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Gopichand Gupta Vs. Commissioner of Wealth-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberMatter No. 1329 of 1979
Judge
Reported in85CWN431,[1981]132ITR308(Cal)
ActsWealth Tax Act, 1957 - Section 18(1); ;Indian Succession Act, 1925 - Sections 263 and 273
AppellantGopichand Gupta
RespondentCommissioner of Wealth-tax
Appellant AdvocateN.K. Poddar and ;R.N. Saha, Advs.
Respondent AdvocateA.K. Sengupta and ;Sunil Mukherjee, Advs.
Cases ReferredC) and Keshav Mitts Co. Ltd. v. Commissioner of Income
Excerpt:
- sabyasachi mukharji, j.1. in the background of certain rather interesting facts, we are asked to answer the following questions referred to us in this reference under section 27(1) of the w.t. act, 1957 :'1. whether, on the facts and in the circumstances of the case, in view of the probate of the will having been granted by the high court, it was competent for the tribunal to go into the question as to the genuineness of the will of the deceased, satyanarayan agarwalla, dated october 11, 1956 ? 2. whether, on the facts and in the circumstances of the case, the tribunal, in view of section 273 of the indian succession act, 1925, was justified in law in holding that the said will executed by late satyanarayan agarwalla proved and registered in the high court at calcutta in the course of.....
Judgment:

Sabyasachi Mukharji, J.

1. In the background of certain rather interesting facts, we are asked to answer the following questions referred to us in this reference under Section 27(1) of the W.T. Act, 1957 :

'1. Whether, on the facts and in the circumstances of the case, in view of the probate of the will having been granted by the High Court, it was competent for the Tribunal to go into the question as to the genuineness of the will of the deceased, Satyanarayan Agarwalla, dated October 11, 1956 ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal, in view of Section 273 of the Indian Succession Act, 1925, was justified in law in holding that the said will executed by late Satyanarayan Agarwalla proved and registered in the High Court at Calcutta in the course of probate proceedings being Matter No. 156 of 1976 was not a genuine will ?

3. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in confirming the penalties of Rs. 1,716 (assessment year 1962-63), Rs. 309 (assessment year 1963-64), Rs. 265 (assessment year 1964-65), Rs. 442 (assessment year 1965-66), Rs. 427 (assessment year 1966-67), Rs. 3,45,716 (assessment year 1968-69) and Rs. 3,56,612 (assessment year 1969-70), under Section 18(1)(c) of the Wealth-tax Act, 1957 ?'

2. The years involved are assessment years 1962-63, 1963-64, 1964-65, 1965-66, 1966-67, 1968-69 and 1969-70, for which the respective valuation dates were Dewali days of Sambat years 2018, 2019, 2020, 2021, 2022, 2024 and 2025. In the wealth-tax assessments of the assessee for the years under consideration, the WTO had included in the 'net wealth' of the assessee the market value of the estate of his deceased son, Satyanarayan Agarwalla, from his first wife. The assessee had not shown these assets left by his deceased son in the wealth-tax returns for those years in question. The deceased, Satyanarayan Agarwalla, was being assessed at Raigarh up to the assessment year 1957-58, while the assessee was assessed at Calcutta. The assessee had also been a wealth-tax assessee since the enforcement of the Act. On receipt of the income-tax file of the deceased, Satyanarayan Agarwalla, at Calcutta, the ITO issued notices under Section 139(2) of the I.T. Act, 1961, for the accounting period relevant to the assessment year 1962-63, which was served on the assessee on December 6, 1962. Pursuant to the said notice, a return was filed on July 21, 1967, in the name of the estate of the deceased, Satyanarayan Agarwalla, represented by his legal heir, Smt. Ratni Debi Gupta, the stepmother of the deceased. The income-tax assessments and the wealth-tax assessments for the assessment years 1962-63 to 1968-69 were finalised on the basis of similar return.

3. Satyanarayan Agarwalla had died at Calcutta on September 23, 1957, by drowning himself in the river Hooghly. The assessee, the father of the said Satyanarayan Agarwalla, had submitted the account under the E.D. Act, 1953, on March 31, 1958, claiming himself to be the sole legal heir of his deceased son, Satyanarayan Agarwalla. As the real mother, and not the stepmother, about whom we shall presently mention, of the said Satyanarayan Agarwalla had predeceased, the father of the said deceased, the assessee, claimed himself as the legal heir of Satyanarayan Agarwalla. The assessee also applied to the CBDT by his letter dated April 25, 1958, to confer jurisdiction on the Asst. Controller at Calcutta to complete the said estate duty assessment. In that letter also, it was claimed by the assessee that he was the sole heir of the deceased. It was an admitted position that, on the basis of that statement, the estate duty assessment was completed. It also appears that in the income-tax returns for the accounting period relevant to the assessment year 1966-67, which fell much after the happening of the facts stated in the preceding paragraph, the assessee did not include the income from the estate of the deceased son, Satyanarayan Agarwalla. For the said non-inclusion, the stand taken by the assessee was that after the submission of the statement of account under the E.D. Act, 1953, for the estate duty assessment it was found by the assessee that the deceased had made a will on the 10th October, 1956, in favour of hisstepmother, Smt. Ratni Debi, at Calcutta and the deceased had been living at Raigarh with one Prohladrai Gupta, who also died in June, 1960, and towards the end of 1961 or in the beginning of 1965, that is to say, after the death of Prohladrai Gupta, Kenai, Gupta nephew of Prohladrai Gupta, discovered the will while going through the papers of Prohladrai Gupta. According to that will, 'Smt. Ratni Debi, step-mother of the deceased. Satyanarayan, was the only heir and the assessee had no interest in the estate or the asset left by Satyanarayan Agarwalla, deceased. The ITO rejected the story set up by the assessee as he doubted the genuineness of the will. The ITO, accordingly, included the income from the estate of the deceased, Satyanarayan Agarwalla, in the total income of the assessee for the accounting period relevant to the assessment year 1966-67. This view of the ITO was upheld by the AAC in his order dated 18th June, 1974. In the wealth-tax assessment of the assessee for the year under consideration the assessee took up a similar plea for non-inclusion of the net value of the estate of the deceased and the said stand of the assessee was also rejected. The value of the estate of the deceased, Satyanarayan Agarwalla, was, therefore, included in the net wealth of the assessee for the year under consideration. Having come to the said conclusion, the WTO initiated proceedings for penalty under Section 18(1)(c) of the Act, for having concealed the particulars of the said asset, viz., the estate of the deceased Satyanarayan Agarwalla, from including it in the net value of his wealth for the years under consideration. Since the penalty exigible exceeded Rs. 1,000 for each of the said years, the penalty proceedings were forwarded by the WTO to the IAC, who after considering the contentions raised by the assessee before him pursuant to the show-cause notice, passed an order for the year 1962-63, which had been followed by him in respect of the subsequent penalty order and held that the alleged will of the deceased dated 10th October, 1966, was not a genuine will and penalty was exigible against the assessee under Section 18(1)(c) of the Act as it then stood. He, therefore, levied penalties of Rs. 2,72,815 for the assessment year 1962-63, Rs. 309 for the assessment year 1963-64, Rs. 265 for the assessment year 1964-65, Rs. 442 for the assessment year 1965-66, Rs. 427 for the assessment year 1966-67, Rs. 3,45,719 for the assessment year 1968-69 and Rs. 3,56,612 for the assessment year 1969-70, against the assessee. For coming to the aforesaid conclusion, the IAC held that the facts and circumstances of the case clearly pointed out the guilt of the assessee and concealment of the net wealth punishable under that section. We may also mention that the Income-tax Appellate Tribunal for the assessment year 1966-67 upheld the order of the ITO. The finding of the Income-tax Appellate Tribunal was that the income-tax authorities had clearly established that the will of Satyanarayan Agarwalla was not a genuine document. Further, it washeld that no credence could be attached to the so-called will, and the story of the will was clearly an after-thought of the assessee in order to serve his own interest. Thereafter, on the 13th March, 1975, the IAC passed an order for penalty, which we have noted hereinbefore. The assessee went up in appeal before the Tribunal against the penalty orders passed by the IAC and the appeal came up for hearing before the Tribunal on 20th January, 1977. After setting out the facts, which we have mentioned before, and the arguments made, the Tribunal noted in its order dated 20th January, 1977, inter alia, as follows :

'9. After considering the above submissions of the learned representatives of the parties, we are of the view that further investigation is necessary about the genuineness of the will in question. The assessee submitted the form, E.D. No 1, claiming himself to be the sole heir of his son Satyanarayan Agarwalla but his plea has been that the will came to light later on from the records of Prohladrai Aggarwal after his death. Adverse inference in the assessments were drawn against the assessee on the grounds of difference in age as given in the will and the death report but it is nobody's case that Satyanarayan Agarwalla did not die. The will was produced before the ITO in the assessment proceedings for the assessment year 1966-67. A copy of the will produced before us shows that the will was attested by a notary public who gave the date of attestation. Smt. Ratni Devi applied to the High Court at Calcutta and has obtained letters of administration. Prima facie the grant of letters of administration by the High Court supports the assessee's contention about the genuineness of the will but the department's case is that it has been obtained by Smt. Ratni Devi in collusion with her husband, the assessee. It has been held in the case of CIT v. Khoday Eswarsa and Sons : [1972]83ITR369(SC) , that the original assessment proceedings for computing the tax may be a good item of evidence in the penalty proceedings but penalty cannot be levied solely on the basis of the reasons given in the original order of assessment. In the light of the principles laid down above by their Lordships of the Supreme Court and the grant of letters of administration by the High Court at Calcutta further investigation about the genuineness of the will is just and proper. We, therefore, direct the IAC to make further investigation about the genuineness of the will in question after allowing opportunity to the parties and to submit his report thereon to the Tribunal within three months of the receipt of this order.'

4. Therefore, it would be apparent from the aforesaid order of the Tribunal that the Tribunal directed the IAC to make a further investigation about the genuineness of the alleged will. Pursuant to the direction, the IAC made a remand report on the 24th April, 1976. In that remandreport, after setting out the will and the probate, the IAC held that the conduct of the assessee was not bona fide and there was collusion, in the matter of, setting up of the will the between the assessee and his wife. He referred to the fact that the deceased's age was given at different times as either 19 or 20 or 26. The deceased, according to one version, when he died was about 26 years of age and was doing business at Ratangarh and was not staying with the assessee. The relationship between the assessee and the deceased son became strained because of the assessee's second marriage and the relationship between the stepmother and the assessee was not very cordial and as a result of this lack of cordiality between the stepson and the stepmother the stepson lived separately from the father, away from Calcutta, and it was further noted that a curious thing about the will was that the assessee was supposed to have left all his assets to his stepmother with whom he had a strained relationship. It was further emphasised that it was strange that the alleged will of the deceased could have been found after such a long time after the death of Prohladrai and not on the death of the deceased son. Further, this alleged will was found at the residence of Prohladrai. In these circumstances, it was held by the IAC, who conducted the enquiry, that the assessee was in clear collusion with his wife and the alleged will was not a bona fide will. The IAC further held that Satyanarayan Agarwalla was illiterate and, according to the assessee, Satyanarayan Agarwalla was separated due to step motherly relation with the assessee's second wife, Sm. Ratni Debi. At the time of separation in 1948, Satyanarayan Agarwalla's age must have been 17 and by that time the assessee, Gopi Chand Gupta, already had a few children by his second wife, Sm. Ratni Debi. In such a setting the relations between the son and his stepmother did not normally undergo a change from a strained position to 'very happy and sweet tenderly relation', so much so that the stepson gave away all his assets by way of will to the stepmother. The IAC observed that, if such a change for the better did happen, then it was the duty of the assessee to show by direct circumstantial evidence that a happy change really occurred. The IAC observed that there was no evidence of such a change and, therefore, it was an abnormal story. It was further noted that Satyanarayan Agarwalla was illiterate and hence it was rather impossible for him to write the will on his own. Nothing had been stated about the person who prepared the will for Satyanarayan Agarwalla where-from it might have been copied by the deceased. Furthermore, according to the IAC, the handwriting of the will as well as of the signature of Satyanarayan Agarwalla widely varied from the signatures purported to have been given by Satyanarayan Agarwalla on various acknowledgment slips while accepting the service of notices issued by the I.T, Dept. at Raigarh. In these circumstances, the IAC in the remand report observed that thewill did not stand the test of scrutiny. He further noted that the only person who could have objected was the father and the father consented to this matter. Therefore, there was collusion. He was further of the opinion that Satyanarayan's source of asset was quite unsatisfactory. He noted, inter alia, as follows :

'It appears that the impugned estate of his deceased son did not really belong to him (son). The assessee claimed to have sold ornaments, etc., of his first wife worth Rs. 95,000 approx. in 1948 in Raigarh. The sale was not proved because the broker who appeared before the ITO, Raigarh, could not prove the sale. On 6-12-1956 the broker, Sri Nandkishore stated on solemn oath before the ITO, Raigarh, as under;

'In 1948 Satyanarayan, s/o Gopinarain, sold some ornaments through me to various consumers. The ornaments may be less than Rs. 1 lakh. I have not made any entries in my books for following reasons :

1. I was not to get any profit or commission due to my good relation.

2. They did not like that the sale of ornaments may be made public for their respect and hence the ornaments were sold to consumers and I merely acted as intermediary in the transaction.

3. The amount was also paid then and there to Satyanarayan or Gopinarain. I do not remember full details now as it is more than 7 or 8 years.'

Apart from the above impugned statement of the broker no evidence in support of the sale of ornaments whatsoever was produced before the ITO, Raigarh. The ITO's acceptance was adversely commented upon by the IAC, Nagpur, whose observations have been extracted in the earlier part of the report. It has also been seen that the so-called affairs of Satyanarayan were always conducted by the assessee and the books of account were also maintained by him. Satyanarayan was never available at Raigarh and the income-tax notices from Raigarh had to be served on Satyanarayan at his Calcutta address. Accordingly, it is reasonable to conclude that the money introduced in the garb of ornaments sale as well as the business were really owned by Satyanarayan's father, and the assessment was sought to be made in the name of the son, only with, the ultimate motive to evade adequate assessment in the hands of the assessee, Sri Gopichand Gupta. In some of the years, speculation profits were shown by Satyanarayan for the assessment years 1950-51 and 1951-52, but here again no conclusive evidence in support thereof were produced before the ITO, Raigarh. Satyanarayan's main income was from interest from investments made with various concerns by his father. In the assessment year 1951-52, interest was received from Devi Devisahai Parmanand of Muzaffar Nagar. This firm belonged to, the assessee's brother. The position was more or lesssimilar in other years. In the assessment years 1954-55 to 1956-57, the income was entirely derived from interest earned on deposits.

It, therefore, follows that the income and the assets of Satyanarayan actually belonged to the assessee.'

5. Therefore, the IAC concluded that the assets left by the deceased did not in effect belong to Satyanarayan. According to him, the assets left behind by the deceased, Satyanarayan Agarwalla, actually belonged to the assessee, which were kept on being disposed of by the will, as was alleged to have been done. According to him, the will was devised. Being aggrieved by the aforesaid order, the assessee came up before the Tribunal. Before the Tribunal, the aforesaid contentions were raised. It was contended that the IAC had no jurisdiction to find out the genuineness of the will nor had he the jurisdiction to determine about the fact whether the deceased's son had the assets. The Income-tax Appellate Tribunal, according to the assessee, had not directed the IAC to make a finding to that effect. The Tribunal noted that, on behalf of the assessee, learned advocate contended that the Tribunal had not directed the IAC to investigate to find out whether the assets left by the deceased actually belonged to the assessee. As such, the finding of the IAC in that behalf was directly contrary to the direction in so far as the investigation was made by the IAC pursuant to the order of the Tribunal. He, therefore, contended that the IAC had misdirected himself and had erred in making entirely a new case beyond his jurisdiction. According to the learned advocate as these were not the facts found by the ITO or the IAC in the original orders, these were not open to investigation again by virtue of the remand report. On the other hand, on behalf of the revenue, it was urged that the IAC, as it would appear from the remand report, conformed to the direction contained in the order of the Tribunal. The Tribunal, after considering the rival contentions, held that the will was not genuine. The Tribunal had mentioned various facts which were highlighted by the IAC, and the Tribunal further noted that in view of that it was not necessary for the Tribunal to go into the question as to whether the assets/estate left by the deceased's son belonged to the assessee which were kept on being disposed of by the will, because, even on the basis that the will was there the Tribunal was of the opinion that in view of the various facts mentioned in its order the will was not genuine. In the premises, the Tribunal held as follows ;

'We have also held above that the will in question is not genuine. We, therefore, on the facts and in the circumstances of the case, are satisfied that the will in question was set up by the assessee as a device for concealing the particulars of the asset in question in his wealth-tax returns for the years under consideration. Penalty is, therefore, exigible againsthim under Section 18(1)(c) of the Act. The amounts of the penalty levied are fair and reasonable and call for no interference.'

6. The Tribunal thus held that the conclusion of the IAC that the signature purporting to be that of Satyanarayan Agarwalla on the will was not his signature, had not been proved to be wrong by the assessee. The Tribunal further held that the will in question was not genuine and it had been set up as a device by the assessee in order to serve his own interest. To complete the narration of events, it must be mentioned that probate was granted to the said will on 7th December, 1976, and the probate was produced before the Tribunal which will appear from the order dated 20th January, 1977, of the Tribunal at p. 70 of the paper book. Thereafter, a remand report was called for, as indicated before. Thereafter, the Tribunal disposed of a miscellaneous application filed by the assessee by its order dated 19th July, 1979. There, the Tribunal held that it was never urged by the assessee that the said probate was conclusive on the genuineness of the will or the said will, in view of its being probated, was accepted as genuine. The case before the Tribunal, was that the IAC in the remand proceedings proceeded on the basis that the genuineness of the will had to be gone into and decided by taking into consideration the facts and circumstances of the case and other materials on record, including the fact that the will was probated. It may be mentioned that the assessee filed a writ application before the Supreme Court from the order of the Tribunal and the Supreme Court by its order dated 17th August, 1979, directed that the reference application which was pending at that time before the Tribunal should be disposed of and that the Tribunal should decide the question of law particularly the question whether in view of the probate of the will having been granted by the High Court the Tribunal was competent to go into the question of genuineness of the will, which arose out of the order of the Tribunal. Accordingly, the Tribunal has referred three questions as mentioned hereinbefore.

7. The first question for our consideration is, whether in the facts and circumstances of the case, the probate of the will having been granted, the Tribunal was competent to go into the genuineness of the will of the deceased. The second question is also a part of the first question. Now, it is indisputable that the will had been probated before the matter was finally disposed of by the Tribunal. In our opinion, this question is clearly concluded by the authorities on the position of law, as we shall presently indicate. But, before we do that, we must note that on behalf of the revenue it was urged that in income-tax proceedings it was the ITO who had jurisdiction to decide the question as to whether a person who was liable to tax or not, and as such, he was free to decide the question independently of any other adjudication by any court in accordance with the facts as found by him. For establishing this proposition, reliance was placed on a Bench decision of this court in the matter of Keshardeo Chamaria : [1937]5ITR246(Cal) . There, a Bench of this court held that before a person could be taxed as an owner under Section 9 of the Indian I.T. Act, it must be decided that he was in fact the owner of the property in question and this decision rested with the ITO, subject to the right of appeal under Section 30 of the Indian I.T. Act, 1922. But the mere existence of a dispute as to the title, even where a suit had been filed, could not of itself hold up an assessment until the final determination of the suit. In a suit for declaration of title and partition a consent decree was passed declaring that the plaintiff, being the assessee in that case, and the defendant were equally entitled to the residue of the estate of a deceased person and a Commissioner for partition was appointed. The parties were jointly given liberty to realise the rents of the joint estate on joint receipt and to meet the necessary expenses thereout. The I.T. authorities treated the assessee and the defendant as owners of the properties in equal shares and levied income-tax on the assessee on half of the annual value. In that context, Panckridge J., on behalf of the Division Bench, made the aforesaid observations which we have mentioned before. Basing on the aforesaid decision, in an unreported decision in I.T. Ref.' No. 203 of 1975, judgment delivered on 16th February, 1978 (since reported in Mahamaya Dassi v. CIT : [1980]126ITR748(Cal) ), I had observed that the powers of the ITO, so far as revenue purpose was concerned, were plenary in the sense that he had to decide who was the owner and to whom a particular income should accrue. It was further observed that he must, of course, decide that question in accordance with other provisions of law. It was for the revenue authorities to decide in accordance with the rights of the parties to decide to whom an income in respect of the property in question belong for tax purposes. The said observations were made in the context of a dispute as to the probate of a will. There was a claim by certain persons claiming to be the executor on the basis of a will in respect of which a caveat had been entered and probate proceedings were pending. During the pendency of the probate proceedings, administratrix pendente lite had been appointed by this court. The question was whether the heirs would be assessed according to their shares under the will or the association of persons of the heirs in respect of the income in the hands of the administratrix pendente lite during the intervening period. But the said observations clearly reiterate the position that though the ITO had jurisdiction to decide as to whom a particular income should be considered to be belonging and whether a particular income was assessable in a particular hand or in whose hands wealth-tax was exigible, that could not be construed to mean that either the ITO or the WTO could ignore the law of the land, that is to say, if there be any law that probate is a judgment in rem and is binding on all the persons. If there is adjudication by any proper and competent court as to whom a particular property belongs, all the authorities administering the law of the land including the I.T. authorities, irrespective of the fact whether they are bound by any rules of Evidence Act or not, are bound by the said adjudication. The rights of the parties must flow on that basis. These two authorities, therefore, in our opinion, are of no assistance to the revenue in the facts and circumstances of the case. In this case, the probate has been granted and in view of one contention raised on behalf of the revenue, it is necessary to refer to the actual grant of the probate which appears at p. 265 of the paper book. This document which is a copy of the certified copy of the grant of letters of administration recites that the will of Satyanarayan Agarwalla alias Satyanarayan Gupta lately residing at No. 10, Narayan Prasad Babu Lane, Calcutta, was duly proved registered and letters of administration of the property and credits of the said deceased were granted to Smt. Ratni Debi, the beneficiary under the said will in accordance with law. Under Section 2(f) of the Succession Act, probate means the copy of the will certified under the seal of a court of competent jurisdiction with a grant of administration to the estate of the testator. So in the eye of law, the grant of letters of administration with a copy of the will annexed and the grant of probate stand on the same footing. The matter relating to grant of probate or letters of administration, in our opinion, is concluded by the decision of the Supreme Court in the case of Surinder Kumar v. Gian Chand, : [1958]1SCR548 . There, the facts are more or less identical and a claim was made out against a third party. In the High Court the will was produced but as it was not probated the will was not taken note of. Before the Supreme Court, an application was made for the admission of additional evidence indicating that there had been a grant of probate. There was an adjudication as to the admission of additional evidence and the Supreme Court held and observed, inter alia, as follows (p. 876):

'An objection to the admission of additional evidence at this stage is taken by the respondents on the ground that as the probate was obtained without their knowledge and the application was made at a late stage, it deprived the respondents of the valuable right which vests in them because the claim has become statute barred and that there is no provision in the Rules of this court for the admission of additional evidence.

It is clear that the probate was applied for and obtained after the judgment of the High Court and, therefore, could not have been produced in that court. The judgment of the probate court must be presumed to have been obtained in accordance with the procedure prescribed by law and it is a judgment in, rem. The objection that the respondents were not parties to it, is thus unsustainable because of the nature of the judgment itself.'

8. The aforesaid observations are apposite to the facts, of the case in view of the fact that in the instant case also the revenue's contention was that the probate was sought for from this court after the assessee's contention about the will was rejected by the taxing authorities.

9. In the case of Hiralal Chatteyjee v. Sarat Chandra Chatterjee [1939] 43 CWN 824, the Division Bench of this court noted that the words 'final judgment, order or decree' used in Section 41 of the Evidence Act with reference to the probate court, means the judgment, order or decree by which the grant was actually issued to the propounder or applicant, i. e., one by which the seal of the court as affixed to the grant, comes to the grantee.

10. In the case of Saroda Kanta Das v. Gobind Mohan Das [1910] 12 CLJ 91 (Cal), Sri Asutosh Mookerji reiterated that the action of a probate court of competent jurisdiction when it admitted a will to probate or rejected it as not duly attested and executed, was in the nature of a proceeding in rem, and so long as the order remained in force, it was conclusive as to the execution and the validity of the will, not only upon all the parties who might be before the court, but also upon all other persons whatever, in all proceedings arising out of the will or claims under or connected therewith. There was no difference in principle whether the compromise was attempted for the grant of probate in the original court during the pendency of the proceedings there, or whether it was attempted in a court of appeal during the pendency of an appeal against a judgment by which the will had been pronounced to be a forgery. The essence of the matter was that the question in controversy affected not merely the parties before the court, but also others who were bound by the decree, though not represented before the court.

11. In the case of Chandra Kishore Roy v. Prasanna Kumari Dasi [1911] ILR 38 Cal 327, the Judicial Committee of the Privy Council reiterated that the grant of administration with the will annexed was, within the meaning of Section 3 of the Act of 1865, a grant of probate which was a compliance with the provisions of Section 187 of that Act.

12. The grant of probate and grant of letters of administration with the copy of the will annexed stand on the same footing and, in this connection, reference may also be made to the Bench decision of this court in the case of Chant Chandra Pramanik v. Nahush Chandra Kundu, AIR 1923 Cal 1, where Sir Asutosh Mookerji also reiterated the same principle at p. 3 of the report.

13. In the case of Kailash Chandra v. Nanda Kumar, : AIR1944Cal385 , Mr. Justice B.K. Mukherjee, as the learned judge then was reiterated that the judgment of a court of probate is a judgment in rem and boundall the world. The judgment in a civil suit is operative only between the parties to the suit. A judgment in rem could not be revoked or set aside by a judgment which was only conclusive inter partes. Therefore, even when there was an allegation of forgery, the proper remedy of the party who wanted a revocation of the grant of probate, was to apply to the probate court under Section 263 of the Act and not to file a civil suit.

14. In the case of Satya Charan Das v. Hrishikesh Karar : AIR1959Cal795 , the learned single judge of this court observed that the grant of probate established conclusively the legal character of the person to whom the grant was made. Further, the grant was not only relevant, but conclusive evidence against all. It is conclusive evidence of the validity and the execution of the will and of the testamentary capacity of the testator.

15. In the case of Anil Behari Ghose v. Latika, Bala Dassi : [1955]2SCR270 , the question arose whether the grant of probate was conclusive. In the context of an application for the revocation of a grant, the court observed at p. 572 that in an application for a revocation of the grant the contention that the grant was not properly obtained could be gone into.

16. About the admissibility of the grant, it was contended on behalf of the revenue that, after it was held in the proceedings before the revenue authorities that the will was not properly made but was only a device set up in this case, the grant was obtained by the consent of parties, and it was argued on behalf of the revenue, that as such it did not retain its character as a judgment in rem. In this connection, reliance was placed on certain observations in Halsbury's Laws of England, 3rd Edn., Vol. 15, Article 370, where Halsbury noted that although a judgment by consent might well create an estoppel between the parties, it would at least be doubtful whether a judgment in rem obtained by the consent of parties could ever be conclusive against persons who were not and did not claim through the parties to it, except so far as it might be necessary to protect the title of a person who purchased the res on the faith of the judgment. It had been laid down that a judgment by consent could not affect a res judicata so as to bind the public or absent parties, and that a judgment by consent establishing a will in solemn form did not bind a party who, though served with a citation to appear in the proceedings had not appeared or represented at the hearing, so as to prevent him from taking proceedings to revoke the probate. As a matter of fact, Halsbury noted that the judgment in rem by consent to certain extent was a self-contradiction in term. In this case, it was a mistake to state that the letter of administration was granted by consent. Citation is normally issued when an application is made either for a grant of letters of administration or for a grant of probate to the necessary parties. Instead of serving citation if the parties consent to the orderthen the only effect is not that the probate is granted by consent of the parties but the process of serving citation is no longer necessary and the period is shortened, even then, it is to be presumed by law that the court must be satisfied about the genuineness of the will. Indeed, the recital of the certified copy of the grant of letters of administration, in this case, recites that the will having been proved in this case the grant was made. The grant was not made because the father of the next of the kin had agreed to the grant being made. The consent of the next of kin or the other parties merely facilitates or exempts the issue of the citation to the parties, but does not affect the duties of the court to satisfy (itself) about the grant of probate. If after the citation there arises any dispute, under the requirement of law a caveat is to be filed. Otherwise, the court has to be satisfied by evidence of the due execution of the will, before the court grants probate or letters of administration as prayed for.

17. The passage in Halsbury's which has been referred to was in a different context. It might or might not be a judgment by consent in a solemn form, might or might not prevent a person served with a citation from taking part in the proper proceedings under Section 263 of the Succession Act for a revocation of the grant of probate. In this case, no such proceedings have been taken. Therefore, we are not concerned with this controversy.

18. Reliance was placed on behalf of the revenue in the case of R.H.E. Oates v. King Emperor [1923] 38 CLJ 163; : AIR1924Cal104 , where it was held that the judgment of a probate court was inadmissible in evidence in a proceeding under Section 193 of the IPC for perjury committed in a testamentary suit. In order to appreciate the said observation one has to bear in mind the facts of that case. That was an appeal against the conviction lodged as a result of the sanction to prosecute given by the learned judge who granted the probate. The learned judge was satisfied aliunde that in proving the will before him somebody had given false evidence and for that perjury the learned judge had given sanction to prosecute. In that prosecution, it was sought to be established, that the evidence of the person against whom the prosecution was launched could not be sustained only because he had made true statement as the grant had been made (sic). This, as we have mentioned before, is mistaken. The grant only establishes that the executant or the testator duly executed the will and that the signature was his and that he had testamentary capacity. Beyond that the grant establishes nothing. Therefore, it is not conclusive of any other matter sought to be agitated as it was done in the case just noted. This judgment again cannot be of any assistance to the revenue.

19. Reliance was also placed on a decision of the Patna High Court in the case of Raj Kishore Prasad Narain Singh v. Promoda Behari Singh, AIR 1944 Patna 182, where the Division Bench reiterated that the probate didnot amount to any adjudication but it only recited the fact that the adjudication had been already made. It was held that the grant of a probate was not a decree. It was observed that the same could not be revoked except by the court which granted it, and unless the probate was revoked, no useful purpose would be served by going into the question as to whether the will was a forgery in a subsequent suit. So long as the probate stood, no effective relief could be obtained by the parties to the subsequent suit, therefore, the court was of the view that disallowing evidence sought to be adduced to prove that the will was a forgery was not improper.

20. In the case of R. Viswanathan v. Abdul Wajid : [1963]3SCR22 , the Supreme Court has considered about the conclusiveness of a foreign judgment in the context of Section 13 of the CPC. In considering whether a judgment of a foreign court was conclusive, the courts in India would not enquire whether the conclusions recorded thereby were supported by the evidence, or were otherwise correct, because the binding character of the judgment might be displaced only by establishing that the case fell within one or more of the six clauses of Section 13 and not otherwise. It also reiterated that the conclusiveness of the foreign judgment was not in any way affected by the fact that the judgment was rendered subsequently or not.

21. On behalf of the revenue reliance was placed on certain observations in Smt. Satya v. Teja Singh : 1975CriLJ52 in order to appreciate the conclusion of the court in the said decision, it is necessary to note that there the Supreme Court found that there was lack of jurisdiction in the Nevada Court and that could have been established by the pleadings and documents of the respondent himself. Those incontrovertible facts, according to the Supreme Court, would be that Nevada was not and could not be home, the permanent home, of the respondent. If the High Court had been invited to consider the conduct and projects of the respondent it would have perceived that the respondent had merely simulated a domicile in Nevada, In that event, the Nevada Court would never have the jurisdiction. If that was the position, then a fraud was practised upon the court to attract its jurisdiction in obtaining a decree of divorce. In that context, the Supreme Court commented that the judgment of a foreign court, to be conclusive between the parties, must be a judgment pronounced by a court of competent jurisdiction and if it could be shown that it was delivered by a court not competent to deliver it, it was obtained by fraud inducing the court to believe that it had such a jurisdiction, then such a judgment was not conclusive or binding on all parties. That is, however, not the situation in the instant case before us. It was not agitated that the court, which granted the letters of the administration in the instant case, was not the competent court nor there was any lack of jurisdiction of that court.

22. Reliance was also placed on certain observations of the Division Bench of this court in the case of Teen Cowree Dossee v. Hureehur Mookerjee [1867] 8 WR 308, where it was observed that a letter of administration with a copy of the will annexed, might be equivalent to a probate, but neither was of itself sufficient to prove a will the genuineness of which was contested. That observation must be read in the context of the facts of that case. There the court found that no probate of the will had been taken out. To clear up the point, the court sent for the papers from the original side, but did not find from them that probate was granted to any one. Letters of administration with a copy of the will annexed to the application, appeared to have been given to the widow on the renunciation of the executors named in the will. Such letters of administration were equivalent to probate, there was no judicial finding that the will was a true one and no proof in solemn form was required by law. The court in its remand order appeared to have thought that probate had been granted. The facts of the present case are that the certified copy of the grant of letters of administration clearly establishes that the record of the will was proved.

23. Reliance was placed on certain observations in Phipson's Evidence, 11th edn., p. 1340, that in so far as the judgment in rem regarding probate is concerned or letters of administration is concerned, in our opinion, the said observations do not advance the position any further. In the illustration an example is given that if A obtained a probate on B's will in proceedings between strangers the probate was neither conclusive nor perhaps admissible to show the genuineness of the will, or the sanity of the executant or death or that a particular property is the asset of B. Now, so far as the finding that if a probate does not establish the title to a particular property, that is to say, that if the testator had title over the property, no exception could be made to the said observation that in view of Section 41 of the Evidence Act read with Section 13 of the CPC and in view of the judicial pronouncement, in our opinion, the probate establishes the genuineness of the will, the signature of the will and the testamentary capacity of the testator.

24. Reliance was placed on certain decisions that the ITOs would not be guided by the technical rules of Evidence Act. In this connection, our attention was drawn to [1954] 26 ITR 775 in the case of Dhakeswari Cotton Mills Ltd. v. CIT, at p. 781, where the Supreme Court noted that the ITO was not bound by the technical rules of Evidence Act.

25. The same principle was also reiterated in the case of C. Vasantlal and Co. v. CIT : [1962]45ITR206(SC) , the court again reiterated that the I.T. authorities were not bound by technical rules of Evidence Act. This being the position, in our opinion, in view of Section 263, readwith Section 273 of the Succession Act, the genuineness of the will could not be gone into, when doubted by the I.T. authorities either about the acceptance or otherwise of the will in question. The fact that the assessee had invited, as it was contended by the revenue, to determine the genuineness of the will does not establish that the I.T. authorities were in any way entitled to go behind the grant of probate as to the question of the genuineness of the will. In that view of the matter, we would answer questions Nos. 1 and 2 in the negative and in favour of the assessee. Before we conclude this part of the answers we must, however, observe that we are inclined to accept the position that the facts of this case, as presented by the assessee, inspire little confidence and credence. But so long as the finality of the probate stands, as a matter of law, such an incongruity has to be accepted. Whether, by making an appropriate amendment in the Succession Act, after the grant of the probate in appropriate cases, an application might be made by the revenue authority, if required, to the court in such a situation, is a matter in which the legislature alone can intervene.

26. This brings us to the third and last question. In so far as the Tribunal sustained the order of penalty on the ground that the will was not genuine that order cannot be sustained. But the question arises, the IAC has in his remand report found that the will was not genuine because there were no assets of Satyanarayan Agarwalla and the assets really belonged to the assessee. It was contended by the assessee that that was not the case before the original ITO nor was it the case before the IAC or the Appellate Tribunal at the first stage. Therefore, it was argued that the IAC had really gone beyond his jurisdiction to make such a finding. It was secondly urged that such a finding of the IAC was against the preponderance of the evidence on record. The Tribunal, however, on this aspect has not given its decision; the Tribunal has not decided whether the IAC had jurisdiction to go into this question or whether the findings of the IAC that the deceased had no estate or assets left, which could be covered by the will, nor whether such finding of the IAC was beyond the evidence on record because the Tribunal felt that the matter was concluded and further investigation was not necessary. On this aspect of the matter, the Tribunal had not adjudicated. Learned advocate for the assessee contended that in view of the observations of the House of Lords in the case of Craddock (Inspector of Taxes) v. Zevo Finance Co. Ltd. [1946] 27 TC 267, this question was no longer open for investigation. The said decision, in our opinion, is not quite apposite to the present question. We are, therefore, unable to accept the proposition as contended for and on behalf of the assessee. Reliance was also placed on the observations in the case of C. P. Sarathy Mudaliar v. CIT : [1966]62ITR576(SC) to theeffect that in a reference under Section 66 of the Indian I.T. Act, 1922, the High Court was exercising advisory jurisdiction, it did not sit in appeal over the judgment of the Tribunal. If the High Court found that the material facts were not stated in the statement of case or the Tribunal had not stated its conclusion on material facts, the High Court might call upon the Tribunal to submit a supplementary statement of case. But the High Court had no power to set aside the order of the Tribunal. Reliance was also placed on certain observations in the case of C.V. Mathukutty v. CIT : [1977]108ITR1(Ker) , where the court held that a non-consideration of any matter which was not necessary for deciding an appeal did not raise a question of law. We find that more or less a similar problem arose before the Supreme Court in the case of CIT v. Indian Molasses Co. P. Ltd. : [1970]78ITR474(SC) , where at p. 482, the Supreme Court observed, inter alia, as follows :

'Two courses are now open to us : to call for a supplementary statement of the case from the Tribunal; or to decline to answer the question raised by the Tribunal and to leave the Tribunal to take appropriate steps to adjust its decision under Section 66(5) in the light of the answer of this court. If we direct the Tribunal to submit a supplementary statement of the case, the Tribunal will, according to the decisions of this court in New Jehangir Vakil Mills Ltd. v. Commissioner of Income-tax : [1959]37ITR11(SC) , Petlad Turkey Red Dye Works Co. Ltd. v. Commissioner of Income-tax : [1963]48ITR92(SC) and Keshav Mitts Co. Ltd. v. Commissioner of Income-tax : [1965]56ITR365(SC) be restricted to the evidence on the record and may not be entitled to take additional evidence. That may result in injustice. In the circumstances, we think it appropriate to decline to answer the question on the ground that the Tribunal has failed to consider and decide the question whether the expenditure was laid out or expended wholly and exclusively for the purpose of the business of the company and has not considered all appropriate provisions of the statute applicable thereto. It will be open to the Tribunal to dispose of the appeal under Section 66(5) of the Income-tax Act, 1922, in the light of the observations made by this court after determining the questions which ought to have been decided.'

27. On this basis, in our opinion, the appropriate manner in which question No. 3 should be disposed of in this case is to say that the Tribunal was not justified in law in confirming the order of penalties on the ground that the will was not genuine. But the Tribunal would be free to determine whether the order of penalty could be confirmed or not by consideration of the facts whether the deceased left any asset which could be covered by the will and in considering that question the Tribunal should consider whether the Tribunal was competent to take into consideration the remand report of the IAC of Wealth-tax and whether such finding of the IAC was based on evidence on record. After considering this aspect, the Tribunal will, accordingly, dispose of the appeal in accordance with law.

28. The questions are answered in the manner indicated above. In the facts and circumstances of the case, the parties will pay and bear their own costs.

Sudhindra Mohan Guha, J.

29. I agree.


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