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PETITIONER: DR. KARAN SINGH

       Vs.

RESPONDENT: STATE OF JAMMU & KASHMIR & ANR.

DATE OF JUDGMENT20/12/1985

BENCH: TULZAPURKAR, V.D. BENCH: 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.

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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]

JUDGMENT:      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

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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

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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.

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M.L.A.                                       Appeal allowed. 1075