- (1.) BOTH these applications have been moved by the Revenue under Section 27(3) of the Wealth-tax Act, 1957, for referring the questions of law which are said to arise out of the order of the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal") dated October 30, 1987. In Reference Application No. 93 of 1988, which relates to the assessment year 1979-80, the questions sought to be referred for the consideration of this court are as under ; "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the finding of the Appellate Assistant Commissioner that Rule 2B(2) of the Wealth-tax Rules was not applicable in the assessee's case and consequently in deleting the addition of Rs. 2,75,415 for assessment year 1979-80 ?
(2.) WHETHER, on the facts and in the circumstances of the case, the Tribunal was right in not holding that the onus was on the assessee to prove that the market value of the closing stock of Messrs. Lall's Gems and Jewels, Jaipur, did exceed by more than 20% the value disclosed by him and whether the assessee could be said to have discharged that onus ?" 2. In Reference Application No. 56 of 1988 which relates to the assessment year 1978-79, the questions are the same except that, in question No. 1, instead of the sum of Rs. 2,75,415, the sum of Rs. 2,58,800 has been mentioned. Manmohan Lal (hereinafter referred to as "the assessee") is a partner in the firm, Messrs. Lall's Gems and Jewels, Jaipur. In respect of the assessment year 1978-79, the assessee valued his share in the capital of the firm at Rs. 2,19,659. The Wealth-tax Officer made an addition of Rs. 2,58,800 in the share of the assessee in the capital of the firm on the basis of Rule 2B(2) of the Wealth-tax Rules. The said figure was arrived at by the Wealth-tax Officer on the view that the gross profit declared by the firm in the previous year relevant to the said assessment year was 35.7% which is more than 20% and, on that basis, the Wealth-tax Officer increased the market value of the closing stock of the firm. Similarly, in respect of the assessment year 1979-80, the assessee, in his return, had declared his share in the capital of the firm at Rs. 91,100. The Wealth-tax Officer made an addition of Rs. 2,75,415 under the said head by applying Rule 2B(2) of the Wealth-tax Rules on the basis that the gross profit of the firm in the previous year relevant to the said assessment year was 34%. The Appellate Assistant Commissioner deleted the aforesaid additions made by the Wealth-tax Officer under Rule 2B(2) of the Wealth-tax Rules in both the assessment years for the reason that Rule 2B(2) could not be applied solely on the basis of the gross profit rate disclosed by the firm in which the assessee is one of the partners. The said view has been affirmed in appeal by the Tribunal. The Tribunal has held that Rule 2B(2) could not be invoked on the basis of the gross profit shown by the assessee in the trading account. The Revenue thereafter submitted applications under Section 27(1) of the Act for referring the questions of law for the consideration of this court. The said applications have been rejected by the Tribunal. Hence, these reference applications in this court. We have heard Shri V. K. Singhal, learned counsel for the Revenue, and Shri Anant Kasliwal, learned counsel for the assessee. Before we deal with the submissions urged by Shri Singhal, we may mention that the provisions of Rule 2B(2) of the Wealth-tax Rules have been considered by this court in CWT v. Moti Chand Daga [1988] 174 ITR 379. In that case, this court was considering the question whether the market value of the closing stock could not be determined on the basis of the gross profit rate alone shown by the assessee. This court has held that where the only material available is the gross profit rate and there is no positive material to indicate the extent of deduction which has to be made therefrom for purpose of arriving at a figure which alone can be added to the cost price for determining the market value, there is no definite evidence to determine the market value on the sole basis of the gross profit rate. In that case, the court has considered the question whether the onus of proof with regard to the valuation of the closing stock lies on the assessee or on the Revenue. After referring to the decisions of the Supreme Court in CWT v. Tungabhadra Industries Ltd. [1970] 75 ITR 196 and CWT v. Hindustan Motors Ltd. [1976) 104 ITR 430, this court has held that where the balance-sheet value is asserted to be the true value by the assessee, but is assailed by the Revenue, the burden lies' on the Revenue to show that the balance-sheet value is not the true value and that the market value is higher, and when material is shown by the Revenue that the market value exceeds the balance-sheet value by more than 20%, then only the aid of Rule 2B(2) can be invoked. In view of the aforesaid decision of this court in Moti Chand Daga's case [ 1988] 174 ITR 379, it cannot be said that the Tribunal was not justified in upholding the finding of the Appellate Assistant Commissioner that Rule 2B(2) of the Wealth-tax Rules was not applicable in the assessee's case because the Wealth-tax Officer had applied Rule 2B(2) only on the basis of gross profit rate being more than 20%. Similarly, in view of the aforesaid decision, the question with regard to onus of proof also stands concluded because this court has held that the onus is on the Department. In other words, both the questions which are sought to be raised by the Revenue in these reference applications stand fully covered by the decision of this court in Moti Chand Daga's case [1988] 174 ITR 379.
(3.) SHRI Singhal has, however, urged that the decision in Moti Chand Daga's case [1988] 174 ITR 379 does not lay down the correct law and needs reconsideration and, in this connection, he has submitted that the question of onus of proof was not covered by the question which was under consideration before this court in that case and, therefore, the observations with regard to onus of proof cannot be held to be covered by the questions referred to therein and that the same must be ignored. We are unable to agree. We find that the said reference was decided on the basis of the submission of learned counsel for the Revenue that the onus of proof was on the assessee and not on the Revenue to show that the market value did not exceed the valuation of the closing stock shown in the balance-sheet by more than 20 per cent. and, therefore, the said question was dealt with by this court in the said judgment. Learned counsel for the Revenue felt that the answer to the question which was under consideration before this court in that case depended on the answer to the question as to onus of proof and that is why the matter was argued by him before this court. It cannot, therefore, be said that the decision of this court in the matter of onus of proof is a matter not covered by the question referred to it. Shri Singhal has next urged that the present cases stand on a different footing and, therefore, the decision in Moti Chand Daga's case [1988] 174 ITR 379 should not be applied to the present cases and that the reference may be called for in respect of the questions mentioned in the applications. In this connection, the submission of Shri Singhal is that, on the facts of the present cases, the Revenue discharged the burden placed upon it and that, in any event, the matter should be sent back to the Wealth-tax Officer for holding an inquiry as to whether the market value is more than 20% or not and to afford an opportunity to the Revenue to show that the market value is more than 20%. In this regard, Shri Singhal has urged that the Wealth-tax Officer had issued a notice to the assessee and the assessee had not submitted any reply to the said notice. Shri Singhal has also urged that there is an admission by the assessee about the gross profit rate, and, in spite of opportunity having been given to the assessee, no rebuttal was made about the factual position. It has been further submitted by Shri Singhal that, for the two years, the gross profit rate remained constant and, therefore, in the facts of the present case, valuation on the basis of the gross profit rate was justified. It has also been urged by Shri Singhal that the matter regarding value of the stock which had been disposed of at the time of the assessment was a matter within the special knowledge of the assessee and, in view of Section 105 of the Evidence Act, it was for the assessee to produce the relevant material in this regard. In support of his aforesaid submissions, Shri Singhal has placed reliance on the decision of the Supreme Court in CWT v. J. K. Cotton Manufacturers Ltd. [1984] 146 ITR 552 and the decision of the Punjab and Haryana Court in CIT v. Fazilka, Dabwali Transport Co. (P.) Ltd. [1981] 129 ITR 15. We have given due consideration to the aforesaid submissions of Shri Singhal. These submissions, in substance, relate to the question whether the Revenue has discharged the burden which lay on it in view of the decision of this court in Moti Chand Daga's case [1988] 174 ITR 379 and whether further opportunity should be afforded to the Revenue to discharge the said burden and, for that purpose, the matter should be remanded to the Wealth-tax Officer. We find that no such contention was urged by the Revenue before the Tribunal. It was not argued before the Tribunal that even if it be held that the burden lay on the Revenue, the said burden has been discharged in the present case or that the matter should be remanded to the Wealth-tax Officer to enable the Revenue to establish its case. Since no such argument was raised before the Tribunal, the Tribunal has not considered the same and, it cannot, therefore, be said that these ' questions arise out of the order passed by the Tribunal. Moreover, these questions are not covered by the questions which are sought to be referred by the Revenue in these applications. In these circumstances, we are of the opinion that no ground is made out for referring the questions raised in these applications and the applications are, accordingly, dismissed. No order as to costs.;