Dr. Karan Singh Vs. State of Jammu
& Kashmir & ANR [1985] INSC 255 (20 December 1985)
TULZAPURKAR, V.D. TULZAPURKAR, V.D.
PATHAK, R.S.
CITATION: 1986 AIR 585 1985 SCR Supl. (3)1069
1986 SCC (1) 541 1985 SCALE (2)1467
ACT:
Wealth Tax Act, 1957, s.5(1)(xiv) - Claim for
exemption in respect of jewellery and valuable articles of personal use lying
in Toshakhana - Assessee in wealth tax proceedings claiming ownership - State
contesting the claim - CBDT informing assessee to arrange physical inspection -
High Court approached with application for inspection - Refusal of inspection
by High Court - Validity of - Necessity for inspection indicated.
HEADNOTE:
The appellant filed a writ petition in the
High Court claiming ownership and title of six boxes containing jewellery and
other valuable articles lying in Srinagar Toshakhana. These were kept under
lock and seal of the Commissioner appointed by the High Court. The petition was
the result of two matters pending before the Government of India: (1) Whether
the appellant was the owner of the jewellery or other valuable articles of
personal use lying in those boxes on the ground that the properties are
heirlooms, and (ii) whether exemption in respect of such items of properties as
heirlooms under s.5(1)(xiv) of the Wealth Tax Act in wealth tax assessment
proceedings of the appellant as HUF was available to him or not. Pursuant to a
request and the suggestion of the Central Board of Direct Taxes to have
physical inspection of the items in question by the Members (W.T.&J)
alongwith experts to establish whether the properties are heirlooms or not, an
application was accordingly moved before the High Court for inspection of the
jewellery and other articles. The High Court dismissed the application on the
ground that no useful purpose will be served to grant inspection.
Being aggrieved, the appellant appealed to
this Court.
The appeal was opposed by counsel for the
Respondents on the grounds (i) that the appellant's claim of ownership or title
to these items has been refuted in the counter-affidavit that had been filed in
the main Writ Petition where property has been claimed to be State property;
(2) that unless the appellant showed some prima facie title to the property in
question, inspection would be premature and uncalled for, and (3) that the writ
petition itself was not maintainable in view of Article 363 (1) of the
Constitution.
1070 Allowing the appeal, ^
HELD: 1(i) The order dated July 20, 1985 is clearly erroneous, and inspection sought ought to have been granted.
The six boxes containing the jewellery and
other valuable articles lying in Srinagar Toshakhana shall be opened for the
purpose of inspection by the Member, Central Board of Direct Taxes (WT&J)
who will be accompanied by the Director General of Archaelogical Survey of
India, Director Antiques, Director National Museum and Approved Valuers of
Jewellery for determining whether any and if so what items constitute heirlooms
or articles of personal use of the appellant and his family. Such inspection will
be taken in the presence of the appellant's representative as also a
representative of the State Government but such representatives shall not work
on the panel of the Inspection Committee but may render assistance as may be
necessary. [1073 E-G] (ii) The relevance and necessity of such inspection in
the instant case cannot be disputed. The main issue arising between the parties
is whether the jewellery and other valuable articles of personal use contained
in the six boxes lying in Srinagar Toshakhana are heirlooms of the appellant
and his family as claimed by him or not. Such inspection by experts will
unquestionably facilitate its determination.
[1072 B-C]
2. Questions of maintainability of the writ
petition and appellant's title to the property in question would undoubtedly be
gone into at the final hearing of the writ petition but it cannot be gainsaid
that the inspection by experts will be useful for determination of the
appellant's title to the property. At this stage no one can proceed on the assumption
that the preliminary objection as regards maintainability will necessarily be
upheld Moreover, the assessment order for the 3 assessment years, 1978-79,
1979- 80 and 1980-81 though made on protective basis and subject to final
valuation of the assets, clearly show that the Wealth Tax Authorities, and the
CBDT are treating the estate lying in the Srinagar Toshakhana as property
belonging to the appellant's family. [1072 F-H; 1073 A]
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
5720 of 1985.
From the Judgment and Order dated 20.7.1985
of the J. & K. High Court in CMP No. 645 of 1985 in W.P. No. 122 of 1983.
Soli J. Sorabjee, J.B. Dadachanji, F.H.
Talyarkhan, S.P. Gupta, Mrs. A.K. Verma and D.N. Mishra for the Appellant.
1071 B. Datta, Additional Solicitor General,
Gauri Shankar S.N. Kacker, R.N. Poddar, Ms. A. Subhashini, M. Beg, E.C.
Agarwala, Z.A. Shah, Pradeep Bakshi and Lalit
Gupta for the Respondents.
The Order of the Court was delivered by
TULZAPURKAR, J. Leave granted.
Heard Counsel for the parties as also for
CBDT and Wealth Tax Officer.
The short question raised in this appeal is
whether inspection of the jewellery and other valuable articles of personal use
contained in six boxes lying in Srinagar Toshakhana - which boxes are at
present kept under lock and seal of the Commissioner appointed by the J & K
High Court under its order dated June 22, 1984 - was improperly declined by the
learned Single Judge by his order dated July 20, 1985 pending disposal of the
main writ petition no. 122 of 1984. The learned Judge has rejected the
appellant's prayer for inspection by observing thus:
"Be that as it may, at this stage
without speculating on the merits of the petition, I find that no useful
purpose will be served by granting relief to the petitioner which he has prayed
in the present CMP." According to the appellant there were two matters
before the Government of India (i) whether the appellant was the owner of the
jewellery or other valuable articles of personal use lying in those boxes on
the ground that the properties are heirlooms and (ii) whether exemption in
respect of such items of properties as heirlooms under s.5(1) (xiv) of the
Wealth Tax Act in Wealth Tax Assessment proceedings of the appellant as HUF was
available to him or not and for both these matters it was necessary to have an
inspection of the items by experts to establish whether the properties are
heirlooms or not. In fact the prayer for inspection was made by him on the
basis of two letters one dated 12th of February 1985 and the other dated 13th
of June, 1985 issued from the Ministry of Finance, Central Board of Direct
Taxes, particularly the former wherein, in the context of the appellant's
application for exemption under s.5(1) (xiv), it was suggested by the CBDT that
the appellant should arrange for the physical inspection of the items in
question by the Member (WT&J) who would be accompanied by some experts such
as Director General, Archaelogical Survey of India; Director Antiques, 1072
Director National Museum and Approved Valuers of jewellery and others for that
purpose. Even then the prayer for such inspection was rejected.
The relevance and necessity of such
inspection in the context of the two matters that are pending before the
Government of India cannot be disputed, for, the main issue arising between the
parties is whether the jewellery and other valuable articles of personal use
contained in the six boxes lying in Srinagar Toshakhana are heirlooms of the
appellant and his family as claimed by him or not and such inspection by
experts will unquestionably facilitate its determination. We, therefore, fail
to appreciate how the learned Judge felt that no useful purpose will be served
by the inspection sought by the appellant.
Counsel for the Union of India as well as the
learned Advocate General of J & K appearing for the State strenuously urged
before us that the appellant's claim of ownership or title to these items has
been refuted in the counter affidavits that have been filed in the main writ
petition where the property has been claimed to be State property and in this
behalf reference was also made to one of the preliminary objections raised by
the Union of India to the maintainability of the writ petition on the ground
that at the time of the settlement arrived at between the acceding Ruler
Maharaja Hari Singh and Government of India no such claim was made and that
under Art. 363(1) of the Constitution neith Government/Merger agreement nor any
dispute or obligation arising therefrom is justiciable and therefore the writ
petition deserves to be dismissed. It was, therefore, urged that unless the
appellant shows some prima facie title to the property in question inspection
would be premature and uncalled for. Questions of maintainability of the writ
petition and appellant's title to the property in question would undoubtedly be
gone into at the final hearing of the writ petition but it cannot be gain-said
that the inspection by experts which will have a bearing on the nature and
character of the property in question will be useful for determination of the
appellant's title to the property in case the preliminary objection fails and
at this stage no one can proceed on the assumption that the preliminary
objection will necessarily be upheld.
But apart from this, on prima facie title,
the claim for exemption under s.5(1)(xiv) of the Wealth Tax Act (under both the
limbs of the provision) was pending before the Wealth Tax authorities and we
are now informed that for the three assessment years, 1978-79, 1979-80, 1980-81
assessment orders under the Wealth Tax Act have 1073 been passed by the Wealth
Tax Officer, A Ward, Jammu wherein the estate belonging to the appellant's
family lying in the Srinagar Toshakhana has been valued at a considerably
enhanced figure over and above the value returned by the appellant in his
returns, and the exemption claimed by him under s.5(1) (xiv) of the Wealth Tax
Act in respect of the heirlooms has been declined and his estate has been
assessed. The relevant portion in each of the assessment orders in this behalf
runs thus:
"2. The assessee has claimed exemption
of this estate (estate lying in Srinagar Toshakhana) under s.5(1) (xiv) of the
W.T. Act, 1961. However, I have been given to understand that the CBDT has not
given recognition to the claim of the assessee. Therefore, the estate is
assessed." The appellant has challenged these assessment orders in appeals
which are pending. These assessment orders, though made on protective basis and
subject to the final valuation of the estates, clearly show that the Wealth Tax
authorities, and the CBDT, Revenue Department, Ministry of Finance, Government
of India are treating the estate lying in the Srinagar Toshakhana as property
belonging to the appellant's family.
Having regard to the aforesaid facts the
impugned order dated July 20, 1985, in our view, is clearly erroneous and the
inspection sought ought to have been granted.
We, therefore, direct that the six boxes
containing the jewellery and other valuable articles lying in Srinagar
Toshakhana under the lock and seal of the Commissioner of the High Court shall
be opened for the purposes of inspection by the Member, Central Board of Direct
Taxes (WT&J) who will be accompanied by the Director General of
Archaelogical Survey of India, Director Antiques, Director National Museum and
Approved Valuers of jewellery for determining the true nature and character of
the same and whether any and if so what items constitute heirlooms or articles
of personal use of the appellant and his family.
Such inspection will be taken in the presence
of the appellant's representative as also a representative of the State
Government but such representatives shall not work on the panel of the
Inspection Committee but may render such assistance as may be necessary to the
members of the panel.
The Inspection Committee will complete the
inspection and submit its report to the High 1074 Court within three months
from the commencement thereof. The parties are directed to obtain further
directions in the matter of such inspection from the High Court.
Appeal is allowed. No costs.
M.L.A. Appeal allowed.
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