S.C. Agrawal, J. - (1.) IN this reference made by the INcome-tax Appellate Tribunal, Jaipur Bench, Jaipur (hereinafter referred to as "the Tribunal"), under Section 27 of the Wealth-tax Act, 1957 (hereinafter referred to as "the Act"), the following question has been referred for the opinion of this court: "Whether, on the facts and in the circumstances of these cases, the Tribunal was right in holding that action under Section 17(1)(a) was validly initiated by the Wealth-tax Officer in respect of assessment years 1964-65 to 1967-68 and that reassessment orders passed as a result of such initiation were valid ?"
(2.) THE facts as stated in the statement of the case sent by the Tribunal are briefly as under : M/s. Sampatram Budhmal Dugar, the assessee herein, is a Hindu undivided family consisting of Shri Jabharmal, his adoptive mother Smt. Dhanni Devi, and his wife and children. Originally, there was a joint Hindu undivided family constituted by Shri Budhmal Dugar and his brother Shri Sumermal. In the year 1930, Budhmal and Sumermal had purchased silver weighing about 430 kgs. and the same was kept in the haveli belonging to the family situated at Sardarshahar. In 1938, a partition took place between these two brothers and as a result of the said partition, the haveli belonging to the family situated in Sardarshahar came to the share of Budhmal. Budhmal died in the year 1954 and some time after his death, his widow, Smt. Dhanni Devi, adopted Jabharmal, who was a minor at that time. In the year 1968, Jabharmal decided to demolish a part of the haveli facing on to the right side for the purpose of constructing shops and while the said demolition was going on, the workmen found 21 bars of silver weighing about 430 kgs. lying buried in a kottri of the haveli on August 13, 1968. On August 16, 1968, 25 gold pieces weighing 783 1/4 tolas were found in an "arch" while breaking the roof of the room adjacent to the kothari in which silver bars and pieces were discovered. On August 20, 1968, Jabharmal wrote a letter to the Gold Control Administrator, New Delhi, bringing to his notice the aforesaid finds in the house. In the said letter he stated that neither he nor any other member of the family including his adoptive mother, had any prior knowledge whatsoever about the existence of the aforesaid gold and silver before their discovery. THE statement of Jabharmal was recorded by the Central Excise authorities on December 20, 1968, and by the Income-tax Officer on August 28, 1972. In both these statements, Jabharmal stated that neither Shri Sumermal nor Smt. Dhanni Devi had ever earlier told him about the hidden silver or gold and that he came to know of their existence only when they were dug out and that when he informed Shri Sumermal and Smt. Dhanni Devi in 1968 about the discovery of gold and silver, he was told by Shri Sumermal that the aforesaid silver fell to his father's (Budhmal) share at the time of partition and that about the gold even Shri Sumermal had no knowledge of its existence in the haveli and that it must have been kept there by some of his forefathers. Statements of Shri Sumermal were also recorded on.December 15, 1968, and December 20, 1968. THE statement of Smt. Dhanni Devi was also recorded on December 15, 1968. She also filed an affidavit dated August 26, 1972, before the Income-tax Officer. By order dated June 10, 1969, the Superintendent of Central Excise released the gold and silver which had been seized, to the assessee after recording a finding that the gold was more than 100 years old and that neither the assessee nor any other member of the family was aware of the existence of this gold. As regards the silver bars, the Excise authorities did not carry out any detailed investigation and the silver was released to the assessee on the short ground that it was not shown to have been imported into India in contravention of the prohibition imposed by law. The wealth-tax returns for the assessment years 1964-65, 1965-66, 1966-67 and 1967-68 had been filed prior to the aforesaid discovery of silver and gold and the assessment for these years had been completed prior to the said discovery. The assessee included the value of the silver in the wealth-tax returns for the assessment year 1968-69 and for the subsequent years. On March 27, 1973, the Wealth-tax Officer, Chum (hereinafter referred to as "the Wealth-tax Officer") issued a notice under Section 17(3) of the Act for reopening the wealth-tax assessment of the assessee for the years 1964-65, 1965-66, 1966-67 and 1967-68 on the view that he was of the opinion that the version which was given by Sumermal and Jabharmal was not correct and that Jabharmal all along knew of the existence of silver and that the above wealth which was admittedly of the assessee family had escaped assessment due to omission or failure on the part of Jabharmal to disclose the material particulars of his family's wealth. The assessee pleaded before the Wealth-tax Officer that whatever wealth belonged to the family as known to him at the time of the filing of the original return was disclosed by him in the said returns and the wealth consisting of silver bars came to his knowledge only in August, 1968, when part of the haveli belonging to the family was demolished and that what the assessee did not know at the time of the filing of the returns could not have been admitted by him when he filed the original returns and it could not, therefore, be said of the assessee that he did not disclose fully and truly all the material facts as known to him till then, when he filed the returns and, therefore, action could not be initiated against the assessee under Section 17(1) of the Act in respect of the aforesaid alleged omission or failure of the assessee to declare the silver in the wealth-tax returns. In pursuance of the said notices, the assessee filed the returns for the assessment years 1964-65, 1965-66, 1966-67 and 1967-68 and in the said returns, the assessee declared the value of the silver discovered in the residential house but did not declare the value of the gold so discovered on the ground that it belonged to the bigger Hindu undivided family. The Wealth-tax Officer passed assessment orders on January 10, 1974, wherein he included the value of gold and silver for assessing the total wealth of the assessee. The assessee filed appeals against the aforesaid assessment orders passed by the Wealth-tax Officer. The said appeals were disposed of by the Appellate Assistant Commissioner of Income-tax, Bikaner Range, Bikaner (hereinafter referred to as the Appellate Assistant Commissioner) by his order dated March 31, 1975. The Appellate Assistant Commissioner found that the possession of gold was neither in the knowledge of Jabharmal nor of his mother but the existence of silver was within the knowledge of Smt. Dhanni Devi and Sumermal and that Budhmal had informed Smt. Dhanni Devi about the existence of the silver and the place where it had been kept and since Smt. Dhanni Devi happens to be the adoptive mother of Jabharmal, the karta of the Hindu undivided family, she must have passed on the necessary information about the silver bars to her son and that since the assessee is assessed in the status of a Hindu undivided family and Smt. Dhanni Devi is a member of the joint Hindu undivided family, her knowledge is enough to bring the appellant's case within the provisions of Section 17(1) of the Act. The Appellate Assistant Commissioner, however, excluded the value of the gold from the wealth of the assessee, as assessed by the Wealth-tax Officer. The assessee filed appeals before the Tribunal. In the Tribunal, a difference of opinion arose between the two members who heard the appeals of the assessee. The learned Accountant Member held that the probabilities of the case and of the ordinary human conduct would justify the inference that Budhmal should have told his wife, if not at the time of partition but at the time of his death, that apart from the wealth of the family which was above the ground and within her knowledge, silver weighing about 430 legs, which had been buried in 1930 in the said haveli and about which Smt. Dhanni Devi had the knowledge, had also come to his share and that it constituted the wealth of the family and in the normal course, Smt. Dhanni Devi should have informed Jabharmal, her adopted son, about the wealth of the family including the buried wealth. The learned Accountant Member was, therefore, of the opinion that the family had knowledge about the wealth in the form of the buried silver and had yet not furnished the information about it in the original returns and due to this omission it had escaped assessment and as such action under Section 17(1)(a) of the Act was rightly initiated. The learned Judicial Member, on the other hand, took the view that the probabilities of the case suggested that Jabharmal did not have any knowledge about the buried silver and that, therefore, he could not have shown it in the original returns filed by him and as such it could not be said that underassessment had taken place on account of the failure or omission on the part of the assessee to furnish the material information at the time of the original assessment. In view of the aforesaid difference of opinion amongst the two members of the Tribunal who had heard the appeals, the President of the Tribunal referred to a third Member of the Tribunal, the following three questions representing the points of difference of opinion between the two learned Members of the Tribunal : "1. Whether, on the facts and in the circumstances of the case, there was material before the learned Wealth-tax Officer to initiate proceedings under Section 17(1)(a) of the Wealth-tax Act, 1957, in respect of assessment years 1964-65, 1965-66, 1966-67 and 1967-68 ? 2. Whether, on the facts and in the circumstances of the case, the learned Appellate Assistant Commissioner of Wealth-tax was justified in holding that the assessee had knowledge about the existence and his ownership of silver bars in the assessment years under consideration ? 3. Whether, on the facts and in the circumstances of the case, the authorities below were justified in including the value of the silver bars in question in the net wealth of the assessee pertaining to the assessment years 1964-65 to 1967-68?" The appeals were thereafter heard by the Vice President of the Tribunal as the third Member. The learned third Member agreed with the Judicial Member and held that as Jabharmal was not aware of the existence of the silver, he had not omitted or failed to disclose these assets and, therefore, he answered the second question in the negative. The learned third Member was of the view that notwithstanding the aforesaid conclusion in favour of the assessee on merits, the assumption of jurisdiction by the Wealth-tax Officer under Section 17(1)(a) of the Act could not be challenged inasmuch as in the set of circumstances that confronted the Wealth-tax Officer, it was possible for him to draw an inference that Jabharmal had been aware much earlier about the existence of the silver also and that it was, therefore, possible for the Wealth-tax Officer to have drawn in good faith an inference that the escapement of net wealth was attributable to the non-disclosure by the assessee of material facts. In view of the aforesaid findings, the learned third Member answered the first and the third questions referred to him in the affirmative and upheld the initiation of the reassessment proceedings and the inclusion of the value of silver bars.
(3.) THE assessee thereupon moved the Tribunal under Section 27(1) of the Act for referring for the opinion of this court the questions of law arising out of the order of the Tribunal and on that application of the assessee, the Tribunal has referred the question mentioned above for the opinion of this court. Before we deal with the submissions of Shri Balia, learned counsel for the assessee, and Shri Arora, learned counsel for the Revenue, we may take note of the provisions contained under Section 17 of the Act which reads as under : "17. (1) If the Wealth-tax Officer- (a) has reason to believe that by reason of the omission or failure on the part of any person to make a return under Section 14 of his net wealth or the net wealth of any other person in respect of which he is assessable under this Act for any assessment year or to disclose fully and truly all material facts necessary for assessment of his net wealth or the net wealth of such other person for that year, the net wealth chargeable to tax has escaped assessment for that year, whether by reason of underassessment or assessment at too low a rate or otherwise; or (b) has, in consequence of any information in his possession, reason to believe, notwithstanding that there has been no such omission or failure as is referred to in Clause (a), that the net wealth chargeable to tax has escaped assessment for any year, whether by reason of underassessment or assessment at too low a rate or otherwise ; he may, in cases falling under Clause (a) at any time within eight years and in cases falling under Clause (b) at any time within four years of the end of that assessment year, serve on such person a notice containing all or any of the requirements which may be included in a notice under subsection (2) of Section 14, and may proceed to assess or reassess such net wealth, and the provisions of this Act shall, so far as may be, apply as if the notice had issued under that Sub-section. (2) Nothing contained in this Section limiting the time within which any proceeding for assessment or reassessment may be commenced, shall apply to an assessment or reassessment to be made on such person in consequence of or to give effect to any finding or direction contained in an order under Sections 23, 24, 25, 27 or 29 : Provided that the provisions of this sub-section shall not apply in any case where any such assessment or reassessment relates to an assessment year in respect of which an assessment or reassessment could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any provision limiting the time within which any action for assessment or reassessment may be taken." The aforesaid provisions contained in Section 17 of the Act are similar to those that were contained in Section 34 of the Indian Income-tax Act, 1922, and those contained in Sections 147, 148 and 149 of the Income-tax Act, 1961. In the Income-tax Act, 1961, there is a further requirement that the Income-tax Officer, before issuing a notice for reassessment, shall record his reasons for doing so and in cases where the notice is issued after the expiry of 4 years from the end of the relevant assessment year the Commissioner must also be satisfied on the reasons recorded by the Income-tax Officer that it is a fit case for the issuance of such notice. The provisions contained in Clauses (a) and (b) of Sub-section (1) of Section 17 of the Act and Clauses (a) and (b) of Sub-section (1) of Section 34 of the Indian Income-tax Act, 1922, and Clauses (a) and (b) of Section 147 of the Income-tax Act, 1961, are, however, substantially the same. ;