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Wealth-tax - Case Laws
Showing 21 to 40 of 3697 Records
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2022 (2) TMI 300 - BOMBAY HIGH COURT
Wealth tax assessment - Piece of land in Panvel held as its stock in trade or taxable within the provisions of Wealth Tax Act - ITAT treating the land which was approved by the State Government only for industrial purpose as stock in trade - Whether Hon’ble ITAT erred in not appreciation the provisions of section 2(ea) of Wealth Tax Act, 1957 which is totally applicable as per the facts of this case? - HELD THAT:- ITAT by its order pronounced on 21st June, 2019 and impugned in this appeal concurred with the finding of CIT(A). ITAT also held, and rightly so, that the explanation (1)(b) attached with Section 2(ea) of the Act clearly specified that any land held by assessee as stock in trade for a period of 10 years from the date of acquisition will not be included in the definition of ‘Urban Land’. ITAT also held that as per Section 2(m) of Wealth Tax Act, while determining the wealth tax liability of Respondent, the aggregate value of debt owed by Respondent in respect of assets owned by Respondent have to be reduced from the aggregate value of asset belonging to Respondent.
Having considered impugned order of ITAT and also the order of AO as well as CIT(A), in our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analyzed and correct test is applied to decide the issue at hand, then, we do not think the questions as proposed raises any substantial question of law.
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2022 (1) TMI 1054 - MADRAS HIGH COURT
Validity of Reassessment proceedings initiated u/s 17 of the Wealth Tax Act, 1957 - sale consideration of the property at Mugappair owned by the assessee that took place after the assessment years under consideration - HELD THAT:- Reopening the assessment by the assessing officer, based on the event of sale, which had taken place subsequently, to redetermine the value of the property for the assessment years in question, is not legally sustainable. Accordingly, the learned single judge rightly held so in the writ petitions filed by the assessee challenging the reassessment proceedings.
In the present case, admittedly, the assessee had filed her returns of wealth along with supportive documents; and there was no allegation that she had withheld the material facts or that the facts placed before the Officer are not truly and fully disclosed for assessment. Further, in the notice issued under Section 17, there was no mention about the additional material or document unearthed by the Assessing Officer, which the assessee failed to disclose; and the sub section, under which assessment was reopened. Thus, one of the basic requirements to initiate the reassessment proceedings under Section 17 of the Act, has not been satisfied by the Assessing Officer. In such circumstances, we do not find any justification on the part of the assessing officer to reopen the assessment and pass the reassessment orders dated 26.03.2002.
In Commissioner of Income-Tax and another v. Foramer France [2003 (1) TMI 101 - SC ORDER]arising under Income Tax Act relating to Sections 147 and 148 of the Income Tax Act, the supreme court pointed out that 'when there was no failure on the part of the assessee to disclose fully and truly all material facts for assessment, the assessment could not be reopened on the basis of change of opinion'. Placing reliance on the same, the learned single Judge has concluded that on a mere change of opinion on the part of assessing officer, there cannot be reopening of the assessment. We are in full agreement with such a conclusion reached by the learned single Judge.
As regards the plea of alternative remedy, this court is of the opinion that when the condition precedent for the invocation of reassessment proceedings does not exist, the assessee is entitled to approach this court under Article 226 of the Constitution of India and hence, the question of invoking the alternative remedy available to the assessee, does not arise. The learned single Judge has also rightly rejected the said plea of the Revenue, besides considering the fact of long pendency of the writ petitions.
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2021 (9) TMI 896 - ITAT CHENNAI
Wealth tax assessment - estimation of value of asset - assessee failed to justify value adopted in wealth tax returns with necessary evidences - Revenue authorities determine value of the property as per market value - HELD THAT:- As regards property at Bharaniputtur, there is a dispute between the assessee and Assessing Officer in respect of extent of landholding. The assessee claims that he owned 0.4 acres of land, whereas the Assessing Officer has adopted 0.8 acres of land. A similar issue has been considered by the Tribunal for assessment years 2009-10 and 2010-11, where issue has been set aside to the file of Assessing Officer to ascertain date of purchase of land and extent of land held by the assessee. Even before us, the assessee has filed necessary evidences to prove that extent of land held by the assessee is only 0.4 acres. Therefore, we set aside this issue to the file of the Assessing Officer to ascertain fact with regard to extent of land held by the assessee.
As regards land at Sholinganallur the assessee has sold property on 28.04.2011, just after 28 days from the date of valuation and thus, estimated price of the property as on valuation date shall be at least value derived by the assessee from sale of property. Therefore, we are of the considered view that there is no merit in the arguments of the assessee that value of the property as on valuation date is at ₹ 10.99 crores. However, fact remains that when the rules prescribed for determining value on the basis of fair market value, the Assessing Officer has adopted guideline value prescribed for payment of stamp duty. In our considered view, guideline value fixed by stamp duty authorities is not relevant to decide value of any asset, other than cash, as on valuation date. Hence, we direct the Assessing Officer to adopt market value of the property as on valuation date at ₹ 21.06 crores, which is the price derived by the assessee from open market when the property was sold in the month of April, 2011. Appeal filed by the assessee is partly allowed for statistical purposes.
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2021 (9) TMI 309 - MADRAS HIGH COURT
Violation of principles of natural justice - appeal was accepted ex-parte, without granting reasonable opportunity of hearing - exclusion of the value of the factory land and buildings within the scope of the exception carved out in the definition of net wealth in Section 2(ea) of the Act - said asset was a commercial asset occupied and used for commercial purposes - HELD THAT:- It is true that, unless and until the counsel or the authorized representative has been duly authorized to appear in the matter, the Courts and Tribunals will not entertain the said person to represent, as the assessee can always take a stand that the person who had appeared had not been authorized to appear. In the instant case, facts had to be adjudicated - if the assessee had an opportunity to place their submissions before the Tribunal, the order would have been more elaborate and a speaking order and it would satisfy the principles of natural justice and the principle of audi alteram partem. This opportunity could have been granted to the assessee when they filed the Miscellaneous Petition, which was filed within the reasonable time.
The reason assigned by the assessee in the Miscellaneous Petition as to why they sought for adjournment, appears to be a reasonable explanation, more particularly, when the Revenue did not controvert the facts stated in the Miscellaneous Petition nor it was found to be a false statement. Therefore, an opportunity could have been granted to the assessee to place the factual position before the Tribunal for a more effective adjudication and decision on merits.
Appeal allowed.
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2021 (9) TMI 276 - ITAT CHENNAI
Properties considered for wealth tax purposes - four properties were treated as stock-in-trade and profits from sale of said properties has been offered to tax under the head ‘income from business’, thus not included under wealth tax - HELD THAT:- When the Assessing Officer has accepted profits earned from sale of said assets as income assessable under the head ‘income from business or profession’, then there is no reason for the Assessing Officer to treat said assets as investments only for the reason that those assets are not classified as stock-intrade in books of account of the assessee. It is well settled principles of law by the decision of various courts, as per which entries in the books of account is not relevant criteria to decide nature of asset or income or expenses, but what is relevant is nature of assets and intention of the assessee to hold such assets in the business of the assessee.
From the intent and conduct of the assessee, it was very clear that those lands were held in the business of the assessee as stock-in-trade and further, profits derived from sale of said land was rightly assessed under the head income from business or profession. The Assessing Officer having accepted income declared from sale of land under the head profits & gains from business, was erred in considering those lands as investments which falls under the definition of assets u/s.2(e)(a) of the Wealth Tax Act, 1957, and to charge for wealth tax. Therefore, the Assessing Officer as well as learned CWT(A) completely erred in considering assets held as stock-in-trade within definition of assets for the purpose of wealth tax.
The Assessing Officer is directed to delete four assets as claimed by the assessee as stock-in-trade for the purpose of wealth tax - appeal filed by the assessee for both assessment years are allowed.
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2021 (7) TMI 513 - MADRAS HIGH COURT
Re-opening of assessment under the Wealth Tax Act, 1957 - Orders passed under Section 18(1)(c) of the Wealth Tax Act - Validity of reopening of assessment - non speaking order passed - impugned orders preceded the issue on a notice under Section 17 of the Wealth Tax Act, 1957, which is pari materia with Section 147 of the Income Tax Act, 1961 - HELD THAT:- There is no dispute in the facts and circumstances of the case that no speaking order was passed before passing the impugned Assessment Orders. The provisions of the Income Tax Act, Wealth Tax Act as far as the reopening of the assessments are concerned are pari materia with Section 17 of the Wealth Tax Act, 1957 and Section 147 of the Income Tax Act, 1961.
As rightly contended by the learned counsel for the petitioner, the decision of the Hon'ble Supreme Court in G.K.N.Driveshafts case [2002 (11) TMI 7 - SUPREME COURT] is to be applied even for re-opening of assessment under the Wealth Tax Act, 1957 - we therefore of the view, the impugned order deserves to be set aside. Accordingly, remit the case back to the respondent to pass a speaking orders on merits in accordance with law following the decision of the Hon'ble Supreme Court in G.K.N.Driveshafts case.
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2021 (7) TMI 50 - ITAT HYDERABAD
Wealth tax assessment - AO treated the lands situated at Dundigal, Bowrampet and Ravada villages as urban lands chargeable to wealth tax - HELD THAT:- We are of the view that once the lands are declared by the govt in its records as agricultural lands, the CWT(A) finding that the assessee failed to produce any evidence that the same are put to use for agricultural purposes is contrary to the law. The assessee has received subsidy announced by the Andhra Govt, which was directly credited into his bank account. We, therefore, set aside the order of CIT(A) and direct the AO to treat the same as agricultural lands. Accordingly, the grounds Nos. 1 to 4 raised by the assessee on this issue are allowed.
AO denied exemption u/s 2(ea)(i)(4) of the Act in respect of the residential flat at Banjara Hills - revenue authorities held that the property was let out for a period of two months during the previous year relevant to impugned AY, therefore, the assessee is not eligible to claim exemption u/s 2(ea)(i)(4) - As argued the said flat was purchased by the assessee during the month of September, 2006, the question of holding the property for more than 300 days does not arise and hence, the same should be considered as an exempted asset - We are of the view that since the assessee has purchased the property in the month of September, 2006, the question of holding the property for more than 300 days does not arise and, we direct the AO to consider the said property as exempted asset. Accordingly, the ground no. 5 raised by the assessee on this issue is allowed.
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2021 (6) TMI 215 - ITAT RAJKOT
Wealth tax assessment - omission on the part of the assessee to hide or conceal the wealth was intended to avoid payment tax - penalty imposed under section 18(1)(c) of the Act - HELD THAT:- If the penalty order is perused in the light of the judgment of Hon’ble jurisdictional High Court [2012 (12) TMI 981 - HIGH COURT OF GUJARAT], then it will reveal that the ld.AO was not specific in his finding for which he has visited the assessee with penalty.
We also find support from the order of case HPCL MITTAL ENERGY LTD. [2018 (6) TMI 1554 - ITAT AMRITSAR] wherein the ld.Third Member held that where the satisfaction of the AO while initiating penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961 is with regard to alleged concealment of income by the assessee, whereas the imposition of the penalty is for ‘concealment/furnishing inaccurate particulars of income’, the levy of penalty is not sustainable. It is pertinent here to note that section 271(1)(c) of the Income Tax Act, 1961 and section 18(1)(c) of the Wealth Tax Act, 1957 are pari materia to each other in terms of purpose and object, and therefore, proposition of law laid down by various higher judicial forums would be applicable on the same analogous in the cases of proceedings under section 18(1)(c) of the Act as well. Therefore, the impugned order is not in line of law laid down by the Hon’ble jurisdictional High Court, and hence not sustainable. The ld.CIT(A) has erred in upholding this order of the AO. We allow this appeal of the assessee and quash the penalty order- Appeal of the assessee is allowed.
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2021 (5) TMI 820 - ITAT VISAKHAPATNAM
Wealth tax assessment - Computation of net wealth - AO while determining the value of the assets and net wealth, as considered the photographs of the property/assets submitted by the Assessee and the value of the entire assets including the land and building as determined by the Sub-Registrar, Visakhapatnam who had adopted a comprehensive value of ₹ 1.95 crores for both the land and structures vide registration deed dated 20/02/2008 - HELD THAT:- Commissioner considered the Form No. 23AC submitted by the Assessee to the ROC and observed that from the record, it is seen that small structure standing on the piece of land is in dilapidated condition and the photographs of the property confirms the position.
Assessee failed to demonstrate the fact that the structure was used for business purpose. Assessee failed to prove the point that the relevant property was utilized for business purpose. The Ld. Commissioner further held that it is not the case of the Assessee that the property was used for residential purpose or any other meaningful purpose. Ultimately, the ld. Commissioner observed that small and dilapidated structure of the Assessee is not functionally useful and was neither utilized for business purpose nor residential purpose and therefore, the AO is justified in stating that given the size of the land/plot, section 5(1)(vi) is attracted
Nothing specific was pointed out to fault the determination of the value of the assets and therefore we concur the finding of the ld. Commissioner to the effects that the case of the Assessee does not fall in the category of house and the land appurtenant to the house.
We are unable to find out any reason to controvert the finding of the authorities below, hence, we do not any hesitation to hold that the order under challenge does not suffer from any perversity, impropriety or illegality, consequently, the same is liable to be upheld. Appeal of the Assessee deserves dismissal.
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2021 (5) TMI 199 - BOMBAY HIGH COURT
Wealth tax assessment - ownership of the Gold in possession of the assessee - Limited power to deal with the Gold - Legal heirs - including the market value of the said gold in the computation of net wealth of the original petitioner - whether the Tribunal erred in law in rejecting the assessee's submissions that even if the said gold were to be included in the net wealth, the value thereof to be taken ought to be NIL or ought to be arrived at, bearing in mind the liability for confiscation, fine and penalty and bearing in mind that what had to be valued was the price which the assessee claim to be restored possession of the said gold would fetch, if sold in the open market ? - HELD THAT:- Applying the ratio in the case of Murari Mohan Dutta [1991 (9) TMI 17 - CALCUTTA HIGH COURT] we are inclined to hold in the present case that there cannot be any market value ascribed for valuation of the seized gold on the respective valuation dates in view of the fact that the gold being seized was in the custody of the Central Excise Authorities on the respective valuation dates and the right of the original assessee was in jeopardy. Thus, we do not agree with the findings returned by the Tribunal in its order dated 29.09.1982 in so far as the issue of valuation is concerned.
(1) Whether, on the facts and in the circumstances of the case, the Tribunal erred in law in including the market value of the gold and gold coins in the computation of net wealth of the appellant ? - Ans. : Yes
(2) Whether, on the facts and in the circumstances of the case, the Tribunal erred in law in rejecting the assessee's submissions that even if the gold and gold were to be included in the net wealth the value thereof to be taken ought to be NIL, or ought to be arrived at, bearing in mind the liability for confiscation, fine and penalty and bearing in mind that what had to be valued was the price which the assessee claim to be restored possession of the gold would fetch, if sold in the open market ? - Ans. : Yes
(3) Whether, on the facts and in the circumstances of the case, Tribunal erred in law in rejecting the assessee's claim that matter had to be considered on the footing of the assessee having invested the said gold and gold coins in gold bonds which were exempt from wealth-tax ?- Ans. : Yes
(4) Whether, on the facts and in the circumstances of the case, the Department having knowingly and consciously prevented the assessee from investing the gold and gold coins in the purchasing of the gold bonds under the Gold Bond Scheme which was then in operation, can in law charge the assessee to wealth-tax on the footing that the assessee continues to be the owner of the gold (and not gold bonds) and was thus liable to wealthtax on the value of the said gold and gold coins ? - Ans. : No
(5) Whether, the Tribunal erred in law in holding that the rules and principles of equity would have no application to the present case ? - Ans. : Yes
(6) Whether, the Tribunal erred in law in valuing gold on the basis of a national sale when the assessee was not in possession of the gold and could not have sold the gold but could have at best entered into an agreement to sell the gold with a condition to deliver the gold, if and when he became entitled to and acquired possession thereof ? - Ans. : Yes
(7) Whether, instead of determining the value of gold on the basis of a notional sale of gold which was not legally possible, the Tribunal ought to have included, if at all, the consideration which any wise and prudent person would have offered for entering into an agreement to purchase the gold subject to the condition that delivery of gold would be given and sale would be completed, if and when the assessee became entitled to and acquired possession of gold ?” - Ans. : In view of the answers to the questions (1) to (6) herein above, the Tribunal ought not to have included any consideration for the seized gold for computation of wealth tax assessment on the respective valuation dates as the gold still stands seized and not released.
Recovery proceedings - notice issued for the sum along with interest being the alleged dues of income tax and wealth tax payable by the estate of Shri. C.S. Goenka (original assessee) - HELD THAT:- A perusal of recovery notice does not evince confidence in the Court as the same is inadequate in terms of any details. Therefore, we are inclined to set aside the notice of recovery dated 22.09.2004 with liberty to the respondents / Revenue / Income Tax department to issue a fresh notice in accordance with law and if permissible in law to the legal heirs of the original assessee. If such a recovery notice is issued, it shall be open to the petitioners to contest the same whereafter law will take its own course.
In so far as the amended prayer for seeking forthwith release of 85,617.80 grams of gold, jewellery, cash and other valuable articles form the premises of the original assessee as per the panchnama to the petitioners is concerned, it is seen from the record i.e IA No.16 of 2015 in Civil Appeal No.723 of 1973 filed in the Supreme Court, that the late Shri. C.S. Goenka had three legal heirs namely Smt. Sushila N. Rungta - daughter, Radheshyam Goenka - son and Rajkumari R. Goenka - daughter. It appears that an arbitrator was appointed by the Supreme Court vide order dated 01.11.1991 to settle the dispute as to who would be the legal heir to the estate of late Shri. C.S. Goenka. Probate Suit No.65/85 was also filed wherein the genuineness of the will dated 29.10.1982 of the original deceased assessee C.S. Goenka was held undisputed and the genuineness of the will was conceded on 27.10.1999 by the non applicants therein. The learned arbitrator passed an award holding that the will in favour of Sushila N. Rungta was inoperative and Radheshyam was the sole heir as adopted son. This award was challenged by Sushila N. Rungta in the Supreme Court. On 01.12.2000 the Supreme Court held that the award of the learned arbitrator was inoperative and on the basis of the probated will, Sushila N. Rungta was the legal heir of the deceased C.S. Goenka. Therefore, Sushila N. Rungta made an application before the Supreme Court that she be brought on record as the sole heir and representative of the deceased original assessee C.S. Goenka. On 18.07.2008, the Supreme Court was pleased to allow Interim Application No.15/2008 filed by Sushila N. Rungta and brought her name on record as the legal heir and representative of the appellant i.e Shri. C.S. Goenka.
The copies of the above orders and the probate however are not on record so as to guide us in considering and directing the amended prayer as sought for by the petitioners. If the petitioners place the certified copies of the aforesaid orders and probate order on record to the satisfaction of the concerned authorities i.e the respondents / department of Income Tax, we direct that the respondents shall forthwith release 85617 grams of gold, jewellery, cash and other valuable articles as per the panchnama and hand it over to the petitioners being the legal heirs of Sushila N. Rungta.
Petitioners i.e Nirajkumar N. Rungta and Bharti Saraf are the son and daughter of Smt. Sushila N. Rungta. Petitioners have to place on record the documentary evidence of they being the true and legal heirs of Sushila N. Rungta in order to seek release of the aforesaid articles to themselves. Not to mention that once the above articles are released into the hands of the petitioners, petitioners shall be liable to wealth tax assessment in respect of the value of the said articles in accordance with law. The present petitioners shall place the appropriate documentation of they being the only legal heirs of Sushila N. Rungta to the satisfaction of the respondents for seeking release of the articles. The seized gold shall be released by the respondents within a period of 6 (six) weeks of furnishing of the required documents by the petitioners.
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2021 (4) TMI 1019 - ITAT HYDERABAD
Wealth tax assessment - valuation of assets under the Wealth Tax Act - valuation of immovable assets and revaluation thereof - HELD THAT:- The revaluation of the properties at Banjara Hills and Madhapur needs reconsideration by the AO in the light of the CBDT Circular No.3 dated 28.09.1957 above and if the value of the assets was fixed by the Assessing Officer in A.Y 2002-03 in accordance with law, then he has to adopt the same for the next two succeeding A.Ys. The Assessing Officer is directed accordingly. Further, the additional ground raised by the assessee with regard to the chargeability of Wealth Tax on Madhapur property is admitted and is also remanded to the file of the Assessing Officer for consideration in accordance with law.
Assessing Officer is also directed to verify the existence of movable assets during the financial year and if they do not exist, then Assessing Officer cannot make any addition in this regard.
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2021 (4) TMI 1010 - ITAT CHENNAI
Wealth tax assessment - assessee wrongly admitted the value of the land at Baraniputhur as an asset in the AY 2008-09, although, the assessee was not owner of the land in that assessment year- HELD THAT:- As the assessee became owner of the land during the period relevant to the AY 2009-10 only. However, the assessee pleads that when the compliances were made subsequent to the receipt of notices u/s.17B for various AYs in 2016, the assessee committed an error and admitted the value of land in the earlier year return itself i.e. in AY 2008-09. In this regard, the assessee placed reliance on the copies of Sale Deed, Encumbrance Certificate, etc.
We are of the considered view that when the assessee became owner of the impugned land? i.e. whether during the period relevant to the AY 2008-09 or from the AY 2009-10, requires a fresh examination. We deem it fit to remit these issues to the file of the AO for a fresh examination. The assessee shall place relevant material in support of its contentions before the AO and comply with the requirements in accordance with law. The AO on due examination and after affording adequate opportunity to the assessee, shall determine the issues in accordance with law. Appeals filed by the assessee are tread as allowed for statistical purposes.
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2021 (4) TMI 269 - GUJARAT HIGH COURT
Refund of wealth tax paid on urban agricultural land to the petitioner along with statutory interest - Assessee stated that in absence of clarity of legal position regarding taxability of wealth tax on agricultural land, he had paid the Wealth Tax on agricultural land owned by the him but as per the amended Section 2(e)(a) of the Act, the urban agricultural land is not assessable for the purpose of wealth tax and the said amendment was inserted vide Finance Act, 2013 with retrospective effect from 01.04.1993 and therefore, the amount already deposited by the writ applicant is required to be refunded - HELD THAT:- There is no dispute with regard to amended provision of Section 2(e)(a) which provides that the urban agricultural land is not assessable for the purpose of wealth tax and the amendment would applicable with retrospective effect i.e. w.e.f. 01.04.1993 - Government of India, Ministry of Finance, Department of Revenue (CBDT) has issued circular No. 11/2015 dated 11.06.2015, whereby, in case of expiry of time limit for claiming refund by way of filing revised return or rectification application, the assessee can file Revision Application under Section 25 of the Act before the Jurisdictional Commissioner of Wealth-tax.
In view of the amended provision which provides that the urban land shall not be chargeable to wealth tax and subsequent circular issued by the CBDT as referred to above, it is evident that those who have paid the wealth tax for the urban agricultural land, for which otherwise, they are not liable to pay, they can claim refund either by way of filing revised return or rectification application within time prescribed under the Act and if time limit is expired, then as per the Circular, the refund may be claimed by filing Revision Application before the jurisdictional Commissioner of Wealth Tax, who has been authorized to decide the claim of the refund in accordance with law.
It appears from the record that the rectification application filed by the assessee was disposed of on technical ground. Record further shows that the assessee has filed Revision Application dated 14.11.2018 under Section 25(1) of the Act claiming the refund for the year under consideration, which is still pending without any further adjudication.
Revenue has fairly stated that the revision is still pending and it can be disposed of subject to necessary orders passed by the court. When the assessee has filed Revision Application as per the CBDT Circular, then, the authority concerned should decide the same in accordance with law.
Therefore, in view of above, we dispose of this writ application with a direction to the respondent authority to hear and decide the Revision Application filed by the assessee for claiming of the refund for the year under consideration in accordance with law within period of 2 (two) months from the receipt of this order.
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2021 (3) TMI 1185 - ITAT RAJKOT
Reopening of wealth tax assessment - assessee has not filed any wealth tax return as on the basis of cash in hand - HELD THAT:- As notice u/s.17 of the Wealth Tax Act, 1957, was issued by the Assessing Officer after verification of balance-sheet filed by the assessee along with return of income pertaining to income-tax assessment, the Assessing Officer has noticed that assessee has shown cash in hand to the amount of ₹ 85 lakhs in the balance-sheet.
Assessee has neither paid wealth tax nor filed any wealth-tax return. Therefore, the Assessing Officer has reopened the wealth tax assessment after recording due reasons and obtaining necessary approval. Looking to the aforesaid facts and circumstances of the case, we do not find any infirmity in justifying the reopening of wealth-tax assessment and further on the basis of notices issued to the assessee, we consider that sufficient opportunities were provided to the assessee at the time of wealth-tax assessment. In view of the above, Ground Nos.1 to 3 of the assessee’s appeal are rejected.
Treating disclosed cash in hand as part of total wealth-tax of the assessee - At the time of wealth-tax assessment, assessee has claimed that aforesaid cash was actually represented outstanding amount as a receivable and incorrectly shown as cash in hand in the balance-sheet. In this regard, it is noticed that assessee has not shown any debtor or any other receivable to substantiate his claim that actually the cash in hand was receivable.
As gone through the paper-book filed by the assessee and noticed that assessee has failed to produce any material to authenticate his contention that the cash in hand in his account was actually receivable and pertained to the sales. In the light of above facts and circumstances, it is clear that assessee has not rendered any cogent explanation or documentary evidence to support his contention before the authorities below or before us at the time of appellate proceedings. Even the assessee has not given the basic details of list of debtors from whom the aforesaid amount was receivable. Therefore, no merit in the ground of assessee’s appeal.
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2021 (3) TMI 76 - ITAT CHENNAI
Wealth tax assessment - whether the lands owned by the assessee and leased to trusts comes under the definition of ‘asset’, as defined u/s.2(ea) of the WT Act, or the assets held by him under the trusts or legal obligation for any public purpose of a charitable or religious nature in India, which is exempt u/s.5(i) of the WT Act? - Admission of additional evidences - HELD THAT:- In the present case, the lands are leased to trusts and trusts utilized the lands by constructing buildings on which educational institutions are running. Hence, by no stretch of imagination, the said lands can be construed as non-productive assets.
Lands occupied by any building which has been constructed with the approval of appropriate authority is excluded from the definition of ‘urban land’ and on plain reading of the said clause, it is clear that in order to avail the benefit, only condition required to be satisfied is, land is occupied by any building and such building has been constructed with the approval of appropriate authority. In the present case, the impugned lands are occupied by buildings and said construction was approved by appropriate authority
Lands on which any building is constructed with the approval of appropriate authority cannot be considered as urban land, which comes under the definition of asset as defined u/s.2(ea) of WT Act. But, the assessee has taken this argument in light of various additional evidences for the first time before us and further, the AO had no occasion to verify the facts with regard to the arguments of the assessee in light of the definition of section 2(ea) of the WT Act. Hence, we are of the considered view that for the limited purpose of verification of facts with regard to additional evidences filed by the assessee to prove that buildings were constructed on the land with the approval of appropriate authority, the issue has been set aside to the AO and direct him to verify additional evidences filed by the assessee, to ascertain the facts whether building has been constructed with the approval of appropriate authority or not. In case, the AO finds that on the impugned lands any building was constructed with the approval of appropriate authority, then the AO is directed to exclude those lands for the purpose of Wealth Tax.
AO himself has allowed the exemption u/s.5(i) for some of the assessment years wherever the trust deeds are registered, but the ld.CIT(A) has rejected the exemptions only on the ground that the impugned lands are vacant urban lands. But, fact remains that the lands in question as on the date of valuation are not a vacant urban lands but lands on which building was constructed with the approval of competent authority. Therefore, once any land on which building was constructed with the approval of appropriate authority, the same cannot be considered as vacant land. Therefore, even on this count, exemption claimed by the assessee on lands is in accordance with provisions of section 5(i) of the WT Act.
AO as well as the CIT(A) were erred in levying taxes on lands owned by the assessee and given on lease for 99 years, even though, the assessee has proved with necessary evidences that the trusts have constructed buildings on the impugned lands with the approval of appropriate authority.
In this case, evidences filed by the assessee clearly proves that these are not urban vacant lands, but lands on which buildings are constructed with the approval of appropriate authority and hence, in our considered view these lands cannot be brought to tax as urban lands within the meaning of asset, as defined u/s. 2(ea) of the WT Act. Therefore, we are of the considered opinion that the assessee is also entitled for exemption u/s.5(i) of the WT Act, because the lands are held by him under a trust for charitable purpose because said lands were given on lease to a trust and the trust has used the lands for running various educational institutions, which comes under the definition of charitable purpose. Therefore, for all reasons the impugned lands are outside the scope of the Wealth Tax. But, the fact remains that certain additional evidences filed by the assessee including copies of sanction plan, copies of approval letters issued for running educational institutions are not submitted before the AO. Therefore, for limited purpose of verification of additional evidences filed by the assessee, the matter has been set aside to the file of the AO and direct him to verify the additional evidences filed by the assessee and allow appropriate relief to the assessee.
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2021 (2) TMI 624 - ITAT HYDERABAD
Wealth tax assessment - entitlement to exemption u/s. 5(vi) on the value to the extent of land admeasure 500 Sq mts, irrespective of the number of plots - assessee and his wife are the co-owners/co-purchasers of two plots and the former’s share neither exceeds the threshold limit of 500 sq.mts. or more as per the exemption clause u/s 5(vi) of the Act. - HELD THAT:- Assessee and his wife purchased these two plots on 23/02/2011 by way of as many sale deeds; both dated 23/02/2011 through their power of attorney. There is also no material to suggest that both these parties have clubbed their two plots and got the same sanctioned from the town planning or municipality.
The precise question that arises for apt adjudication as to whether the said two plots can be assumed to have been clubbed or not so as to be exigible to wealth tax is to be answered in negative i.e. in assessee’s favour and against the department. We make it clear that section 5(vi) of the Act nowhere provides for application thereof by applying such a deeming fiction of clubbing so as to arrive at the threshold limit of 500 sq. mtrs..
We refer to Commissioner of Customs (Imports) Vs. M/s Dilip Kumar and Company [2018 (7) TMI 1826 - SUPREME COURT] in these facts and circumstances to hold that both the lower authorities have erred in law and on facts in assessing this taxpayer’s share each in the above two plots; by applying clubbing, as liable for wealth tax assessment. We make it clear that the hon’ble constitutional bench has settled the law now that a taxing statute has to be strictly interpreted and benefit of doubt in such an exercise goes to the taxpayer. The assessee succeeds in his sole grievance on this count alone. All other remaining issues on merits are rendered infructuous.
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2021 (2) TMI 47 - ITAT CHENNAI
Net wealth assessment - additions towards two assets within the definition of asset u/s. 2(ea)(1)(v) of the Act, which includes property at Saidapet and property at Haddows Road, Nungambakkam - claim of assessee before lower authorities that property at Saidapet is in the name of partnership firm, where the assessee is having 50% share and hence the same cannot be included in the net wealth of the assessee - HELD THAT:- It is an admitted fact that once an asset is not in the name of the assessee, the same cannot be included in the definition of asset for the purpose of wealth tax. Valuation of interest of a person in a firm of which the assessee is a member shall be determined in the manner provided in Rule 16 and such value shall be added to the value of net asset as on the date of valuation. In this case, the AO has directly taken 50% value of property in the hands of the assesse without considering the prescribed method provided under Rule 16 for value of interest in partnership firm.
Similarly, as regards property at Saidapet, although the assessee claims that the said property was used for her own business, but conceded the fact that property was never used for the purpose of business during the impugned assessment years. The only argument advanced by the learned AR for the assessee is value adopted by the Assessing Officer and according to him, value adopted by the Assessing Officer is on higher side. Schedule III (2) of Wealth Tax Act, 1957 provides for valuation of asset and how such value to be determined. Assessing Officer shall determine value of property in accordance with Schedule III. In this case, the Assessing Officer has adopted value declared by the assessee, without following the procedure provided under Schedule III.
Considering the facts and circumstances of this case, are of the opinion that the appeals need to be set aside to the file of the Assessing Officer to redo the assessments in respect of above two properties and determine the value of interest in partnership firm in accordance with Rule 16 and value of Saidapet property in accordance with Part B of Schedule III to Wealth Tax Act, 1957.
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2021 (2) TMI 46 - ITAT CHENNAI
Reassessment of wealth tax - vacant urban land not included within the definition of asset as defined u/s. 2(ea) of the Wealth tax Act - JDA Entered for construction of building after demolition of existing building - definition of asset for the purpose of Wealth Tax Act - whether the impugned land was a vacant urban land or there existed any building - Whether AO as well as CWT(A) has brought out various reasons to come to the conclusion that the land in question was a vacant urban land and there was no structure in the impugned land as on the date of valuation of asset? - HELD THAT:- On perusal of details filed by the assessee including Joint Development Agreement, we find that Joint Development Agreement dated 4-7-2009 has clearly spelt out the main purpose of agreement and as per which, the sole object of agreement is for construction of building after demolition of existing building.
At the time of signing joint development agreement there was a building on the impugned land. Unless, there is building, then the question of specifying a condition for demolition of existing building does not arise. JDA agreement was entered into on 4-7-2009 and said date falls within the financial year 2008-09 relevant to assessment year 2009-10. From the above, it is undoubtedly clear that there was a building up to the end of financial year 31-03-2008 and thus, for the impugned Asst. years 2007-08 and 2008-09 the land was a vacant urban land and the existing building was demolished is not supported by any evidence.
Sole basis and evidence for the lower authorities to draw an adverse inference against the assessee is copy of letter from the Corporation of Chennai dated 06.08.2007 where permission has been given for demolition of old structure. AO as well as the ld. CWT(A), on the basis of above letter assumed that the assessee must have demolished existing building immediately after receipt of permission and at the time of entering joint development agreement, the land was vacant - said finding is not supported by any evidence, but purely on suspicion and conjectures. Unless, the AO brings on record any evidence to prove that there was a structure, we cannot concur with findings of the AO only on the basis of letter of Corporation of Chennai that the assessee has demolished the building before entering into joint development agreement, more particularly, when JDA dated 4-7-2009 is specifically mentioned about existing structure on the land.
Since, the JDA dated 4-7-2009 is clearly mentioned about existing building and demolition of said building before commencement of construction, we cannot agree with the findings of the ld. AO and ld. CWT(A). We, therefore are of the considered view that the findings recorded by the lower authorities to conclude that said land is urban vacant land and which comes under the definition of asset as defined u/s 2(ea) of the wealth tax Act, 1957 is incorrect.
Alternative argument taken by the assessee that there existed incomplete or semi-finished building on the impugned land on the date of valuation and thus the said land fall outside the definition of asset for the purpose of Wealth Tax Act - In absence of any evidence to prove that the assessee has necessary permission from the authorities to commence construction of building and further any evidence to prove that there existed a semi-finished building on the impugned land as on the date of valuation, the arguments of the assessee that there existed a semi-finished building as on the date of valuation cannot be accepted. This fact is further strengthened by the Gift Deed dated 25.04.2009 executed by the assessee and other co-owners in favour of CMDA where it was clearly indicated the fact that there was no approval from the authorities for construction of building.
Therefore on this count also the arguments of the assessee that there existed a semi-finished or under construction building on the impugned land is incorrect - there is no merit in the alternative arguments of the ld. AR for the assessee that there exists a semi-finished building on the impugned land.
In this case, the whole argument of the assessee stands on the pretext of the land in question was not a vacant land because there was a building or structure in the land as on the date of valuation. Even, the AO has not gone in to the aspect of whether the building is used for own residential purpose or business purpose or the same has been let out during the relevant previous year. Unless these facts are examined, simply on the ground that there was a building in the impugned land, the same cannot be excluded from the ambit of wealth tax. We, therefore are of the considered view that the AO needs to verify above facts before coming to the conclusion that whether particular asset comes under the definition of asset as defined u/s.2(ea) of the Act or not.
Appeals filed by the assessee go back to the file of the AO.Hence, we set aside appeals to the file of AO and direct him to re-examine the issue in light of our findings given hereinabove, in accordance with law.
Appeal filed by the assessee for both assessment years are treated as allowed for statistical purpose.
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2021 (2) TMI 2 - ITAT CHENNAI
Concealment of wealth - assessee has not filed wealth tax return u/s.14 - penalty proceedings u/s.18(1)(c) of the Act was initiated - when notice was issued u/s.17(1) of the Act, return of wealth declaring taxable wealth has been filed along with payment of consequent taxes - HELD THAT:- Presumption of automatic levy of penalty is completely unsustainable in law, while such presumption of the department negated the discretion vested with the original authority for levying or not levying of such penalty depending upon the facts and circumstances of the case. Further, the deemed concealment of wealth or furnishing of inaccurate particulars of wealth as per Explanation 3 should be subject to the discretion vested with the authority in the matter of levying or not levying of penalty.
Levy of penalty u/s.18(1)(c) of the Act, after completion of reassessment in accepting return of wealth would deserves exercise of discretion vested with the authority for not levying penalty - levy of penalty u/s.18(1)(c) of the Act without exercising discretion is not sustainable in law, more particularly, when the assessee has explained the reasons for not filling return of wealth for the concerned assessment year within the time limit as per section 14 of the Act and such reasons are bonafide.
In this case, although the assessee has not filed return of wealth under the provisions of section 14 of the Act, but subsequently on issue of notice u/s.17 for reopening of assessment, return of wealth disclosing correct taxable wealth has been filed along with payment of taxes. AO has accepted the return of wealth filed by the assessee without any modification.
Even though the deeming provision of Explanation 3 to section 18(1)(c) would come into operation in the event the assessee has not complied with the provisions of section 14 or section 17(1) of the Act, but because the assessee has disclosed taxable net wealth in the return filed in response to notice u/s.17(1) of the Act and paid taxes thereon, the authority would have accepted the explanation furnished by the assessee that he has not filed return of wealth for concerned assessment year within the time limit specified u/s.14 of the Act, on the bonafide presumption that there is no taxable wealth for the relevant assessment years on the disputed land, jewellery and cash on hand. We, further, are of the opinion that Assessing Officer would also have considered the fact that surrender of taxable wealth in the reassessment proceedings would not automatically lead to levy of penalty under consideration and the bonafide understanding of the assessee on the non-taxability cannot be ruled out or negated mechanically by imposing penalty in relation thereto.
The component of wealth based on the admission of return of wealth after the issuance of notice for reopening could not fall within mischief of explanation 3 of section 18(1)(c) of the Act. We are therefore of the considered opinion that the Assessing Officer and CWT (A) were erred in levying penalty u/s.18(1)(c) - Decided in favour of assessee.
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2021 (1) TMI 1055 - SC ORDER
Exemption from wealth tax - whether 28 Acres of ‘urban land’ comes under the ambit of the exemption clause of Section 2(ea) of the Wealth Tax Act, 1957? - person to be the ‘owner’ - protective assessment - HELD THAT:- Leave granted.
Pending further consideration, the effect and operation of the following observation made by the High Court in Para 78 of the judgment under challenge shall remain stayed:
“The Assessing Authority would be free to now proceed to make substantive assessments in the hands of the Respondent-Assessees."
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