings was made. It is found that you owned 2507 bighas of land in the surroundings of Umed Bhavan at Kota. The value of the aforesaid land was not declared in the wealth-tax return filed by you on 30-9-1976. The assessment for the assessment year 1976-77 was made by the WTO on 31-3-1978. The value of the aforesaid property could not be brought to charge because of failure on your part to declare the said asset in the return of wealth filed by you. You have, however, filed annexure G-2 along with the return. In the annexure, you have shown the details of land comprising in Umed Bhavan sold to the two co-operative societies. In a note annexed to the said annexure it is mentioned that ' the land comprising of Umed Bhavan compound was sold to the co-operative societies as per sale agreement dated 18-8-1972. These sale deeds were presented for registration to the Sub-Registrar of Kota on 18-8-1972 but the documents have not been realised so far and unless the registration deeds are returned to sellers, the deals are not final and, therefore, the amount is shown under p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd form his opinion about it. He had verified all the facts and had examined all the facts and had also gone through the past records and, therefore, the order passed by the WTO was not at all erroneous and prejudicial to the interests of the revenue. 6. That in the past the revenue had all along accepted that Umed Bhavan including rari and entire compound was entitled to exemption under section 5(1)(iii) and that, there was no basis for upsetting that finding. The WTO had given exemption to the assessee only after he had been fully satisfied with the explanation of the assessee. 7. That, therefore, it was not warranted to re-open the settled issue under the provisions of section 25(2) and that as such ' Your honour would not have jurisdiction in this matter '." 25.2 On merits, the assessee reiterated the same submissions, as he had made earlier in the course of assessment proceedings for the assessment year 1957-58, which have been extracted by us in extenso above in para 8 supra and need not, therefore, reproduced at this stage. Towards the end, the assessee's submission was summarised in the following words : " That it is needless to mention that entire Umed Bhavan including....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h regard to the aforesaid subject-matter and submitted in para 9 of his letter as follows : " That it is beyond doubt that question of exemption of entire Umed Bhavan including land has been decided in the assessment year 1957-58 and there is no change in the nature of property, then law of res judicata applied in the above assessment also. There is no change in the property. The property continues the same in all these years and as such the law of res judicata applies in this case and exemption continued to be allowed." 25.5 Similar submissions were reiterated by the assessee in respect of the assessment years 1975-76 and 1976-77 vide his letter dated 14-3-1980. 25.6 The Commissioner's action under section 25(2) as is evident from the above was challenged, firstly, on the ground that he had no jurisdiction to initiate action under section 25(2) as the WTO had not made any error in framing these assessments and that he had examined the matter thoroughly before making up his mind about the exemption claimed by the assessee. Secondly, the Commissioner's proposed order was resisted on merits also and it was pointed out that there was no justification for him to take the view that h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed that the assessment orders passed by the WTO on 28-1-1978 for the assessment years 1970-71, 1971-72, 1972-73, 1973-74 and 1974-75 were erroneous insofar as they were prejudicial to the interests of revenue. It was, therefore, proposed to take action under section 25(2) of the Wealth-tax Act including an order enhancing or modifying the order or cancelling the order or directing a fresh order to be passed." 26.3 He then referred to the submissions made by the assessee in his joint reply to the notices under section 25(2) issued to him by the Commissioner and then rejected the same by observing as follows : " Facts of the case and arguments made challenging the validity of action under section 25(2) on behalf of the assessee are more or less the game as have been discussed in detail in my order dated 23-8-1979 passed under section 25(2) of the Wealth-tax Act, in this very case for the assessment years 1966-67 to 1969-70 whereby I have set aside the said assessment order to be made de novo I need not repeat the contention raised by the assessee and my observations thereon. For the same reasons as have been elaborately discussed by me in the aforesaid order dated 23-8-1979 and the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....udit objection. It will, therefore, be necessary to look into those files also. They may, therefore, be produced... 2-4-1981 may be fixed for producing the files of the Chief Auditor, which were looked into by the Commissioner. It is necessary to look into the above files in order to dispose of the contention that the Commissioner's assumption of jurisdiction under section 25(2) was not valid. Both sides be informed of the above date and the above subject-matter." Accordingly, the matter was brought to the attention of both the sides. 27.3 The assessment records of the WTO, referred to above, were also gone through, and it was felt that, in the interest of substantial justice, the following letters/communications/reports borne on the wealth-tax records of the WTO for the assessment years 1957-58 and 1970-71 ... are necessary to be placed on record : " WT records of 1957-58 1. Letter dated 8-1-1969 written by the WTO Kota to the Tehsildar, Kota, bearing No. K(A)/WT/68-69. 2. Letter of Tehsildar dated 23-1-1969 in reply to the above. Assessment record for 1970-71 3. Extract of A.G.'s letter No. R.As.V/K-126/3344 dated 5-3-1976 (Sl. No. 26 of 1970-71 Folder). 4. WTO's letter ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tative further averred that : " I am also directed to submit that since certain records have already been examined by the Hon'ble Accountant Member in his chamber without the presence of the parties, natural justice demands that the points noted and the inference drawn by the Hon'ble Accountant Member from such examination may kindly be intimated to us and an opportunity provided to us to make necessary submissions about the same in the Court." 27.7 A copy of the above-mentioned submissions of the revenue was given to the opposite side and both the sides were heard in detail. Thereafter, the Tribunal passed the following order on the department's application : " Both the sides have been heard with regard to the departmental representative's application for adjournment. It is opposed by the assessee's counsel on the ground that all the points in appeal have already been heard at length over two days and that nothing further remains for arguments. We notice that the departmental representative has complied with all the requirements of the Tribunal except with regard to audit files. With regard to the latter, the departmental representative's submissions are contained in para 4 of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in terms of section 5(1)(iii), after claiming that the said lands were not agricultural lands. 2. That it was not factually correct for the learned Commissioner to have observed that the WTO had failed to make enquiries whether the land in question was appurtenant to Umed Bhavan and was exempt under section 5(1)(iii). The enquiries on this point were made by the WTO and the assessee pointedly reiterated all these pleadings, which he had earlier raised before the WTO in the course of his assessment proceedings for the assessment year 1957-58, and had urged that the entire land, forming part of the compound of Umed Bhavan palace, was part of the palace and was exempt under section 5(1)(iii). The aforesaid plea was taken by the assessee not only in his letter dated 25-9-1977, but, again, in his letter dated 29-11-1977. The Commissioner had, therefore, made a mis-statement that the WTO had made no enquiries with regard to the land forming part of Umed Bhavan palace and its size. 3. That it was factually incorrect for the learned Commissioner to have observed that the advance receipts of cash of Rs. 2,40,000 in respect of the assessment years 1973-74 to 1975-76 and of Rs. 4,56,000 in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the discussion, which he definitely had had with the assessee on this point. 5. That inasmuch as all the points, which have been mentioned by the Commissioner in his order for the assumption of jurisdiction, have been found to be factually incorrect, the assumption of jurisdiction by the Commissioner on the facts and in the circumstances of the case, was void ab initio and, therefore, the orders passed by him deserved to be quashed. 29.1 On merits, the emphasis of the learned counsel for the assessee has been on the fact that what was exempted under section 5(1)(iii) was the Umed Bhavan, and what constituted the said palace has been specified and agreed upon between the assessee and the Government of India vide the terms of the agreement of merger of the State of Kota in the United States of Rajasthan and reference to which has been made in the letter of the Government of India dated 13-9-1950 and the inventory attached therewith (pages 14 and 15 of the assessee's 1st paper book) and which reads as follows : " Umed Bhavan including gardens, rari, buildings comprising the entire compound." 29.2 The notification dated 14-5-1954 of the Government of India, in pursuance of the pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....indicate that what was exempted under section 5(1)(iii) was the Umed Bhavan Palace and, therefore, whatever constituted the said palace would be exempt and there would be no question of trying to make a distinction between the building of the palace and the surrounding land of the palace. The palace consisted not only of the building but also of the area demarcated on the map, which was shown to the WTO in the course of the assessment proceedings for the assessment year 1957-58, and a copy of which has been given by the assessee in its paper book. The entire palace is surrounded by one compound wall and what is contained within it is the palace and, therefore, according to the learned counsel, it is this palace which is exempt under section 5(1)(iii). 29.4 The learned counsel for the assessee conceded that the Tribunal had decided the issue against him in respect of the assessment years 1966-67 to 1969-70, but submitted that the facts for these years were different from those of the years under consideration, and all the material which has been placed by the assessee on record now was not considered by the Tribunal, while deciding the aforesaid appeals. The decision for this year ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....espect of these appeals, were raised by him earlier also and that the Tribunal had considered each one of the points raised by the assessee's learned counsel and the learned departmental representative relied heavily on the order of our learned brothers in respect of the assessment years 1966-67 to 1969-70, referred to above. 31. In the course of hearing it was noticed that different figures were being given at different times with regard to the area surrounding the Umed Bhavan Palace and it was not clear as to how the figure of 2507 bighas mentioned by the Commissioner had been worked out, and whether it included the land on which the buildings in question of Umed Bhavan Palace were built up or whether this area was in addition to the area covered by the buildings. Both the department as well as the assessee were required to throw light on this aspect of the matter. In response to the above query of the Bench, the assessee's learned counsel submitted papers in the form of a paper book, being paper book No. 111, which contains the order of the Collector of Kota dated 16-9-1976 requisitioning the Umed Bhavan compound. It appears from the said order that the correct position in this....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... year. But this rule is subject to limitations, for there should be finality and certainty in all litigations including litigation arising out of the Income-tax Act and an earlier decision on the same question cannot be re-opened if that decision is not arbitrary or perverse, if it had been arrived at after due enquiry, if no fresh facts are placed before the Tribunal giving the later decision, and if the Tribunal giving the earlier decision has taken into consideration all material evidence. A Tribunal like the Appellate Tribunal should be extremely slow to depart from a finding given by an earlier Tribunal. There is also a further limitation, namely, that the effect of revising a decision in a subsequent year should not lead to injustice and the Court must always be anxious to avoid injustice to the assessee. For instance, if the Court is satisfied that by depriving the assessee of his rights under the later decision, in an earlier year, the assessee lost an important advantage or lost some benefit which he could have got under the Income-tax Act, then the Court may take the view that departing from the earlier decision leads to injustice or denial of justice and the Court may p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to interfere with this finding---Mahabir Prasad Khemka v. CIT [1962] 44 ITR 405. In proceedings for the assessment years 1947-48 to 1951-52, considerable additional evidence was adduced, and the Tribunal, after taking into consideration the decision rendered in the earlier proceedings, came to the contrary conclusion and held that the gifts were genuine. On these facts, the Hon'ble Supreme Court had to consider if the Tribunal's aforesaid action was justified. They held : "... that the fact that in the earlier proceedings the Tribunal took a different view of the two gifts was not a conclusive circumstance : the decision of the Tribunal reached in those proceedings did not operate as res judicata. As seen earlier there was a great deal more evidence before the Tribunal." [Emphasis supplied] 32.6 The principle which, according to us, emerges from the review of the aforesaid decisions is that, if the facts remain identical and no additional evidence is placed on record in a subsequent year, the Tribunal should not depart from the decision earlier given by it on the same subject and on the same evidence. If, however, additional evidence has been placed on a record in the subsequent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....977 during the assessment proceedings for the assessment year 1970-71, claiming exemption under section 5(1)(iii) in respect of the above land, the WTO failed to make enquiries whether the land was, in fact, exempt and discuss this matter in his assessment orders. 3. That in respect of the assessment years 1973-74, 1974-75, 1975-76 and 1976-77, although no such land was shown in the returns, yet in the annexure a note was given mentioning the sale of the said land and the receipt of advance of Rs. 2,40,000 in respect of the assessment years 1973-74 to 1975-76 and of Rs. 4,56,000 in respect of the assessment year 1976-77. The WTO, while completing the assessments, neither included the cash of Rs. 2,40,000 nor discussed in the assessment order, the claim of exemption under section 5(1)(iii). He, in fact, according to the Commissioner, made no enquiries on this point and did not consider the claim of exemption at all." 34.2 As can be readily seen, the averment made by the Commissioner in (1) above is immediately contradicted by what he says in (2) above he acknowledges the assessee's two letters and yet says that the assessee did not give details. It is self-contradictory. Besides, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tory and in the notification of the Central Government dated 14-5-1954 and that no demarcation line could be drawn for treating only one portion of the palace as official residence and the other portion of the palace as subject to the wealth-tax. The above submission of the assessee was made on 17-3-1969 and the same was accepted by the WTO, who passed the assessment order for the assessment year 1958-59 four days later on 21-3-1969. Reference to this position was made by the assesses in his letter dated 27-9-1977, while replying to the WTO. As noted above, the Commissioner refers to this letter in his order and it is, therefore, to be presumed that he is aware of the contents of this letter. As noted above, the assessee's submission to the WTO, as per this letter, was that ' entire Umed Bhavan including rari and compound is a personal property of the Maharao Sahib and is exempt from the purview of the wealth-tax under section 5(1)(iii). This point has already been clarified in the assessment relevant to the assessment year 1957-58 '. The assessee had further clarified in the aforesaid letter that ' The land of Umed Bhavan compound is abadi land and not agricultural land '. In this....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Bhavan Palace ' and were, therefore, not agricultural lands. The assessee had further clarified that 304 bighas out of 310 bighas situated in Lodhpura village were also ' part of Umed Bhavan Palace '. The aggregate of the above lands is 2507 bighas (594+559+ 1050+304). It is this figure, which is being mentioned by the learned Commissioner in his show cause notices to the assessee. It is, therefore, reasonable to believe that the learned Commissioner had examined the aforesaid letter of the assessee. The WTO had, as noted above, submitted a report to the IAC on the basis of the aforesaid reply given by the assessee, after verifying the correctness thereof and had, inter alia, made the following observations in his report dated 3-1-1978 : " The main chunk of lands measuring 2203 bighas is comprised in the official palace of His Highness ... They include the lands situated in Kherli Purohit, Dostpura, Khand Caunri villages which are now nowhere. It was on this land the palace was built and the villages were removed." (Copy of this report has been placed on record by the revenue.) 34.6 The Commissioner had also examined the assessment records for the assessment years 1971-72 and 197....
X X X X Extracts X X X X
X X X X Extracts X X X X
....69 in the course of the assessment proceedings for the assessment year 1957-58, when he wrote to the Tehsildar, Kota, on 8-1-1969 asking the area of the land on which Umed Bhavan was situated. In his letter, the WTO had written, inter alia, as follows : " You may be aware, that there is a vast open land situated in the residential area surrounding the Umed Bhavan Palace which is enclosed by iron bars all around." [Emphasis supplied] The Tehsildar's reply, inter alia, was : " Area of this land is 2732 bighas. On 882 bighas out of it the building and groves are situated." [Emphasis supplied] On the face of the categorical report of the WTO dated 3-1-1978, and the above information gathered and placed on the wealth-tax record of 1957-58, it is not understood as to bow did the Commissioner take the stand that the assessee had ' failed to produce any evidence that 2507 bighas of land was part and parcel of the official residence of the assessee.' (see the Commissioner's observations in para 12 of his order dated 23-8-1979 pertaining to the assessment years 1966-67 to 1969-70, the totality of which has been imported by him into the assessment years under consideration.) 35.1 The fa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sment years 1966-67 to 1969-70 in respect of the present years also. If the learned Commissioner had applied his mind objectively to the facts relevant for the present appeals, and had contrasted them with the facts, as found by the Tribunal vide its combined order dated 31-10-1980 for the assessment years 1966-67 to 1969-70, the following position would have been abundantly clear to him : 1. That whereas, in respect of the assessment years 1966-67 to 1969-70, the assessee had made no reference in his returns to the Umed Bhavan and the area of the land on which it was situated, specific mention thereof has been made by the assessee in the returns filed for the years under consideration. 2. That whereas, in the course of proceedings for the assessment years 1966-67 to 1969-70, the WTO had made no enquiries whatsoever with regard to the question of exemption under section 5(1)(iii) of the Umed Bhavan Palace and the land appurtenant thereto, the WTO, in respect of the assessment years, under consideration, had made detailed enquiries, and had only thereafter concurred with the finding of his predecessor given by him, continuously year after year, in respect of the assessment years 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to the above conclusion if he had taken note of Note No. 2 given by the assessee in Annexure G-2, the earlier part of which the Commissioner has noted in his orders. The said Note No. 2 made it clear that the accounts of the assessee were maintained on cash basis and, therefore, it was assured by the assessee that whenever the outstanding would be received by him, ' the same would be included accordingly '. The assessee's accounting system being cash, the amount, which he had already received by way of cash, had apparently been included by him in his wealth and, therefore, the averment of the learned Commissioner that the assessee had not included the cash in his wealth-tax return was based on mere surmises and conjectures, and ignored the declaration made by the assessee himself. The learned counsel for the assessee has vehemently denied the above allegation and the learned departmental representative has not been able to show to us any material on the basis of which the learned Commissioner could have arrived at the above conclusion. On the contrary, the assessee has filed before us the correspondence (referred to in detail in paras 22.1 land 22.2) which goes to show that the WTO....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Commissioner, in the circumstances, cannot be sustained. Accordingly, for this defect itself, we quash his orders. 37.1 On merits also, we are unable to sustain the orders of the learned Commissioner. Clause (iii) of sub-section (1) of section 5 under which the assessee has claimed the exemption with regard to Umed Bhavan Palace and its entire compound reads as follows : " 5.(1) Subject to the provisions of sub-section (1A), wealth-tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee--- (i) and (ii) (iii) any one building in the occupation of a Ruler, being a building which immediately before the commencement of the Constitution (Twenty sixth Amendment) Act, 1971, was his official residence by virtue of a declaration by the Central Government under paragraph 13 of the Merged States (Taxation Concessions) Order, 1949, or paragraph 15 of the Part B States (Taxation Concessions) Order, 1950 ;" The aforesaid clause came into operation with effect from 28-12-1971 and was substituted in place of the earlier clause by the Rulers of Indian States (Abolition of Privileges) Act, 1972. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee's reply thereto dated 23-1-1958, have, in our opinion, to be read together to ascertain the scope of exemption granted by clause (iii) of sub-section (1) of section 5. The words used in the Part B States (Taxation Concessions) Order, are ' Palaces of Rulers of Indian States '. The words used in clause (iii) of sub-section (1) of section 5, on the other hand, are ' building in the occupation of a Ruler '. Apparently, there is use of different words in the two Acts ; in the one, there is the use of the word ' Palace ' whereas, in the other, there is the use of the word ' building '. Prima facie, therefore, it may be urged that the two words ought to convey two different meanings. There might have been some force in the above contention, if both the sections did not contain the adjectival clauses which identified the ' building ' or the ' palace '. The adjectival clause used in clause (iii) of sub-section (1) of section 15 of the Part B States (Taxation Concessions) Order reads as follows : " which are declared by the Central Government as the official residences of such rulers." In clause (iii) of sub-section (1) of section 5, as it stood prior to its amendment by the Rulers ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., vide their order dated 31-8-1950 (contained at pages 14 and 15 of the assessee's first paper book) and this specific action, as we have noted above, reads as follows : " Umed Bhavan including gardens, rari, buildings, comprising the entire compound. " That this specification is sacrosanct and beyond the pale of even the Rajasthan Land Reforms and Acquisition of Land Owners Estate Act, 1963, was made clear by the letter of the Additional Chief Secretary to the Government of Rajasthan, Jaipur, addressed to the Collector, District Kota dated 17-9-1966 placed at Sl. No. 21 of the assessee's first paper book, wherein the Additional Chief Secretary stated, inter alia, that " Having regard to the definition of the words ' estate ' and ' land ' as given in the Rajasthan Land Reforms and Acquisition of Land Owners Estate Act, ' Umed Bhavan ' including gardens, rari, building, etc., comprising the entire compound entered in the inventory of the private property of His Highness, Kota, mentioned in the covenant, cannot be regarded as estate for the purposes of the aforesaid Act." 37.4 The difficulty experienced by the Commissioner, while passing the orders under section 25(2) for the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... produce any evidence even in the list of private properties at Sl. No. 2 of the inventory that 2507 bighas of land was part and parcel of the official residence of the assessee. No evidence has been produced before us either to show that land admeasuring 2507 bighas of land was part and parcel of the official residence of the assessee before merger. In fact, as the documents before us do not show to what is the total area of the lands surrounding Umed Bhawan which the assessee is claiming exempt under section 5(1)(iii) of the Wealth-tax Act. In the absence of any evidence produced before the learned Commissioner or before us, we have no hesitation in holding that the assessee's claim that 2507 bighas of land were part and parcel of the official residence of the assessee is not proved." [Emphasis supplied] 37.5 The aforesaid impression, as we have shown above, cannot be allowed to persist in the fact of the additional evidence, which has been placed by the assessee on record in the course of the assessment proceedings in respect of the assessment years presently under consideration. We have recounted above, at length, such additional evidence. It consisted of the following : 1. L....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve finding on the basis of the evidence which is now before us, and which, as we have pointed out above, is an additional evidence, which was either not produced before the authorities below or before the Tribunal, Jaipur Bench, during the course of the appellate proceedings for the assessment years 1966-67 to 1969-70, or to which attention of our learned brothers was not drawn and, therefore, the same were not considered by them, while deciding the aforesaid appeals for the assessment years 1966-67 to 1969-70. That the Tribunal can take a stand different from what the earlier Bench of the Tribunal has taken, provided it has additional evidence before it, is supported, as noted above, by the decision of the Hon'ble Supreme Court in the case of CIT v. Brijlal Lohia and Mahabir Prasad Khemka [1972] 84 ITR 273. We are inclined to believe that, if the evidence which is now before us, had been before our learned brothers also, there would have been no difficulty for them to come to the same conclusion as we, because they would, then, have had no doubt as to what constituted Umed Bhavan Palace. 38. The entire controversy in this case, unfortunately, arose because the learned Commissione....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of money amounting to Rs. 2,40,000 and Rs. 4,56,000 were duly declared by the assessee as part of his assets on the basis of the cash system of accounting followed by him, even though in fact, they were not his assets. We, therefore, cannot sustain the Commissioner's orders and so quash them. 40. In the result, we allow the appeals and vacate the orders of the Commissioner. Per Shri S. S. Mehra, Judicial Member --- First of all, I express my regret that the matter could not claim my attention earlier, since I was frequently on long tours and some time on leave. 2. I have the benefit of having gone through the learned order proposed by my learned brother Shri Anand Prakash, the Hon'ble Accountant Member. However, I regret a lot that I failed to persuade myself to associate with the conclusion arrived at by my learned brother. 3. The facts, have by and large been properly incorporated in the impugned order and more fully by, my learned brother. Briefly stated, Shri V.P. Gupta, the learned Commissioner, ride his consolidated order dated 21-1-1980, under section 25(2), for the assessment years 1970-71 to 1974-75, directed the WTO, after setting aside the assessment orders to value....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee's instant appeals deserve dismissal and are hereby dismissed. 6. In the result, the assessee's appeals are dismissed. THIRD MEMBER ORDER Per Shri R.L. Segel, Judicial Member --- As there was ' difference of opinion between the learned members hearing these appeals, they had initially referred the following common question to the Hon'ble President, Tribunal, Bombay, for the opinion of the Third Member under section 255(4) of the Income-tax Act read with section 24(ii) of the Wealth-tax Act : " Whether, on the facts and in the circumstances of the case, the orders under section 25(2) of the Wealth-tax Act, 1957 passed by the Commissioner of Wealth-tax in the present case are assessable in law and on fact ?" 2. The President, Tribunal, Bombay, in turn had referred the said question to me for opinion. 3. The assessee to these appeals is Mr. Bhim Singhji, the Ex-Maharaja of the erstwhile State of Kota. The point for decision before the Bench hearing the appeals was as to whether the market value of open land admeasuring 2507 bighas in the surroundings of Umed Bhavan, Kota was to be included in the ' net wealth. ' of the assessee for each of the years under consideration. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....one of the points on which the learned Accountant Member and the learned Judicial Member have also differed was as to whether the facts in the years under consideration are similar to those in the assessment years 1966-67 to 1969-70, yet that difference between the learned Members had not been referred under section 24(ii) of the Wealth-tax Act read with section 255(4) of the Income-tax Act. I, therefore, after reviewing the case law on the subject, vide my order dated 26-8-1982, had submitted the case to the Hon'ble President, Tribunal, Bombay, for further directions in the matter by observing as under : " Since the Members hearing the appeal have not referred the difference of opinion between them, on the point as to whether the facts in the years under consideration are similar to those in the assessment years 1966-67 to 1969-70 or not and since that difference has to be resolved before deciding the aforesaid issue referred by the Members for the opinion of the Third Member, I, in these circumstances have no other alternative but to abstain from giving my opinion on the question referred to me for opinion by the Hon'ble President. In these circumstances, I submit the papers to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Court in Jan Mohammed v. CIT [1953] 23 ITR 15 and of the Patna High Court in Hanutram Chandanmul v. CIT [1953] 23 ITR 505. This aspect has already been dealt with by me in my aforesaid earlier order dated 26-8-1982. But the said decisions have no application in the present case. The Third Member initially hearing the appeals noticed, as per his aforesaid order dated 26-8-1982, that there was difference of opinion between the Members originally hearing these appeals on the points now brought out in the aforesaid additional question No. 1 He in view of the ratio of the aforesaid decisions, was of prima facie view that he was precluded by law from deciding the said difference of opinion as now brought in the aforesaid additional question No. 1. Thereafter, the matter was placed before the learned Members originally hearing the appeals. They, after due application of their mind, have referred the aforesaid additional questions to the Third Member, may be observing ' as per the suggestion of the Third Member '. Whatever be the fact remains that the said additional questions have been referred by the Members originally hearing the appeals. The Third Member himself has not formulated the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder the notification of the type referred to in the preceding paragraph. On 20-1-1958, Mr. V. Vishwanathan of the Ministry of Home Affairs, Government of India, addressed a letter (at page 17 of the paper book) to the assessee with regard to the exemption to be available to him in this behalf. The relevant extract of the said letter reads as under : " As Your Highness may be aware, section 5(1)(iii) of the Wealth-tax Act, exempts from the wealth-tax any one building in the computation of a Ruler declared by the Central Government as his official residence under para 13 of the Merged States (Taxation Concessions) Order, 1949, or para 15 of the Part B States (Taxation Concessions) Order, 1950. The notifications regarding the official residence, which have been issued by the Central Government for the purpose of income-tax will, therefore, apply for the purpose of the wealth-tax also and not fresh or further declaration by the Central Government is necessary. In case, where more than one building has been declared by the Central Government as the official residence of a Ruler, the Rulers concerned have to select the particular building in respect of which they would like exemption u....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the assessee to the decision of the Gujarat High Court in the case of Rasiklal Chimanlal Nagri v. CWT [1965] 56 ITR 608 and went on to point out as under : " Your vast land surrounding the palace satisfies the conditions laid down in Nagri's case. The exemption granted to you under section 5(1)(iii) relates only to the palace and the land appurtenant thereto. There is no other Ruler in Rajasthan, who has claimed exemption from such a vast non-agricultural land of over 800 acres situated within the municipal limits or in the residential area as in your case. Hence, in your case, I intend, to treat a part of the said 800 acres as not agricultural urban land liable to wealth-tax. The area works out as under : Area of the total land (as shown in your letter) 880 acres Less : considered necessary for garden, lawns, etc. for personal residence as a Ruler 80 acres -------------------------- 800 acres -------------------------- Less : one-tenth of the total land for possible development got out residential place, etc. 80 acres Palace land known as agricultural land 720 acres Changed in the sq. yards and sq. ft. 34,84,800 sq. yards 3,63,63,200 sq. ft. The present market value of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Palace and compound is exempt under section 5(1)(iii) wrongly stated as section 5(1)(iv) in the assessment order ... Hence, they are not included. 1963-64 -do- 1964-65 While dealing with the exemption claimed by the assessee under section 5(1)(iv) regarding the Garh property, which was claimed to be in self-occupation, the WTO has observed as under : ' In respect of exemption under section 5(1)(iv), in my view, this exemption is not available to the assessee, as the exemption is provided in respect of a house belonging to and exclusively used by him for residential purposes. In fact, the assessee is a Ruler and has already got exemption under section 5(1)(iii) of the Wealth-tax Act, 1957, in respect of a building occupied by him. He is residing in this building and as such, he cannot avail of the concession provided under section 5(1)(iv).' " It may be added that in the assessment order for the said year, i.e., the assessment year 1964-65, the WTO has not recorded the details of the property in respect of which the exemption has been allowed under section 5(1)(iii). It is, however, correct that in the assessment order for that year, the WTO has not included the market value of Um....
X X X X Extracts X X X X
X X X X Extracts X X X X
....th-tax returns filed by him for those years in Part IV thereof is as under : -------------------------------------------------------------------------------------------------------------------------------------------------- Year of Name of the Observation in Observation in assessment property Part IV regard- Part IV of exing the annexures emption claimed -------------------------------------------------------------------------------------------------------------------------------------------------- 1 2 3 4 -------------------------------------------------------------------------------------------------------------------------------------------------- 1970-71 Umed Bhavan, There is no claim regarding exemption Kota under section 5(1)(iii) either in Part IV of the return or in any annexure to the return. 1971-72 -do- As per Annexure Section 5(1)(iii). ' K ' 1972-73 -do- -do- This house is official residence of ex-ruler. Hence, the value exempt under section 5(1)(iii). 1973-74 -do- As per annexure This house including ' L ' the compound is official residence of ex-ruler. Hence, value is exempt under section 5(1) (iii). 1974-75 -do- -do- This house including the compound is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er : 2. As regards the point raised by your goodself that whether land comprising in the Umed Bhavan is agricultural land or urban land or abadi land. In this connection, we submit that entire Umed Bhavan including rari and compound is a personal property of the Maharao Sahib and is exempt from the purview of the wealth-tax under section 5(1)(iii) of the Wealth-tax Act, 1957. This point has already been clarified in the assessment relevant to the assessment year 1957-58. The land of Umed Bhavan compound is Abadi land and not agricultural land. In this connection we draw your kind attention towards the letter of Assistant Secretary, Government of Rajasthan No. FLG/17/Rev./A/65 dated 17-9-1966 in which they have clarified that the said land is not agricultural land but Abadi land, the copy of which is enclosed herewith. Therefore, the entire land comprising in Umed Bhavan is exempt under section 5(1)(iii) of the Wealth-tax Act, 1957, and the same point has already been finalised in the assessment year 1957-58." 22. I next find that pursuant to the above Audit Note the ITO-A Ward, Kota had addressed a letter dated 24-10-1977 (at pages 4-5 of the paper book filed by the revenue) to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....our kind attention to our letter dated 27-9-1977 in which we have submitted that these are not agricultural land. These lands comprise Umed Bhavan which is the official residence of ex-Ruler of Indian State Kota. In this connection as desired by your goodself we have filed the order of the Government of Rajasthan No. FLG/17/Rev/A/65 dated 17-9-1966 according to which aforesaid lands are not agricultural lands and are comprising in Umed Bhavan which is the personal property of Maharao Shri Bhim Singhji Sahib of Kota---the original order is ready for your kind perusal and verification. The entire Umed Bhavan is declared as official residence of ex-Ruler which is exempt under section 35(1)(iii) of the Wealth-tax Act, 1957, and this point has been discussed at length in the past and since then exemption is being allowed. Therefore, we hope your goodself would now be quite satisfied on this point. 2. The agricultural land 3 bighas of Kishorepura was sold to Shri Ramesh Chand earlier and, therefore, does not belong to the applicant. 3. The agricultural land 4 bighas of Sakatpura is already included in the land which shown at Nanta, therefore, there is no question of treating the sam....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of 310 bighas, 304 ... is comprising in Umed Bhavan compound .... agricultural land. Umed Bhavan is official residence of Ex. . . . hence, it is exempt under section 5(1)(iii) and ... at length as above. (e) As regards Rampura land, the land in possession of assessee is 500 bighas 10 biswas and not 530 . . . as shown by you. It seems there is some ... and correct land is 500 bighas and 10 biswas ... was included in the return. The necessary evidence of the above ... available with the assessee is ... We do hope your goodself would now be quite satisfied and will finalise the assessment and oblige." 22.2 On that very day, the assessee had addressed another letter dated 29-11-1977 to the WTO (at pages 68 and 69 of the paper book filed by the assessee) on the subject ' regarding Wealth-tax cases of H.H. Maharao Bhim Singhji Sahib, Kota---Assessment year 1970-71 and onwards' reading as under : " Submission of the point of agricultural land : In continuation of our previous submission and details which we have furnished from time to time we further submit as under : 1. Your goodself has observed that why the agricultural land of Kherli Purohit 594 Bighas, Dastpura 559 Bighas and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ersion of this land into ' abadi ' land is concerned, it appears from the perusal of the record that this land should not have been classified as agricultural land. It would not be in the fitness of things to issue an order converting this land into ' abadi ' land. The revenue record may, however, be corrected so that the correct nature of the land may be shown therein. You may now take necessary action in respect of correction of the record." 22.4 The paper, which I will like to mention next, is the letter No. B1/IT/ Agrl. Land/77-78/15900 dated 3-1-1978 addressed by the ITO, to the IAC Ajmer Range, Ajmer (at pages 9-11 of the paper book filed by the revenue) on the subject regarding ' A.G. Audit Note-Review of assessment of Agricultural lands for Wealth-tax, Gift-tax, etc. A-ward, Kota A. G.'s letter No. RAS-126/3344 dated 5-3-1975', reading as under : " The case of H.H. Bhim Singh of Kota was examined. Assessee had shown agricultural land measuring 1345.12 bighas whereas in the Tehsil records, it has been shown at 5017 1/2 bighas. As per the audit report the land has been shown at 4815.02 bighas. The consolidated chart with reasons is enclosed herewith. Assessee has given rea....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... consideration under section 5(1)(iii) and brought out in paragraph 19 above. At the same time, the WTO has not included in the net wealth of the assessee in each of the years under consideration the market value of land attached to and surrounding Umed Bhavan Palace building. 24. Insofar as the other years under consideration are concerned, the WTO has computed the net wealth of the assessee in each of those years by including therein the market value of the immovable assets, namely, urban assets and the agricultural land ' as per the value of the last year ' minus the value of each those said assets, if any, sold in that year (assessment orders are at pages 77 to 91 of the paper book filed by the assessee). 25. After those assessments for the years under consideration were completed by the WTO, the Commissioner issued show cause notices to the assessee on 27-12-1979 in respect of the assessment years 1970-71 to 1974-75 and on 4-3-1980 for the assessment years 1975-76 and 1976-77. 26. The extract from the show cause notice for the assessment year 1973-74 (at pages 98-100 of the paper book) is in the following words : " A perusal of records of proceedings was made it is found t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... year 1976-77 was made by the WTO on 31-3-1978. The value of the aforesaid property could not be brought to charge because of failure on your part to declare the said asset in the return of wealth filed by you. You have, however, filed Annexure G-2 along with the return. In the annexure, you have shown the details of land comprising Umed Bhavan sold to the two co-operative societies. In the note annexed to the said annexure, it is mentioned that ' the land comprising of Umed Bhavan compound was sold to the co-operative societies as per sale agreement dated 18-8-1972. These deeds were presented for registration to the Sub-Registrar of Kota on 18-8-1972 but the documents have not been released so far and unless the registration deeds are returned to the sellers, the deals are not final and, therefore, the amount is shown under the protest. In any case, if the final registration could not be effected, the land would remain exempt under section 5(1)(iii) of the Wealth-tax Act, as in the past '. The WTO has neither included the cash receipt of Rs. 4,58,000 received by you towards the sale proceeds in your net wealth nor has discussed in the assessment order about the exemption of the sa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....us and prejudicial to the interests of the revenue. 6. That in the past the revenue had all along accepted that Umed Bhavan including rari and entire compound was entitled to exemption under section 5(1)(iii) of the Wealth-tax Act, 1957, and that, there was no basis for upsetting that finding. The WTO had given exemption to the assessee only after he had been fully satisfied with the explanation of the assessee. 7. That, therefore, it was not warranted to re-open the settled issue under the provisions of section 25(2) of the Wealth-tax Act, 1957, and that as such ' your honour would not have jurisdiction in this matter '." [Emphasis supplied] 30. On merits, the assessee reiterated the same submissions, as he had made earlier in the course of assessment proceedings for the assessment year 1957-58, which have been extracted by me in extenso above in para 8 supra and need not, therefore, be reproduced at this stage. Towards the end, the assessee's submission was summarised in the following words : " That it is needless to mention that entire Umed Bhavan including land, garden, rari, etc., etc., is within one compound wall and no part of it is separated elsewhere from the on compou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssued for the assessment years 1970-71 to 1974-75 passed a consolidated order dated 21-1-1980 to the following effect : " Facts of the case and arguments made challenging the validity of action under section 25(2) on behalf of the assessee are more or less the same as have been discussed in detail in my order dated 23-8-1979 passed under section 25(2) of the Wealth-tax Act in this very case for the assessment years 1966-67 to 1969-70 whereby I have set aside the said assessment orders to be made de novo. I need not repeat the contentions raised by the assessee and my observations thereon. For the same reasons as have been elaborately discussed by me in the aforesaid order dated 23-8-1979 and the facts discussed above I set aside the assessments for the assessment years 1970-71 to 1974-75 also to be made de novo. The WTO is directed to value the vast open land measuring 2507 bighas in surroundings of Umed Bhavan, Kota after giving proper opportunity to the assessee according to law and include the same in the net wealth of the assessee in the assessment years 1970-71 to 1974-75." 34. Similarly, the Commissioner, after hearing the representative of the assessee and considering the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tween the learned Members hearing the appeals in the matter of facts. In this connection, the learned counsel, Mr. C.S. Agarwal, took me through the order of the learned Accountant Member touching the facts of the case. He then took me through para 3 of the order of the learned Judicial Member wherein he has observed that ' the facts have by and large been properly incorporated in the impugned order and more fully by my learned brother '. Thereafter, the learned Judicial Member referred to the aforesaid consolidated order of the Commissioner dated 21-1-1980 for the assessment years 1970-71 to 1974-75, and the consolidated order dated 19-3-1980 for the assessment years 1975-76 and 1976-77 under section 25(2). The second point made out by the learned counsel, Mr. C.S. Agarwal, is that the approach of the learned Judicial Member in his order is not correct because, according to him, the learned Judicial Member has not advanced any reasons for taking a view contrary to the view taken by the learned Accountant Member. The order of the learned Judicial Member, according to the learned counsel for the assessee, Mr. C.S. Agarwal, is not a speaking order and so is not an order valid in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in the net wealth of the assessee for the year concerned nor discussed in the assessment orders the claim of the assessee for exemption under section 5(1)(iii). He, in fact, according to the Commissioner, did not make an enquiry on this point and consider the claim of exemption at all. The said assumed jurisdiction, according to the learned counsel for the assessee, Mr. C.S. Agarwal, as rightly pointed out by the Accountant Member in paras 34.2, 34.3, 34.4, 34.5, 34.6 and 34.7 and also 35.1, 35.2, 35.3, 35.4 and 35.5 and 36, was not validly assumed by the Commissioner under section 25(2). The reasons given by him to assume jurisdiction, as brought above, could not be sustained. Since I will be dealing in detail with the points made out by the learned Accountant Member, the subsequent part of my order, I need not detail those reasons at this stage. 40. The learned counsel, Mr. Agarwal, next took me through the provisions of section 5(1)(iii) and urged that from the plain reading of the said provision, as rightly held by the learned Accountant Member in paras 37.2 and 37.3 of his order, it was clear that what was exempt under that provision was building in the occupation of the rul....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the additional evidence now brought on record and detailed by the learned Accountant Member in paragraph 37.5 of the order of the learned Accountant Member, the earlier order of the Tribunal relied upon by the learned Judicial Member in his order cannot hold the field. The said additional evidence was never there either before the Commissioner when he passed the order under section 25(2) for the assessment years 1966-67 to 1969-70, nor before the Tribunal. The learned counsel for the assessee, Mr. C.S. Agarwal, next urged that the assessment orders for the years under consideration were passed by the WTO after due application of mind. These assessments were completed after due enquiry. The present case is not a case of an assessment completed without any enquiry as was in the assessment years 1966-67 to 1969-70. These assessments were made by the WTO after full and complete disclosure was made by the assessee in the wealth-tax returns for the years under consideration. The WTO, while making the assessments, applied his mind to the disclosure made and came to a conclusion that the assessee was entitled to the exemption, regarding the land surrounding the Umed Bhavan Palace build....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... letter of the Tehsildar No. 55 dated 23-1-1969 at page 2 of the paper book filed by the Revenue addressed to the WTO in reply to the aforesaid letter of the WTO ; 3. The stand as taken hereinbefore in (1) & (2) was also reiterated by the departmental representative regarding the letter of the WTO No. B-1/WT/KU/2062 dated 1-2-1969 addressed to the assessee and the map of the Palace which was shown by the assessee to the WTO on 17-3-1969 in the course of the assessment proceedings for the assessment year 1957-58. The said letter and the map were according to the departmental representative never produced and shown by the assessee to the WTO in the course of the assessment proceedings nor were those documents considered by him (the WTO) while making the assessments of the assessee for the assessment years 1970-71 to 1976-77." 45. The departmental representative next drew my attention to para 13 of the order of the Commissioner under section 25(2) for the assessment years 1966-67 to 1969-70 wherein he considered the stand of the assessee over there that there was no change about the property in those years as compared to the one in the assessment year 1957-58 when the decision was t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....did not primarily raise the question of exemption under section 5(1)(iii) in respect of the land surrounding the Umed Bhavan Palace building. These papers had nothing to do with the exemption available to the assessee under section 5(1)(iii) in respect of the land surrounding the Umed Bhavan Palace building and the extent of the said exemption. The enquiry, as is clear from the said papers, pertained to the extent of the agricultural land holding with the assessee in the assessment year 1970-71 and onwards. In this connection also, the departmental representative drew my attention to the assessment order of the assessee for the assessment year 1970-71, wherein the WTO has expressly brought out (at page 78 of the paper book filed by the assessee) as to the extent of agricultural land owned by him. He had accepted there that the Umed Bhavan land was not agricultural land meaning thereby that it was abadi land as claimed by the assessee. 47. Insofar as the letter of the Additional Chief Secretary to the District Collector, Kota dated 17-9-1976 referred to in para 23.3 above and the order of the District Collector, dated 16-9-1976 requisitioning the compound of Umed Bhavan at pages 1 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....abadi land and not agricultural land. The exemption claimed was for Umed Bhavan/Umed Bhavan including compound and not the land surrounding it in the returns for the years under consideration. 49. The departmental representative further urged that in the Audit Note of the Accountant General, Rajasthan, there was no reference to Umed Bhavan Palace. The said Audit Note only pointed out the difference between the extent of the agricultural land actually held by the assessee and the agricultural land disclosed by him in his assessments from the assessment years 1965-66 and onwards. 50. The departmental representative, in view of what has been stated therein before has, therefore, urged that the learned Accountant Member has erred in concluding that in the years under consideration there was any such additional evidence which was not before the Commissioner and/or the Tribunal when they disposed of the assessments of the assessee for the assessment years 1966-67 to 1969-70. As such, the question as to whether the so-called additional evidence was considered by the Tribunal in its aforesaid earlier order for the assessment years 1966-67 to 1969-70 is of no consequence. The so-called ad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e approach of the learned Accountant Member in this behalf is not correct. The learned Accountant Member for coming to the above conclusion, according to the departmental representative, in paragraphs 34.2, 34.3, 34.4, 34.5, 34.6, 34.7, 35.1, 35.2, 35.3, 35.4 and 35.5 has relied on the facts and circumstances and/or the evidence which was either not before the WTO and/or was irrelevant in the context of the question involved. The conclusion drawn by the learned Accountant Member in paragraph 36 was, according to the departmental representative, not correct. The conclusion by the learned Accountant Member in the above paragraphs are either misplaced or not correct or not justified. The facts in the years under consideration are almost similar to those which were there in the assessment years 1966-67 to 1969-70 and as such, the decision of the Tribunal for those years in the matter of valid assumption of jurisdiction by the Commissioner under section 25(2) squarely applies to all the years under consideration. 53. The departmental representative next took me through the various paragraphs of the order of the learned Accountant Member. Insofar as the reference to the inventory of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....epresentative, discusses the assessment of the assessee for the assessment year 1957-58. The records of the assessment of the assessee for that year were never looked into by the WTO while making assessments for the years under consideration. The Commissioner in his earlier order under section 25(2) for the assessment years 1966-67 to 1969-70, vide para 13, has squarely dealt with the said assessment of the assessee for the said assessment year 1957-58. 57. Coming to para 10 of the order of the learned Accountant Member, the departmental representative stated that the same deals with the assessments of the assessee up to the assessment year 1964-65 which has no relevance to the assessments of the assessee for the years under consideration, more so when in the assessment orders for the years under consideration (at pages 77-91 of the paper book filed by the assessee) there is no reference to those assessments nor was there any reference therein pertaining to the exemption claimed by the assessee under section 5(1)(iii) or the extent of the exemption available to the assessee regarding Umed Bhavan Palace building and/or compound thereof. As such, according to the departmental repres....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ive advanced before the Tribunal. 62. According to the departmental representative, para 28 of the order of the learned Accountant Member records the arguments advanced by the learned counsel for the assessee. So is the position regarding para 29 of the said order of the learned Accountant Member. Para 30 of the order of the learned Accountant Member, according to the departmental representative, records the arguments of the departmental representative advanced before the learned Accountant Member and the learned Judicial Member. 63. The departmental representative next took me through para 31 of the order of the learned Accountant Member which brings out the total area of the Umed Bhavan Palace building and the land surrounding it. The total area, according to the learned Accountant Member, came to 2428 bighas and 15 biswas and not 2507 bighas or anything higher than that. 64. The departmental representative after reading para 32 of the order of the learned Accountant Member stated that the same bring out the conclusion of the learned Accountant Member in respect of the preliminary point made by the departmental representative, namely, that the issue before the Tribunal stood c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ibunal. The earlier decision of the Tribunal referred to above for the assessment years 1966-67 to 1969-70 in the case of the assessee was correct and had full application to the case of the assessee for the years under consideration. 66. In reply, the learned counsel for the assessee, Mr. C.S. Agarwal, has urged that the departmental representative was not correct in arguing that the order of the learned Judicial Member was a speaking order. The mistake, if any, in the earlier order of the Tribunal should not be perpetuated, when there is additional evidence on record, as brought out by the learned Accountant Member in para 37.5 of his order. The question of proprietary does not arise in the present case. The assessee had made full and complete disclosure before the WTO regarding the exemption claimed. Since the claim for exemption was made and/or considered by the WTO, it is to be taken, even though there is no discussion in the assessment orders, that the claim made was considered and allowed, more so when no addition in respect of the market value of the property involved, namely the lands surrounding superstructure of the Umed Bhavan Palace was added to the net wealth of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iligently gone through the orders of the learned Accountant Member and the learned Judicial Member. Section 5(1)(iii) as it stood on each of the valuation dates for the assessment years 1970-71 and 1971-72 is in the following terms : " (1) Wealth-tax shall not be payable by an assessee in respect of the following assets and such assets shall not be included in the net wealth of the assessee--- (iii) any one building in the occupation of a Ruler declared by the Central Government as his official residence under paragraph 13 of the Merged States (Taxation Concessions) Order, 1949, or paragraph 15 of the Part B States (Taxation Concessions) Order, 1950 ;" The said provision on each of the valuation dates for the assessment years 1972-73 to 1975-76, by virtue of the Finance Act, 1970, the Rulers of Indian States (Abolition of Privileges) Act, 1972, came to read as under : " 5(1) Subject to the provisions of sub-section (1A), wealth-tax shall not be payable by an assessee in respect of the following assets and such assets shall not be included in the net wealth of the assessee--- (i) and (ii) (iii) any one building in the occupation of a Ruler, being a building which immediately b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g in the aforesaid Order. ' Umed Bhavan Palace ' in the case of the assessee, in view of the letters exchanged between V. Vishwanathan of the Government of India, Ministry of Home Affairs, New Delhi, dated 20-1-1958 and the reply of the assessee thereto dated 23-1-1958 at pages 17 and 18 of the paper book filed by the assessee, means the said palace including the compound. This conclusion is sought to be supported in the light of the existence of the adjective clause used in paragraph 15(1)(iii) of the Part B States (Taxation Concessions) Order, reading " declared by the Central Government as his official residence, under paragraph 13 of the Merged States (Taxation Concessions) Order, 1949, or paragraph 15 of the Part B States (Taxation Concessions) Order, 1950 ". The stand of the assessee is that since Umed Bhavan Palace is to be considered for the purpose of the exemption under section 5(1)(iii), the exemption extended not only to the superstructures of the palace but also to the entire land surrounding the palace. Support for this view is sought not only from interpretation given in the manner stated hereinbefore but also from the inventory of the private properties of the asses....
X X X X Extracts X X X X
X X X X Extracts X X X X
....private property approved by the Government of India, Ministry of States dated 13-9-1950 at pages 14 and 15 of the paper book filed by the assessee is concerned, the same constitutes a part of the merger agreement. The said merger agreement between the Government of India and the assessee, an erstwhile ruler of one of the Indian States, being not law has no binding force on the Income-tax Department. The same cannot be enforced in a Court of Law or any Tribunal---see in this connection the decisions of the Allahabad High Court in Nawab of Rampur and H.H. Maharaja Vibhuti Narain Singh. 77. Another important thing to be noticed is that though the aforesaid inventory of private property of the assessee speaks of ' Umed Bhavan including gardens, rari, building comprising the entire compound ', the notification issued by the Government of India dated 14-5-1954 in the case of the assessee in pursuance of the provision of item (iii) of paragraph 15 of the Part B States (Taxation Concessions) Order has for the purpose of paragraph 15 of the said order declared Umed Bhavan Palace as the official residence of the assessee. It may be also added that the sweep of paragraph 15 of the Part B St....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tered into the inventory of the private property of the assessee mentioned in the covenant entered into between him and the Government of India. Further, the decision of the Government is with reference to the aforesaid 1963 Act wherein the said Umed Bhavan including gardens, rari, building, etc., was considered to be abadi land and not agricultural land. This has nothing to do with the present controversy before me. The said decision was rendered in entirely different setting. 79. Coming to the requisitioning order dated 16/20-9-1976 issued by the Collector, Kota, under section 23(1) of the Defence and Internal Security of India Act, 1961, I find that the Collector has requisitioned the land surrounding Umed Bhavan Palace building and the cluster of buildings of Umed Bhavan Palace. These too do not have any relevance in the matter of interpretation to be given to the provision of section 5(1)(iii). Of course, the said requisitioning order has stated that the land surrounding the Umed Bhavan Palace building is in the compound of the said palace. 80. I now address myself to the meaning to be given to the expression ' any one building ' appearing in section 5(1)(iii). If we get sec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....' in section 5(1)(iii) as it stood in assessment years 1972-73 to 1976-77 in the context in which it appears there to mean the Umed Bhavan Palace Building(s) together with the land appurtenant there to have due and proper enjoyment thereof and not the entire land surrounding the same. 81. Coming to section 5(1)(iii) as it stood in assessment years 1970-71 and 1971-72, the adjective part of section 5(1)(iii) after the words any building in occupation of a Ruler therein' reads ' declared by the Central Government as his official residence under paragraph 13 of the Merged States (Taxation Concessions) Order, 1949, or paragraph 15 of the Part B States (Taxation Concessions) Order, 1950 '. As already stated in the preceding paragraph, the words ' under paragraph 13 of the Merged States (Taxation Concessions) Order, 1949, or paragraph 15 of the Part B States (Taxation Concessions) Order, 1950 ' have to be interpreted in the said adjective clause of section 5(1)(iii) to pin-point the official residence of a ruler declared by the Central Government instead of enumerating therein ruler-wise, each and every official residence of his. The said adjective clause has to be interpreted in sectio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oned ' Umed Bhavan ' Palace. As stated above, the inventory of the private property of the assessee being a part of the aforesaid covenant entered into between him and the Government of India the merger agreement was not law and, therefore, cannot be enforced in a Court of Law or in any Tribunal. As far as the letter of the Additional Chief Secretary to the Government of Rajasthan addressed to the Collector of Kota is concerned, the same has no relevance in the present case as has been brought out by me in paragraph 78 above. So is the position regarding requisitioning order of the so-called compound of Umed Bhavan Palace by the Collector of Kota dated 16-9-1976 as discussed by me in paragraph 79 above. 83. Coming to the arguments of the learned counsel for the assessee, Mr. C.S. Agarwal, that Umed Bhavan Palace building and the entire lands surrounding it constituted one unit which was not divisible or partitioned, being in one compound with one boundary wall, there cannot be any doubt that the said entire land admeasuring over 2,000 bighas cannot be considered as land appurtenant to the Umed Bhavan Palace building. Only the land which is required for reasonable and proper enjoym....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tional evidence which was, according to him, there on record of the years under consideration and was not there in the earlier years, i.e., the assessment years 1966-67 to 1969-70 which had come up for consideration before the Tribunal on the earlier occasion. The said additional evidence is detailed in para 37.5 of the order of the learned Accountant Member. The records of each of the years under consideration, I, after deliberation hold, are the records of each of those years as they stood at the relevant time before the WTO. Taking the letter of the WTO, dated 8-1-1969, addressed by him to the Tehsildar in M.A. File of 1957-58 assessment, the reply of the Tehsildar dated 23-1-1969 addressed to the WTO in reply to his letter referred to hereinbefore, the letter of the WTO, dated 21-2-1969, addressed to the assessee and map of the palace referred to at item Nos. (1) to (4) of para 37.5 of the order of the learned Accountant Member, first, these never formed part of the assessment records of the assessee for each of the years under consideration, i.e., the assessment years 1970-71 to 1976-77. They were never considered by the WTO in the course of the assessment proceedings for each....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce building together with the land surrounding it, has been held and/or was exempt under section 5(1)(iii), the WTO neither in the assessment order for the assessment year 1970-71 nor for any of the subsequent year, it appears, has applied his mind to that aspect of the case raised before him. I say so because there is of discussion in the assessment order in this behalf, when the WTO has otherwise dealt with the other claim of the assessee in those replies that the lands surrounding the Umed Bhavan Palace building was abadi land and not agricultural land vide assessment order for the assessment year 1970-71, had the WTO applied his mind to the exemption so claimed by the assessee under section 5(1)(iii) in respect of the Umed Bhavan Palace building and the land surrounding it, there was no reason as to why the WTO should not have made any reference to the exemption so claimed, when he had dealt with the main thrust of the claim therein that the land surrounding the Umed Bhavan Palace building was abadi land and not agricultural land. Since the letter of the Accountant General, the letter of the WTO dated 24-10-1977 and the report of the WTO to the IAC dealt only with the question ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing it and directing a fresh assessment." As is clear from the provisions of section 25(2), the order to be passed is a quasi-judicial one. It is well established that in exercising the said power, the Commissioner must bring there an unbiased mind and consider impartially the objection raised by the aggrieved parties and decide the dispute according to the procedure consistent with the principle of natural justice. In the exercise of that power, he cannot permit his judgment to be influenced by matter not disclosed to the assessee nor by the dictates of another authority. It also follows from the above provisions of section 25(2) that the Commissioner can validly assume under section 25(2) only when he establishes that the impugned order by the WTO is not only ' erroneous ' but also ' that the error had operated against the interests of the revenue '. In order to do so, he must pass a speaking order, clearly spelling out the particular ' error ' and how it has caused loss of revenue. 91. According to the learned counsel for the assessee, the present case is one where the Commissioner has not validly assumed jurisdiction, inasmuch as, the Commissioner before issuing the show-caus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n, the extent of the Umed Bhavan and the compound attached therewith and the size of that compound ; and (ii) the WTO had failed to make enquiry whether the land in question surrounding Umed Bhavan was exempt under section 5(1)(iii). The said returns read with the material referred to in paragraph 37.5 of the order of the learned Accountant Member, as also the assessment of the assessee for the assessment year 1957-58 clearly established that there was no failure on the part of the assessee in making requisite declaration in the return with regard to Umed Bhavan and the adjoining land nor was there any failure on the part of the WTO to make enquiry whether the land in question was part of Umed Bhavan Palace and whether it was exempt under section 5(1)(iii). 93. The observations of the Commissioner in the show-cause notices for the years under consideration and his impugned orders, in the light of the arguments by the learned counsel is detailed in para 40 above, it was urged by the learned counsel that it clearly established that the assumption of jurisdiction by the Commissioner was without jurisdiction. In this connection, the learned counsel had taken me through paras 34, 35 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by the assessee, the letter of the WTO dated 24-10-1977 at pages 4 and 5 of the paper book filed by the revenue and the two replies of the assessee to the WTO dated 29-11-1977, the one at pages 6 to 8 of the paper book filed by the revenue and the other at pages 68 and 69 of the paper book filed by the assessee, read with Audit Note of the Accountant General dated 5-3-1976 at page 3 of the paper book filed by the revenue and letter of the WTO with annexures to the IAC at pages 9 to 11 of the paper book filed by the revenue, that the WTO had raised the question with the assessee as to whether the land around the Umed Bhavan Palace building was agricultural land or urban land or abadi land. In that connection, the assessee in the assessment proceeding for the assessment year 1970-71 had in reply to the query raised by the WTO in that behalf had also stated that : " In this connection, we submit that the entire Umed Bhavan including rari and compound is a personal property of Maharaja Sahib and is exempt from the purview of wealth-tax under section 5(1)(iii) of the Wealth-tax Act. This point has already been clarified in the assessment relevant to the assessment year 1957-58. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aid Audit Note and the reply of the assessee has stated in that letter that " thus in my opinion there is no difference of land shown by the assessee ". 99. As is clear from the assessment order of the assessee for the assessment year 1970-71, the said correspondence was duly considered only regarding the case of the assessee that the land surrounding Umed Bhavan building was abadi land and not agricultural land. That is why the WTO in the assessment of the assessee for the assessment year 1970-71 has stated that the land surrounding the Umed Bhavan Palace building was not agricultural land. See in this connection the discussion in para 86 above. At the same time, the assessment orders for each of the assessment years 1970-71 to 1976-77 read with the aforesaid correspondence also shows that in those assessment orders, the WTO has not discussed the claim of the assessee for exemption under section. 5(1)(iii) in respect of Umed Bhavan Palace building and the entire land surrounding it. The WTO does not appear to have applied his mind to this question nor did he make any enquiry in this behalf, had he done so, he would have, as he had done for holding the land surrounding Umed Bhavan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment year 1970-71 at Rs. 8,66,200 no longer held good. The same is the position regarding the computation of the net wealth of the assessee in the matter of immovable assets for each of the other years under consideration, i.e., assessment years 1971-72 to 1976-77. 101. Position being as stated hereinbefore, the WTO has adopted the value of the immovable property for each of the assessment years 1970-71 to 1976-77 ' as per last year ' and not with reference to the past records of the assessee. The disclosure of information regarding the exemption claimed by the assessee under section 5(1)(iii) in respect of Umed Bhavan Palace/Umed Bhavan Palace including the compound in Part IV of the returns for the assessment years 1971-72 to 1976-77 may be relevant for not invoking jurisdiction under section 147 of the Act. The proceedings before the Tribunal pertain to the invocation of jurisdiction by the Commissioner was under section 25(2). The Commissioner has, in view of what we have stated hereinbefore, correctly held that the WTO in the assessments of the assessee for the assessment years 1970-71 to 1976-77 did not apply his mind at all as to whether the land surrounding the Umed Bhavan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dated 8-6-1979 addressed to the assessee and the reply of the assessee thereto dated 12-6-1979 in misplaced because these papers came into existence after assessment orders for the years under consideration, i.e., assessment years 1970-71 to 1976-77 were made in January and March 1978. As such, this correspondence, relied upon by the assessee, was never considered by the WTO before making those assessments. These have to be ignored as rightly argued by the departmental representative. 103. Reference by the learned Accountant Member in para 35.5 regarding the issue of the non-inclusion of the net wealth by the WTO of diverse amounts of cash mentioned in the show-cause notice for the assessment years 1973-74 to 1976-77 under section 25(2), it may be added that the said aspect is not relevant at this stage, because this aspect of the case never became the subject-matter of the orders of the Commissioner under section 25(2). The Commissioner raised this issue in the show-cause notices but he did not take any action in this behalf after considering the explanation of the assessed in this behalf. 104. I, therefore, on the facts and in the circumstances and the above discussions, hold t....