Vimal Gandhi, J.M.
1. These 9 appeals by the assessee for the asst. yrs. 1974-75 to 1981-82 are directed against the consolidated order of the Dy. CWT(A), dt. 23rd March, 1990. The inclusion of value of certain jewellery in the wealth of the assessee in all the aforesaid years has been challenged on the ground that the jewellery in fact belonged to assessee’s daughter and was her wealth.
2. The jewellery which is subject-matter of dispute was found in Locker No. 84 in the name of assessee’s daughter Miss Amrita Ghosh with Allahabad Bank, Alipore Branch, Calcutta during the course of the search operation carried by the Revenue in July, 1974. The assessee in order to cover jewellery’s acquisition, made a disclosure under the Voluntary Disclosure of Income and Wealth Ordinance, 1975. Taking note of above disclosure, the WTO added value of the jewellery in the wealth of the assessee.
3. The assessee challenged the above additions in appeal before the Dy. CIT(A) and contended that the value of jewellery should be excluded from the wealth assessed as the same was gifted to the assessee’s daughter earlier to 1972. The learned Dy. CIT(A) rejected the above contention and justified inclusion of jewellery with the following pertinent remarks :
“It has been urged by the learned advocate that the jewellery in the name of daughter who became major in 1972 should be excluded from the assessment. It has been pleaded by the learned advocate that the jewelleries purchased in the name of daughter was the property of the elder daughter since she became major and hence the same was not includible in the hands of the appellant. It has been admitted that the entire jewelleries were purchased by the appellant. In his view the jewelleries purchased for the purpose of use by the daughter must be excluded. It cannot be denied that the investment in jewellery was made by the appellant out of his own fund and constitute his wealth. In case of any gift being made, the donor became liable to gift-tax. Learned advocate for the appellant could not specifically state when jewellery purchased has been actually gifted to her. The mere fact that the elder daughter became major in 1972 and jewellery purchased in her name changed ownership and as such should be excluded is not an acceptable proposition. The jewellery allegedly purchased for elder daughter is not excludible from the net wealth.”
4. The learned Dy. CIT(A), however, allowed relief of Rs. 5,000 to Rs. 40,000 in the value assessed in different assessment years from 1978-79 to 1981-82. The assessee being aggrieved, has brought the issue in appeal before the Tribunal.
5. Shri G. N. Singh, the learned counsel for the assessee, reiterated the claim made before the lower authorities. He emphasised that the assessee’s daughter Miss Amrita Ghosh, a major, was the owner of the jewellery and, therefore, there is no justification for sustaining addition in the hands of the assessee. Shri Singh in this connection relied upon the letter dt. 7th August, 1974, alive by Miss Ghosh before the AO. Shri Singh further relied upon the disclosure on Form ‘P’ made by the assessee under the Voluntary Disclosure Scheme of 1975. It was contended that the jewellery was acquired from 1958 to 1972 and given to the daughter. Gifts of jewellery made in different years were below the taxable limits and, therefore, no gift-tax was paid. But statement of assessee’s daughter, disclosure petition and other circumstances clearly established that Miss Ghosh was the owner of jewellery on the valuation dates, Shri Biswas, the learned Departmental Representative, on the other hand, supported the order of the Dy. CIT(A). He argued that the assessee himself has admitted the source of acquisition of disputed jewellery and made disclosure under the Voluntary Disclosure Scheme. The form ‘B’ representing disclosure petition does not advance the case of the assessee. The claim of alleged gifts has not been established. The assessee, therefore, has rightly been treated as owner of jewellery on the valuation dates. The jewellery was the wealth of the assessee and has been assessed accordingly.
6. We have carefully considered material on record in the light of the submissions advanced by the parties. The short question required to be determined is whether the assessee or his major daughter was the owner of the jewellery on the relevant valuation dates. There is no acid test or rule of universal application, but for determining the question whether ‘A’ or ‘B’ is owner of the disputed property, Courts normally take the following circumstances into account :
(a) Source and contribution of purchase money or investment;
(b) Nature of property, possession and control over it;
(c) Intention of parties and their relation inter se, and
(d) Custody of title deeds.
7. As to what is the relative importance of a particular circumstances would depend upon the facts of each case. Where it is claimed that the property was purchased in the name of a particular person with intention to vest ownership in that person, the question of intention is of primary importance and has to be examined with reference to other material available on record. The intention may be apparent and clear or shrouded in a thick veil not easy to pierce through. The contribution of purchase money cannot be treated as conclusive proof of ownership in every case. Even under s. 82 of the Indian Trusts Act, the matter has to be decided with reference to the intention of the person contributing the funds – Ammaponnammal vs. Shanmugam Pillai AIR 1971 Mad 370.
8. Now, in the present case, the jewellery was admittedly found in Locker No. 84 with Allahabad Bank, Alipore, Calcutta in the name of Miss. Amrita Ghosh in July, 1974. The assessee’s wife Mrs. Aarti Ghosh, at that time, was maintaining another Locker No. 94 with the same bank. The assessee jointly with his wife and mother-in-law had a third locker No. 5883 with Calcutta Safe Deposit Co. In all the three Lockers jewellery was found by the Revenue. The jewellery thus was kept by the daughter for safe custody. We further find from record that the AO had summoned Miss Amrita Ghosh on 2nd August, 1974, under s. 131 in the course of proceeding under s. 132(5) of the IT Act. She filed written reply dt. 17th August, 1994, supported by an affidavit. In the said written reply with reference to ornaments and jewellery found in her locker, she stated as under :
“2. These ornaments and jewellery have been acquired by me from my parents Shri Shankar Ghosh and Mrs. Uttara Ghosh of 15C, Raja Santosh Road, Alipore, Calcutta to segregate for my marriage.”
9. It is nobody’s case that the assessee was operating the locker in the name of his daughter. It is further not shown that separate locker was maintained for a purpose other than to give exclusive possession and control of jewellery to the daughter. The bills of purchase are not available and there is no clear evidence of name of purchaser or date of acquisition of jewellery. But that on the facts of the case is not material. The claim of transfer of movable property (gift) is established through intention and delivery of property. If that is done, as is the case before us, the claim cannot be dislodged merely because the date of transfer is not clearly established. The investment in the present case no doubt flowed from the assessee, but it is not shown that the assessee did not intend to take her daughter the beneficial owner of the jewellery.
10. The other objection of the Revenue that no gift-tax was shown to have been paid is also not valid. The payment of gift-tax is not a condition precedent or requirement of a valid gift. The Revenue in this case has not brought sufficient material on record to show that the assessee’s claim was wrong. On the facts of the case we are inclined to hold that for the purposes of WT Act the assessee’s daughter held the jewellery on the date of the search. In these circumstances and without material to the contrary, she can be presumed and held to be the owner of the jewellery on all the valuation dates.
11. For the aforesaid reasons we are of view that the lower authorities were not right in including jewellery in the hands of the assessee which was found in the locker in the name of Miss Amrita Ghosh. We direct the WTO to exclude the value of the aforesaid jewellery in all the assessment years under appeal.
12. In the result, the assessee’s appeals are allowed.
P. Pradhan, A.M.
13. I have gone through the order of my learned Brother and I disagree with his findings. In this connection I may mention that it is an admitted fact that investments in jewelleries were made by the assessee out of his own funds and constituted his wealth and will continue to be so unless and until he can show some evidence that he gifted those jewelleries to his daughter, who has attained majority in 1972. In the instant case he has not produced any evidence at all. In the case of gifts the donor is liable for gift-tax. The authorised representative of the assessee could not give any date as to when the jewelleries were gifted to his daughter. The mere fact that the daughter attained majority in 1972 and jewelleries changed automatically without evidence is not an acceptable proposition. On the contrary, p. 11 of the paper book on voluntary disclosure clearly shows that the assessee has declared categorically that he was holding those jewelleries in the name of persons mentioned therein till 30th December, 1975, date of disclosure. Therefore, the entire argument of the authorised representative that he gifted the jewelleries in 1972 on attainment of majority of the daughter is not correct. The statement that the jewelleries were acquired from 1958 to 1972 is also without any basis. These were found in Locker No. 84 during the course of the search and seizure operation and but for this operation, in July, 1974 things could not have come to light.
14. Therefore, the contention that the jewelleries were acquired from 1958 to 1972 cannot be accepted without any evidence. In this connection it may also be mentioned that the letter dt. 17th August, 1984, and the affidavit which was filed in the proceedings under s. 132(5) of the IT Act by Miss Amrita Ghosh also does not help the assessee. There is nothing to show in those letter and affidavit that those were gifted by the assessee to his daughter on attainment of majority. The authorised representative has also not given the date when the Locker No. 84 was taken and who applied for the same. Regarding the intention of the assessee regarding gift of the jewellery it may be mentioned that the intention of the assessee appears to be an afterthought in view of the facts stated above. In view of these facts, the assessee’s claim is wrong and unfounded. The assessee’s claim that jewelleries were gifted to his daughter in 1972 on attainment of majority cannot be accepted as correct specially in view of his voluntary disclosure on 13th December, 1975 where he categorically stated that on the date of the disclosure he was still holding the jewellery on behalf of Smt. Amrita Ghosh.
15. Therefore, the Dy. CIT(A) is justified in confirming the order of the AO by including the jewellery of the minor daughter in the hands of the assessee.
ORDER UNDER S. 255(4) OF IT ACT R/W S. 24(11) OF WT ACT
16. We, having differed on the following point in the above appeals filed by the assessee, refer the following point of difference to the President under s. 255(4) of the IT Act, 1961 r/w s. 24(11) of the WT Act, 1957 :
“Whether, on the facts and in the circumstances of the case, the Dy. CIT(A) is right in treating jewellery found in Locker No. 84 with Allahabad Bank as wealth belonging to the assessee for all the assessment years under consideration ?”
S. Bandyopadhyay, AM.
17. On the basis of the difference of opinion between the two Members constituting the Division Bench, the following common question of law in respect of all the eight years under consideration, has been referred to me by the Hon’ble President of Tribunal, for my decision, in accordance with the provisions of s. 255(4) of the IT Act r/w s. 24(11) of the WT Act.
“Whether, on the facts and in the circumstances of the case, the Dy. CIT(A) is right in treating jewellery found in Locker No. 84 with Allahabad Bank as wealth belonging to the assessee for all the assessment years under consideration ?”
18. However, it is required to be mentioned at the outset that the appeal in WTA No. 322/Cal/1990 is not a quantum appeal and relates to levy of penalty under s. 18(1)(a) of the WT Act, 1957, in respect of asst. yr. 1976-77. The question as referred to me, therefore, does not apply to this appeal. Hence, the appeal in WTA No. 322/Cal/1990 is beyond the purview of the reference to me and I am not in a position to deal with this particular appeal. The other eight appeals, however, are of the nature of quantum appeals in wealth-tax proceedings for the asst. yrs. 1974-75 to 1981-82 and the same are being disposed of by me as below :
19. The facts of the case, in the nutshell, are that during the course of search and seizure proceedings in the premises of the assessee in July, 1974, three bank safe-deposit-vault lockers of the assessee were searched and certain ornaments and jewelleries were found therein. One of these three lockers being locker No. 84, stated to be standing in the name of the daughter of assessee viz. Miss Amrita Ghosh with Allahabad Bench, Alipore Branch, Calcutta contained a number of pieces of ornaments/jewelleries meant for ladies’ wearing. The assessee, in order to cover the acquisition of the jewelleries found in all the three lockers including the Locker No. 84 as mentioned above in a disclosure made by him under the Voluntary Disclosure of Income and Wealth Ordinance, 1975. It is thus clear that so far as the acquisition of the jewelleries under consideration, is concerned, the assessee accepted the position that the source of money in acquiring them had come from him. It was, however, contended before the WTO that when the daughter of the assessee viz. Miss Amrita Ghosh attained majority, sometime in 1972, the jewelleries, which had been acquired by the assessee in piecemeal over the period from 1958 to 1972, were gifted to the aforesaid daughter of the assessee, who since then became the absolute owner thereof. As such, the assessee claimed that the value of the jewelleries should not be included in his wealth-tax assessment for the years under consideration.
20. The AO, however, did not accept his contention and mainly on the basis of the declaration made by the assessee under the Voluntary Disclosure Scheme, 1975, included the jewelleries, valued at different figures in the different years, within the total assets of the assessee, in his wealth-tax assessments. In the first appeals, the Dy. CWT(A) confirmed the additions in the hands of the assessee, but allowed certain reliefs in respect of values of the jewelleries for some of the years.
21. When the matter came up before the Tribunal in further appeals filed by the assessee, the two Members constituting the Bench took diametrically opposite views. Whereas the Judicial Member was of the opinion that the contention of the assessee about the jewelleries having been gifted to his daughter is required to be accepted and in that view, the value of the jewelleries need not be included within the wealth of the assessee, the Accountant Member, however, opined that there being no positive evidence about the gift, the assessee should be considered to remain owner of the jewelleries in all the years under consideration.
22. I have heard the representatives of both the sides and have also perused the papers filed on my record.
23. There is no doubt about the fact that the jewelleries were found in a bank locker standing in the name of Miss Amrita Ghosh, who was a major at the time of the search. Normally, therefore, she should have been considered as the owner of the jewelleries and the value of the jewelleries as well as the question of cost of acquisition of the same should have been considered in her assessments. However, the assessee himself has admitted the initial acquisition of the jewelleries in the voluntary disclosure made by him. Miss Amrita Ghosh also, in a statement made by the WTO on 17th August, 1974, and thereafter in an affidavit filed by her, has accepted the position that the ornaments and jewelleries were acquired by her from her parents Shri Shanker Ghosh and Mrs. Uttara Ghosh “to segregate for her marriage”. In the affidavit, she, further, adds as follows :
“I further say that these ornaments and jewelleries have been given to me out of their accumulations and items received from my parents and other relations at the time of their marriage.”
24. The crux of the problem, therefore, seems to be whether the contention of the assessee that although these jewelleries had initially been belonging to him, were later on gifted to his daughter viz., Miss Amrita Ghosh, can be accepted or not. Undisputedly, there is no documentary evidence in support of the gifts. The Department also raises an issue that there is nothing on record to show that the assessee had paid gift-tax in respect of these gifts.
25. The assets under consideration are movable assets. Gift of a movable asset is completed simply by handing over the same by the donor to the donee. There is no requirement of executing a deed of gift or keeping any written record of the act of gift, to support the genuineness of the gift. So far as the instant case is concerned, both the donor i.e., the assessee and the donee i.e. his daughter confirmed that the gifts of the ornaments had taken place from time to time. There is nothing on record to show that the Locker No. 84 was in the joint name of Miss Amrita Ghosh along with somebody else. On the other hand, it is quite evident that the locker was in her single name. As such, the normal inference would be that she alone was able to operate the bank locker. The Department has tried to raise an issue that the assessee had not discharged his onus by supplying relevant information like when the locker was taken up and who was able to operate the locker initially. In absence of these informations, we have got to go by normal rules relating to operation of lockers in the custody of bank. Even if it be assumed that the locker had been taken up by the assessee in the name of his daughter, when she was a minor and hence, the assessee had the right to operate the locker during her minority period, under the banking regulation the position would get completely changed as soon as the daughter of the assessee attains majority. From the date of her attainment of majority, she alone would be able to operate the locker, inasmuch as, the locker stands in her name and there is no other joint holder mentioned anywhere on records. It has thus got to be held that the ornaments and jewelleries under consideration were actually in the possession and under the control of Miss Amrita Ghosh and not of the assessee at the time of the search.
26. The question may thereafter arise as to whether the assessee had actually gifted the ornaments to his daughter or simply allowed the same to be kept in her custody for the purpose of her use. I am of the opinion that the possession and control over the ornaments would indicate that the ornaments had actually been gifted by the assessee to his daughter. It may be a fact that in ordinary middle class society, ornaments and jewelleries are procured for the purpose of marriage of the daughter over a long period and the said ornaments are gifted to the daughter only at the time of her marriage. In such cases, however, the ornaments are generally kept in the custody of the mother or the father of the daughter. It is required to be mentioned in this connection that the assessee belongs to an affluent class forming the higher echelon of the society. The assessee is known to have been a top Executive of M/s. Bird & Co. Ltd. He was also having a house property in the posh locality of Alipore at Calcutta. In such a high class society, the women-folk and even the grown-up children also acquire some individual status and unlike children belonging to ordinary middle-class, go on holding possession of valuable articles like ornaments and jewelleries, etc. It is required to be mentioned in this connection that at the time of the search, three different lockers were found out, one of which was in the name of the assessee along with his wife and the third one being in the joint names of the assessee, his wife and his mother-in-law. Some jewelleries and ornaments were found in each of the lockers. It is thus quite evident that the assessee had earmarked the jewelleries and ornaments for the purpose of his daughter, wife, etc. separately. The facts of the case coupled with the social ambience of the assessee would clearly lead to the conclusion that the daughter of the assessee, having already become major and come to possession and control of the ornaments and jewelleries under consideration, had started considering those ornaments and jewelleries as her own. The gift of different items of the jewelleries by the assessee to his daughter in the earlier period, is evidenced in this way.
27. It has already been mentioned that there need not be any documentary evidence in respect of gift of a movable asset. Both the sides, i.e., the donor and the donee confirmed the veracity of the gifts in this particular case. The other side of the picture i.e., that although the assessee belongs to an aristocratic class, at the same time, however, he is physically a member of the Bengalee Bhadralok Society, cannot be disregarded. Bengalees other than those belonging to business community are notoriously known for their carelessness, callousness and aversion to maintenance of proper records with regard to acquisition and possession of assets by them. Very rarely, it can be found that a Bengalee gentleman, especially if he be a salaried person, maintains books of account relating to his income and expenditure or also takes care to retain receipts and vouchers in respect of acquisition of assets in a methodical manner. On the other hand, had the assessee been belonging to a traditional business community, not only proper books of account depicting the acquisition of all the pieces of ornaments and jewelleries and most probably along with the receipts/vouchers in respect thereof but also duly executed declarations of gift in respect of each item of ornaments would have either been found out during the search or produced before the AO in due course. It is required to be noted in this particular case that the ornaments and jewelleries were evidently found in the locker in the name of the major daughter of the assessee and had the voluntary disclosure been made by the said daughter, most probably lesser amount of tax would have been payable by her relating to the cost of acquisition of the ornaments and jewelleries and the onus would have squarely lied on the Department to show that those ornaments actually belonged to the assessee. In that way, it may be said that the assessee would have been in a position to overcome all the troubles, he has undergone so far with regard to his wealth-tax assessment simply by getting the voluntary disclosure made by her daughter. This shows the lack of spirit of manipulation by the assessee and also proves the bona fide of the claim of the assessee. Where there are no documentary evidences, the Court is required to take notice of the prevailing circumstances. Judicial notice may also be taken in this connection of the natural tendency and set of behaviour of the particular race and society to which the assessee belongs. On the basis of the circumstances of the case as discussed above, the inevitable conclusion would, therefore, be that the assessee must have gifted away the ornaments and jewelleries to his daughter throughout the period since acquisition of those ornaments and that on attaining majority, the said daughter became the absolute owner of the ornaments and jewelleries.
28. This would lead us to the question as to why gift-tax was not paid by the assessee on the gifts. The voluntary declaration made by the assessee in 1975 itself shows the value of the total jewellery as at that time to be Rs. 44,196. In the wealth-tax assessments also, the AO has considered similar value for the jewelleries in the initial years like 1974-75, etc. When the jewelleries are claimed to have been acquired since 1958 (and this fact has been acknowledged by the Department by accepting the voluntary disclosure of the assessee), the actual value of the jewelleries in the earlier years must have been even lesser. The list of the jewelleries shows nine pieces of distinct items of ornaments and jewelleries. If such pieces of ornaments and jewelleries be considered to have been gifted by the assessee in different years between 1958 to 1972, the value of each piece of jewellery gifted could come out at the average figure of around Rs. 5,000. The learned counsel for the assessee has brought on our record a copy of Chapter-III of the treatise written by Chaturvedi and Pithsaria on “Three taxes” (1989 Edition) listing the exemption limits in respect of gifts under s. 5 of the GT Act, 1958, over the different years. The said list shows that the exemption limit was Rs. 10,000 for asst. yrs. 1958-59 to 1963-64 and 1966-67 to 1970-71. The said limit was again Rs. 5,000 in the asst. yrs. 1964-65, 1965-66 and 1971-72 to 1986-87. It is thus quite clear that if the contention of the assessee about gifting the ornaments and jewelleries to his daughter in a spreadover manner be accepted, the total value of jewellery gifted by him in each of the years, will fall below the exemption limit of even Rs. 5,000. Furthermore, the other contention raised in this regard that simply because the gift-tax is not paid, the genuineness of the gift cannot be challenged, also requires consideration.
29. Taking into consideration all these aspects, I am of the view that the contention of the assessee that the ornaments and jewelleries under consideration were gifted by him in piecemeal manner over the period from 1958 to 1972 to his daughter has got to be accepted. I order according. The value of the said jewelleries and ornaments cannot, therefore, be assessed in the hands of the assessee in his wealth-tax assessments in any of the years under consideration. The question thus put forward to me is, therefore, being answered in the negative and in favour of the assessee.
30. The matter would, therefore, now go back to the Division Bench for disposing of the appeal in consonance with the decision taken by me with regard to the question referred to me.