Commissioner of Wealth Tax vs Abhemal Shah

The Income Tax Appellate Tribunal, Jaipur Bench, Jaipur, has referred the following question of law arising out of its order dated May 27, 1981, in respect of the year 1977-78 :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the Wealth-tax Officer was not justified in including the sum of Rs. 60,000 in the net wealth of the assessee-Hindu undivided family ?"

The brief facts of the case are that the assessee-Hindu undivided family had deposited a sum of Rs. 2,40,000 with Messrs. Shah and Co. In respect of the amount a partial partition which has taken place as a result of which Rs. 1,80,000 were divided amongst the karta and his two sons and the remaining Rs. 60,000 was set apart for the purpose of education and marriage of the daughters of the karta. This amount of Rs. 60,000 was credited in the accounts of the three daughters in the books of account of Shah and Co. According to the Wealth-tax Officer, the amount of Rs. 60,000 having been credited in the accounts of the three daughters in the books of Shah and Co., the assessee had control over the funds and, therefore, it was held by the Wealth-tax Officer that no trust was created in respect of the amount of Rs. 60,000 transferred in the names of the three daughters. The Wealth-tax Officer included the sum of Rs. 60,000 in the net wealth of the assessee itself.

The matter was taken before the Appellate Assistant Commissioner where the addition was deleted.

In the appeal before the Income Tax Appellate Tribunal it was held that the partial partition was recognised by the Department and there was transfer of funds to the individual accounts of the daughters of the karta and interest on these deposits were credited in these accounts and it had not been clubbed by the Income Tax Officer with the income of the Hindu undivided family in the Income Tax assessment order. In these circumstances, the Tribunal held that it was difficult to believe that the assessee-Hindu undivided family continued to have control over these funds. The Tribunal came to the conclusion that these amounts could not be included in the net wealth of the Hindu undivided family.

We have considered the arguments of learned counsel for the Revenue and are of the opinion that no illegality has been pointed out in the order of the Tribunal. The fact of partial partition having been recognised by the Department has not been denied. While making the Income Tax assessment, the interest accrued in these accounts had not been included in the Income Tax assessment as income of the Hindu undivided family. There could be a circumstance where by reason of mere entry in the books of account the control over the fund could be with a person different from the one in whose name the account has been credited but in the present case it has not been proved by any evidence or document on the record by which either the genuineness of the partial partition could be disputed or it could be said that the amount was not unequivocally transferred to the three daughters of the karta. More so, it is a finding of fact and does not call for any interference.

Looking to the facts of the present case we are of the opinion that the Income Tax Appellate Tribunal was justified in holding that the Wealth-tax Officer was not justified in including the sum of Rs. 60,000 in the net wealth of the assessee-Hindu undivided family.

Accordingly, the reference is answered in favour of the assessee and against the Revenue. No orders as to costs.