Satish Chandra, C.J.
1. The assessee is a public limited company. The assessment years are 1957-58, 1958-59 and 1959-60. The relevant valuation dates were December 31, 1956, December 31, 1957, and December 31, 1958. At the instance of the Commissioner, this court asked the Tribunal to draw up a statement of the case and refer the following question of law for our opinion :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the amount of Rs. 42,45,692 from the assessment under the Wealth-tax Act ?'
2. The relevant and material facts in relation to this case can be shortly stated. It appears that the assessee-company entered into some settlement with the Investigation Commission. The Investigation Commission determined the concealed income of the assessee at Rs. 50,40,086 for the assessment years 1940-41 to 1947-48. The break-up of the said amount was as under:
(1) Inflated expenses on coal
(2) Inflated expenses on wages
(3) Inflated expenses on storesand sundries
(4) Boguslosses in cotton speculation
(5) Non-business expenses and expenses of personal nature
3. Ultimately, under Section 34(1B) of the Indian I.T. Act, 1922, the assessee settled the amount at Rs. 49,08,324. This amount was not shown by the assessee in its original return. The WTO stated that this was a clear act of omission on the part of the assessee to disclose fully and truly all material facts necessary for wealth-tax purposes. He initiated proceedings under Section 17 of the W.T. Act. The assessee filed a return in due course. He, however, rejected the explanation offered by the assessee and included the sum of Rs. 49,08,324 in the total wealth of the assessee. On similar grounds this amount was added in the total wealth of the assessee in the assessment years 1958-59 and 1959-60. The assessee went up in appeal. The AAC refused to accept the explanation of the assessee, but on merits he reduced the above amount by a sum of Rs. 6,62,632, which were held to be expenses of personal nature debited to the company's account, which were not allowable for determining the company's total income, but which in fact were outgoings of the company and so they could not form part of the assessee's total income. The same order was passed for the other two assessment years.
4. Both the assessee and the department went up in appeal to the Tribunal. The Tribunal came to the conclusion that on facts it was clear that the company did not have any secret funds or any asset representing the aforesaid concealed income on the relevant valuation dates. From the report of the Investigation Commission, the Tribunal concluded that Sri Padampat Singhania and other directors had taken and utilised the entire secret income and nothing remained in the company's coffers. No amount of the disclosed secret income was brought into the company's books of account. The company did not make any such request to the Government. Though the amount of tax was paid out of the regular business funds of the assessee-company, no action was taken against the company under Section 23A of the I.T. Act suggesting that in fact no secret funds remained with the company which could be distributed to the shareholders. The Tribunal was also impressed by the fact that wealth-tax was charged from the company up to the year 1960. If the assessee had really some secret amount it could have easily brought it into the books of account by paying a small amount of wealth-tax. No amount of this secret income was brought into the books of account of the company even after 1960. For these various reasons, the Tribunal partly allowed the assessee's appeal. It, accordingly, deleted the addition of Rs. 42,45,692 from the assessment under the W.T. Act.
5. The learned counsel for the revenue has submitted that the drawings, by the directors, of the amounts, which in law belonged to the company, could be treated as debts owed to the company. The amounts illegally drawn and utilized by the directors were hence assets of the company. We are unable to agree. The company itself never advanced any money to the directors as a loan. The directors may have committed breach of trust with the company, but the transaction could not be termed as a loan. The company never had any access to these amounts. Further, the statement which the Investigation Commission submitted was in relation to the assessment years 1940-41 to 1947-48. The wealth-tax was assessed for the assessment years 1957-58, 1958-59 and 1959-60, that is to say, nearly more than ten years after the event. There had been no acknowledgment by anyone to extend the period of limitation. Thus, the so-called debts became time-barred long before. It cannot hence be said that on the valuation dates these amounts represented the assets of the company. We have no hesitation in saying that the Tribunal took a correct view of the situation.
6. The Tribunal has referred another question with regard to reopening of the assessment under Section 17(1)(a) of the Act. Mr. S.C. Khare stated that in the light of our opinion on the first question, he did not desire to press the second question.
7. In the result, the first question is answered in the affirmative, in favour of the assessee and against the department and the second question is returned unanswered. The assessee is entitled to its costs which are assessed at Rs. 200.