TaxTMI 
TaxTMI 
2012 (9) TMI 670
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.... in appeal before the Appellate Tribunal for Forfeited Property, New Delhi which came to be allowed on 24.6.1992 and the forfeiture was set aside. In the wealth tax proceedings in relation to the assessment years under consideration, the assessee claimed that the value of the silver bars could not be included in the wealth of the assessee as he was not the owner of the silver bars on the valuation dates corresponding to the assessment years under consideration. The Assessing Officer rejected such contention and included the value of the subject assets in the total wealth of the assessee for the assessment years under consideration. Being aggrieved, the assessee preferred separate appeals before the Commissioner of Wealth Tax (Appeals) against the assessment orders passed by the Assessing Officer. By a common order dated 28.7.1998, the Commissioner (Appeals) dismissed the appeals by holding that the order of the competent authority on which reliance had been placed by the assessee whereby silver was confiscated on 8.6.1979 was not final and the assessee had right of appeal against such order. He was of the view that by exercising right of appeal, the assessee had moved the appellate....
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....rs was removed by the said order of the Tribunal. Against the order under section 7 passed by the competent authority under SAFEMA, the assessee had preferred an appeal before the Appellate Tribunal for Forfeited Property and as such, the order of the competent authority had not attained finality. Such proceedings under section 7 of SAFEMA attained finality only when the order dated 24.6.1992 came to be made by the Appellate Tribunal whereby the order of the competent authority was set aside. Under the circumstances, the subject assets continued to remain the property of the assessee and were assessable as his wealth under the provisions of the Wealth Tax Act. Reliance was placed upon the decision of the Supreme Court in case of Kunhayammed and others v. State of Kerala and another, AIR 2000 SC 2587 for the proposition that mere pendency of an application seeking leave to appeal does not put in jeopardy the finality of the decree or order sought to be subjected to exercise of appellate jurisdiction by the Supreme Court. It is only if the application is allowed and leave to appeal granted then the finality of the decree or order under challenge is jeopardised as the pendency of appe....
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.... under SAFEMA and as such, the matter is required to be remanded for taking into consideration such facts. 5. Vehemently opposing the appeal, Mr. Manish Shah, learned counsel for the respondent-assessee invited the attention of the court to the relevant provisions of the Wealth Tax Act, 1957 (hereinafter referred to as "the Act"). It was submitted that "net wealth" as defined in section 2(m) of the Act, is the aggregate value of all the assets, wherever located, belonging to the assessee on the valuation date, computed in accordance with the provisions of the Act. Thus, it is the assets which belong to the assessee as on the valuation date that are required to be taken into consideration. It was pointed out that by virtue of the order passed by the competent authority under the SAFEMA the subject assets stood forfeited to the Central Government. Consequently, the same did not belong to the assessee on the relevant valuation dates and as such, could not be included in the net wealth of the assessee for the assessment years under consideration. According to the learned counsel, wealth tax being an annual levy, what is relevant is as to whether or not such assets belong to the asse....
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....ITR 536, wherein the court, in the context of the provisions of the Wealth Tax Act, had observed that the expression "belong" has been defined in the Oxford English Dictionary as "To be the property or rightful possession of" so it is the property of a person, or that which is in his possession as of right, which is liable to wealth tax. In other words, the liability to wealth-tax arises out of ownership of the asset, and not otherwise. Mere possession, or joint possession, unaccompanied by the right to, or ownership of property would therefore not bring the property within the definition of "net wealth" for it would not then be an asset "belonging" to the assessee. 5.3 Attention was also invited to the definition of "forfeiture" in different dictionaries to which reference shall be made at a later stage. 5.4 Dealing with the contention raised by the learned counsel for the appellant that the order of the competent authority had not attained finality as the appeal was pending and therefore, the subject assets belonged to the assessee during the relevant period, the learned counsel for the assessee placed reliance upon the decisions of the Supreme Court in Kedarnath Jute Mfg. ....
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....pany at the rate or rates specified in the Schedule. Thus, liability to pay wealth-tax gets crystallized on the valuation date. Net wealth as noticed earlier, is the aggregate value of all the assets, wherever located, belonging to the assessee on the valuation date computed in accordance with the provisions of the Act. Thus, for the purpose of determining the wealth tax liability of an assessee what is required to be taken into consideration is value of all assets belonging to him as on the valuation date. As held by the Supreme Court in the case of Bishwanath Chatterjee (supra), the liability to wealth-tax arises out of ownership of the asset, and not otherwise. Reverting to the facts of the present case, therefore, unless the subject assets belonged to the assessee as on the relevant valuation dates corresponding to the assessment years under consideration, they would not fall within the ambit of "net wealth" and would not be chargeable to wealth tax. 9. Thus, what is required to be examined in the present case is as to whether the subject assets belonged to the assessee as on the respective valuation dates so as to be liable to be included while computing his net wealth for ....
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.... the property stands forfeited to the Central Government free from all encumbrances. The expression "forfeiture" has been defined in different dictionaries as follows: 1. The Oxford Encyclopedia English Dictionary "Property lost as a legal penalty" "lost the right to" "be deprieved of" 2. Shorter Oxford English Dictionary "The fact of losing (goods, estate. . .) in consequence of a crime, offence" 3. Webster's Third New International Dictionary "The loss of some estate in consequence of a crime offence" 4. Black's Law Dictionary "Loss of property as a penalty for some illegal act." 5. STROUD's Judicial Dictionary "Forfeiture" means "the loss of all interest' in the property. " 6. K.J. Aiyar's Judicial Dictionary "Deprivation of lands, goods or other property usually in consequence of sentence passed by a court of law, or some breach of the law." 12. Thus, the dictionary meaning of the term "forfeiture" is loss of all interest in the property in consequence of a crime. In Jayantilal Amritlal (supra), this court has observed that if the articles were confiscated, the a....
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....he statutory scheme must be held to be different. A proceeding for confiscation can be initiated irrespective of the fact as to whether prosecution for commission of a forest offence is lodged or not. A confiscation proceeding, therefore, is independent of a criminal proceeding. 14. Adverting to the facts of the present case, the subject assets have been forfeited under section 7 of the SAFEMA. Forfeiture of the goods, as held in the above decision, results in vesting of the property in the State. Thus, the distinction sought to be drawn between forfeiture and confiscation by the learned counsel for the appellant by placing reliance upon the above decision does not in any manner come to the aid of the appellant. In the present case, undisputedly, there was an order of forfeiture of the subject assets, which was in operation during the period between 8.6.1979 to 24.6.1992 till it was set aside by the Appellate Tribunal. Thus, during the said period, which encompasses the valuation dates corresponding to the assessment years under consideration, the subject assets stood vested in the Central Government free from all encumbrances. During such period, though the assessee had challen....
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....the pendency of assessment proceedings before the Income Tax Officer and before the finalisation of the assessment. The court held that it was not possible to comprehend how the liability would cease to be one because the assessee had taken proceedings before higher authorities for getting it reduced or wiped out so long as the contention of the assessee did not prevail with regard to the quantum of liability. The court approved of the decision of Madras High Court wherein it was held that the assessee had incurred an enforceable legal liability on and from the date on which he received the Collector's demand for payment and that his endeavour to get out of the liability by preferring appeals could not in any way detract from or retard the efficacy of the liability which had been imposed upon him by the competent excise authority. 16. In Kunhayammed (supra), the Supreme Court has held that in spite of a petition for special leave to appeal having been filed, the judgment, decree or order against which leave to appeal has been sought for, continues to be final, effective and binding as between the parties. Once leave to appeal has been granted, the finality of the judgment, decre....
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....ct assets which stood vested in the Central Government free from all encumbrances. Thus, in the interregnum, that is, from the date of passing of the order of forfeiture, till the same was set aside, the said order was in operation and the pendency of the appeal would not reduce the efficacy of such order. The subject assets, therefore, did not belong to the assessee on the relevant valuation dates and could not have been taken into consideration while computing the net wealth of the assessee. 21. A faint attempt has been made by the learned counsel for the appellant to submit that during the relevant valuation dates, the order of forfeiture had been stayed by the higher forum. In support of such contention, the learned counsel had placed reliance upon a communication dated 6.11.1992 addressed by the assessee to the Assistant Commissioner of Wealth Tax. On a perusal of the said communication, it is apparent that it is nowhere stated therein that the High Court had granted interim stay against the order passed by the competent authority under section 7 of the Act. From the facts as emerging from the record, it is apparent that against the order passed by the competent authority u....