Estate of late G. Ramaswamy Naidu vs Controller of Estate Duty, Madras

Ramaprasada Rao, J.—This reference arises under the Estate Duty Act, 1953. At this instance of the accountable person, u/s 64(1) of the

said Act, the following question has been set before us for our decision.

Whether on the facts and in the circumstances of the case, the Tribunal is justified in holding that the value of the jewellery that passed on the

death of the deceased was Rs. 1,00,000/?

The estate in question belonged to one G. Ramaswami Naidu, who died as a bachelor on October 26, 1959. The accountable person is his

sister, Guruswami Naidu, the father of Ramaswami Naidu, admittedly was possessed of jewels worth about a lakh of rupees. He made a

declaration to that effect before the Department on March 31, 1950. The deceased, in his Wealth Tax proceedings, during the assessment years

1955-56 and 1956-57, owned the jewels of such value and disclosed the same in his Wealth Tax returns. During the assessment year 1957-58,

however, Ramaswami Naidu retracted and declared in his Wealth Tax returns the value of such jewels at Rs. 40,000/- and claimed that jewels

worth Rs. 25,000/- were given away on November 24, 1954, to one Baby Ammal who projected a claim for maintenance as against the estate of

Guruswami Naidu. It is not clear as to what happened to the rest of the Jewels. In fact, the record does not contain as to how the depletion arose

resulting in the disclosure of the jewels worth Rs. 40,000/- as against jewels worth one lakh in the previous assessment year. The Revenue rejected

the returns, since there was no satisfactory proof of disposal of the jewels between he previous assessment year and the assessment year 1957-58,

and in the absence of such satisfactory proof of the disposal of the unaccounted jewels, the deceased''s Wealth Tax assessments were completed

on the basis that his wealth inter alia comprised of jewels worth one lakh of rupees. The result is that in the assessment year 1957-58 the value of

the jewels was determined as one lakh and this has become final on appeal before the Tribunal. After the death of Ramaswami Naidu on October

26, 1959, his sister as the accountable person filed as return under the Estate Duty Act declaring the aggregate value of the estate of the deceased

at Rs. 19,85,450/- including jewellery worth only Rs. 3,350/. The Deputy Controller of Estate Duty would not accept the unexplained depletion of

the jewellery and confirmed that the deceased died possessed of jewels worth Rs. 1,00,000/-. The contention before the Deputy Controller was

that the deceased made the return in the Wealth Tax proceedings under a mistake unwittingly and without proper thought. The story put forward

by the deceased when he was alive that a substantial portion of the jewellery was given away to Baby Ammal was repeated. The accountable

person claimed that she made an inventory of the jewels on the date of death of the deceased and found only jewellery worth Rs. 3,350/-. The

Deputy Controller of Estate Duty as already stated, held that in the absence of any evidence in support of sale or gift of the jewellery as contended,

it should be concluded that the jewellery worth one lakh did exist on the date of death of the deceased. An appeal to the Appellate Controller of

Estate Duty was not successful. On a further appeal to the Appellate Tribunal, it found that the jewels in this opulent family were to be considered

as family heir-looms and observed that the inference was inescapable that the accountable person obtained possession of the entire jewellery. It

discussed the materials on records, the contentions raised and in the light of the earlier Wealth Tax proceedings came to the conclusion that the

Revenue was right. It also observed that even in the Wealth Tax Proceedings for the assessment year 1960-61 it was held that the accountable

person was possessed of jewels of the value of Rs. 1,00,000/-. Thereafter, on an application by the accountable person, the question already

excepted has been referred to us for our decision.

Before us Mr. Ramamani, learned counsel for the accountable person, strenuously urged that the Tribunal was wrong in mechanically relying

upon the order of the Tribunal in the Wealth Tax proceedings; the case of the accountable person that the deceased might have used and utilised

the jewels either in India or in the United Kingdom ought to have been accepted; that the discovery of large bank credits in the United Kingdom

left by the deceased is an indicia to probabilise the argument that the jewels were removed by the deceased from India and sold there. He would

also urge that the accountable person has sworn to the affidavit of assets and has stated on oath that only jewels worth Rs. 3,350/- were

inventoried by her and she could not find any other jewels on the date of death of the deceased. It is urged that once the accountable person bases

here claim on such materials, the burden shifts on to the Revenue to show that the story of depletion of the jewels cannot be accepted. Mr.

Jayaraman, counsel for the Revenue, contends that the deceased should be deemed to have died leaving jewels worth one lakh and stated that it

was for the assessee to rebut a reasonable presumption arising from the Tribunal''s order in Wealth Tax proceedings that the deceased indeed was

possessed of jewellery worth a lakh on the date of his death, since an year and a half before the date of death his wealth was determined by a

proper statutory Tribunal which included the jewellery worth one lakh. He would in any event say that the finding of the Tribunal on the material

placed before it was reasonable and as the fact so found is conclusive, the answer should be against the accountable person.

Section 2(15) of the Estate Duty Act defines ''property'' as including any interest in property movable or immovable. Section 5, which is the

charging section, provides that in the case of every person dying after the commencement of this Act, there shall be levied and paid upon the

principal value ascertained as hereinafter provided of all property, settled or not settled, including agricultural land situate in the State specified in

the First Schedule to the Act, which passes on the death of such person, a duty called ""estate duty"". The rates are fixed in accordance with Section

Section 6 et seq deals with property which is deemed to pass. Section 6 in particular provides that the property which the deceased was at the

time of his death competent to dispose of shall be deemed to pass on his death. Thus, the relevant provisions of the Estate Duty Act make exigible

to duty all such property, movable or immovable, left by the deceased on the date of death, including the property over which the deceased had

the competence to deal with. The charging section read with the deeming provisions of the Act makes it clear that if the deceased died possessed

or deemed to have died possessed of property, over which he had the right of disposal, then such property would very well come within the net of

taxation. What has passed on the death of a deceased has to be determined by,the Revenue, on the material furnished by the accountable person

on such other indisputable material available or found on record. It would be difficult to base the reckoning and determination purely on the self-

serving affidavits or davits or statements of the accountable person. The initial burden of establishing the correctness of the return filed by the

accountable person is on him or her. If satisfactory clinching and acceptable proof to substantiate the contents of the return is forthcoming. then the

Revenue, if it intends to depart therefrom, should in its turn tender such evidence to prove to the contrary. As to what would be the measure of

acceptable evidence on either side is a varying factor depending upon the facts of each case. The burden of proof is no doubt ambulatory because

in the nature of things no right standard can be set or an inelastic formula laid for such proof. No doubt, throwing the proof on wrong shoulders,

would certainly raise a question of law--see Parimisetti Seetharamamma Vs. Commissioner of Income Tax, Hyderabad, . In the instant case the

accountable person was initially under a handicap because the deceased himself did not demur against the order of the Tribunal in Wealth Tax

proceeding when it evaluated his jewellery o at one lakh as on March 31. 1958. The contention is that the deceased committed an unwitting

mistake. The explanations so is unconvincing that to accept it, would mean to depart from the usual norm of evidence, that the material tendered

should be proved and substantiated. Excepting the ipse dixit of the accountable person, nothing more is available to bring home the argument. If a

person alleges that a mistake has crept in any legal proceedings, he should bring home to the Tribunal such a circumstance and demonstrate that a

mistake is an unwitting one. Again, it is pure speculation to urge without any basis, that the deceased might have removed a great part of the

jewellery to United Kingdom and sold them there. During the relevant period, the Foreign Exchange Regulation Act was in force and there were

statutory barriers, before any such attempt can bear fruition The alleged removal of the jewellery if at all true, over the blue seas ought to have been

clandestine and stealthy. If this could be the on way in which the deceased could have dealt with the jewels, then the onus is heavier on the

accountable person, who alleges it, to prove it. He, who sets up a bundle of facts, should establish them in a meaner known to law. No effort has

been made by the accountable person., No doubt the Revenue was also to discharge its burden that the deceased died possessed of the jewels on

the date of demise. They at tempted to establish it by destroying the accountable person''s basis and also by relying on other circumstances, and

acceptable material including the Wealth Tax returns. This was accepted by the Tribunal. Therefore no question law arises from its order. Mr.

Ramamani''s case is that the accountable person''s version ought to be accepted in toto without being punctuated. But why? There is no valid

explanation. We cannot there fore accept the contention. Counsel also would say that sole reliance on the Wealth Tax returns and the resultant

assessment thereon is also unsustainable. No doubt, K.A. Subramaniam, Ambi''s Cafe Vs. Controller of Estate Duty, Madras, , would say that the

force of such an assessment under a different fiscal enactment is not conclusive. No doubt an implicit following up of an order under the Wealth

Tax Act, to subserve an assessment proceeding under the Estate Duty Act is no proper. But such a retain and its resultant effect has of course

probative value and is not an irrelevant factor in these proceedings. It such an order is also high lighted by other circumstances such as the conduct

of the deceased himself, absence of material to prove the depletion in the estate''s wealth prior to the death of the deceased total lack of reality and

substance in the contention of the accountable person and such other similarly factors, then it would be proper legal and regular for the Revenue as

well as the Tribunal to rely on the assessment order under they Wealth Tax Act as above, in the light of the a surrounding facts and circumstances.

The contents of the Wealth Tax return, the order in a Wealth Tax Assessment proceeding which has become final, are all relevant material on

which reliance can be placed by the Tribunal to decide an issue under the Estate Duty Act, particularly while reckoning the value of the estate that

has passed or deemed to have passed on the death of a deceased.

It cannot be disputed that the provisions of Section 64 of the Estate Duty Act, 1953, and those of Section 66 of the Indian Income Tax Act,

1922 are almost in pari materia and the Courts are bound to interpret the two sections in the same way. It, therefore the principles governing the

above two sections are similar and the sections have to be thus interpreted, a reference u/s 64 of the Estate Duty Act to the High Court can only

be on a point of law and the High Court in its advisory jurisdiction ought not to and shall not interfere on pure findings of fact given by the Tribunal.

As to how the Income Tax Appellate Tribunal, whose functions are very similar to that of the Tribunal constituted under the Estate Duty Act,

should act has been clearly set out by the Supreme Court in Omar Salay Mohamed Sait Vs. Commissioner of Income Tax, Madras, .

The Income Tax Appellate Tribunal is a fact finding tribunal and if it arrives at its own conclusions of fact after due consideration the evidence

before it the court will not interfere. It is necessary, however, that every fact for and against the assessee must have been considered with due care

and the Tribunal must have given its finding in a manner which would clearly indicate what were the questions which arose for determination what

was the evidence pro and contra in regard to each one of them and what were the findings reached on the evidence on record before it. The

conclusions reached by the Tribunal should not be colored by any irrelevant considerations or mattes of prejudice and if there are any

circumstances which require to be explained by the assessee, the assessee should be given an opportunity of doing so. On no account whatever

should the Tribunal base its findings on suspicions, conjectures, or surmises; nor should it act on no evidence at all or on improper rejection of

material and relevant evidence or partly on evidence and partly on suspicions, conjecture or surmises and if it mows anything of the sort, its findings

even though on questions of fact will be liable to be set aside by the Court.

In this case, the Tribunal never made a conjecture or based its conclusion on surmise. It considered all the facts, weighed each one of the

circumstances arising in the reference and gave the finding. It is therefore unassailable. BIBI GURDARSHAN KAUR (DECEASED)

(THROUGH LEGAL HEIRS) Vs. COMMISSIONER OF Income Tax, NEW DELHI., cannot help the accountable person, The observation

there is:

The mere fact that the deceased had before his death admitted possession of jewellery of a certain value in his wealth statements for some

previous years furnished to the Income Tax Officer in connection with his Income Tax assessment will not justify the inclusion jewellery of such

value in the assets on which estate duty could be levied. If the accountable persons deny that the deceased had any jewellery on his death it is the

duty of the Estate Duty Officer to decide whether any jewellery was in existence as the property of the deceased at the time of his death.

In this case that was not the only circumstance. Other relevant factors were weighted by the Tribunal.

In the ultimate analysis, it has to be found whether the Tribunal exercised due care and judgment in coming to the conclusion and rendering the

findings of fact that the jewels should be considered as estate which passed or deemed to have passed on the death of Ramaswami Naidu.

Can it be said that the finding of fact given by the Tribunal is perverse or unreasonable or was given without ""due care""? While answering the

reference, this Court is bound by the findings of fact given by the Tribunal provided they are backed up by relevant material on record. The

Tribunal relied on the various circumstances already referred to and also the Wealth Tax proceedings of the deceased, and on an overall

consideration these facts, and having regard to the conduct of the deceased and the accountable person, who did not make any independent

survey or inventory of the jewels through an independent agency, and after weighing the pros and cons of the case found in the manner they did.

To us, the finds in by the sole fact find in authority is not unreasonable and much less perverse. They have taken due and proper care to weigh the

material before them. As the scope of Section 64 of the Estate Duty Act is similar to that u/s 66 of the Indian Income Tax Act, 1922, we are

bound to accept the finding of fact that RS. 1,00.00/- worth or jewellery passed on the death of Ramaswami Naidu. The question is answered

against the accountable person with costs. Counsel''s fee Rs. 250/-.

Answered in affirmative.