TMI Blog1989 (12) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning of section 5(1)(xxxii) and consequently, in holding that the value of the assessee's interest in that firm is exempt under section 5(1)(xxxii) of the Wealth-tax Act, 1957 ?" Smt. Kusum Bader (hereinafter referred to as "the assessee") is partner having 20% share in the firm, Cosmopolitan Trading Corporation, Jaipur. The said firm is carrying on business in export sale or precious stones. In respect of the assessment year 1979-80, the assessee disclosed the value of her capital in the partnership firm at Rs. 75,916. The Wealth tax Officer, in his assessment order dated March 26, 1984, made an addition of Rs. 5,78,657 under rule 2B(2) of the Wealth-tax Rules, 1957. In the said order, the Wealth-tax Officer has observed that the value of the closing stock of the said firm was taken by the assessee at Rs. 44,43,441 as against Rs. 81,51,918 shown in the export invoices and the said figure of Rs. 44,43,441 was arrived at after deducting disparity rate of 45.49%. In the said order, the Wealth-tax Officer has further observed that, in the written reply filed on behalf of the assessee, it was stated that the margin of gross profit earned by the assessee was more than 20% on the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the view that this issue has been decided by the Commissioner of Income-tax (Appeals) by his order dated October 14, 1986, in respect of the assessment years 1976-77, 1977-78 and 1978-79 in favour of the assessee. The Tribunal, on appeal by the Revenue, affirmed the said view of the Appellate Assistant Commissioner with regard to the applicability of rule 2B(2) of the Rules. Before the Tribunal, it was submitted on behalf of the Revenue that the exemption under section 5(1)(xxxii) of the Act had been wrongly allowed, but the Tribunal held that the said exemption had been allowed by the Wealth-tax Officer and that there was no mention about the said exemption in the order passed by the Appellate Assistant Commissioner for the assessment year 1979-80 and that the said question, therefore, did not arise in the appeal. The Revenue thereupon moved an application under section 27(1) of the Act whereby it was prayed that the two questions referred to above may be referred to this court for consideration. The said application was rejected by the Tribunal by order dated March 25, 1988. As regards question No. 1, the Tribunal observed that a similar issue was decided by the Tribunal in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al points for the purpose of assessing the market value of the stock of the firm of which the assessee is a partner, but the assessee failed to supply the said information and, therefore, an adverse inference should be drawn against the assessee on account of non-production of the said material and, in the circumstances, it cannot be said that the Revenue has failed to discharge the burden which lay upon it. Shri Singhal has also urged that after taking into consideration the profits earned by the firm for the assessment years 1977-78 to 1981-82 which showed that the same were in excess of 40% in each year, the Wealth-tax Officer had come to the conclusion that the assessee was able to sell off the goods at the market rate, i.e., export invoice value, and that any deduction in the export invoice value was not called for. The submission of Shri Singhal is that the decisions of the Tribunal in relation to earlier assessment years are not applicable to the assessment year in question and that the Appellate Assistant Commissioner and the Tribunal have erred in holding that rule 2B(2) is not applicable to the assessment year 1979-80 by relying upon the decisions of the Commissioner and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of res judicata does not apply to taxation proceedings." In CIT v. Brij Lal Lohia and Mahabir Prasad Khemka [1972] 84 ITR 273 (SC), the question in issue was with regard to the genuineness of two gifts made by the assessee. In respect of the assessment years 1945-46 and 1946-47, the Tribunal had found that the said gifts were not genuine gifts and the High Court did not interfere with the said finding of the Tribunal on the view that it was a finding of fact and the Supreme Court affirmed the said view. In respect of subsequent assessment years 1947-48, 1948-49, 1949-50, 1950-51 and 1951-52, the assessee produced additional evidence and the Tribunal, after taking into consideration the said additional evidence, came to the conclusion that the gifts in question were genuine gifts. The Supreme Court held that the fact that in the earlier proceedings, the Tribunal took a different view of the two gifts was not a conclusive circumstance and the decision of the Tribunal reached in those proceedings did not operate as res judicata. In Pravara Sahakari Sakhar Karkhana Ltd. v. CIT [1974] 94 ITR 321 (SC), the assessee was a co-operative society having a sugar factory and it had paid to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent for sugarcane could be taken into account and the amount paid in excess of the minimum price be disallowed. In the present case, the question under consideration with regard to the applicability of rule 2B(2) of the Wealth-tax Rules relating to the market value of the closing stock would depend upon the nature of the evidence produced by the Department and the assessee during the proceedings for the particular assessment year and, therefore, the decision on that issue in respect of a particular assessment year cannot be held to be conclusive for another assessment year. The present case is more similar to the decision of the Supreme Court in CIT v. Brij Lal Lohia and Mahabir Prasad Khemka [1972] 84 ITR 273, wherein it was held that the decision in respect of one assessment year did not operate as res judicata in the assessment for a different period. In our opinion, therefore, the principle of res judicata cannot be made applicable to the present case and reference cannot be denied on this ground. We may now refer to an earlier decision of this court in CWT v. Smt. S. K. Bader [1987] 167 ITR 890. In that case this court was dealing with the assessment years 1974-75 and 1975 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material that was placed by the assessee before the Income-tax Officer as well as the Appellate Assistant Commissioner, the Settlement Commission found that the value of the goods exported had to be reduced by as much as 20% to 30% as compared to the export invoice prices, and that, even at the reduced prices, it was not possible to sell the goods on many occasions and they were reimported and again exported in different lots and assortments and at reduced prices. In these circumstances, it was found that the export invoice prices were not the selling prices of the goods. It was also noticed by the Settlement Commission that, for the assessment year 1970-71, the Income-tax Officer had arrived at the intrinsic value of the export goods by reducing 31 % from the export invoice value and the said figure was raised to 35% by the Appellate Assistant Commissioner of Income-tax and that for the assessment year 1973-74, the intrinsic value was arrived at by allowing the deduction of 40% from the export invoice value. In its order dated December 31, 1983, the Tribunal, while dealing with the assessments of the partners of the firm K. D. Jhaveri, for the assessment years 1974-75 and 1975-7 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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