TMI Blog2012 (8) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... s dismissed. - WTA No. 75 (Mum.) of 2011 - - - Dated:- 11-5-2012 - Vijay Pal Rao, N. K. Billaya, JJ. Anil Sathe for the Appellant. Chandrajit Singh for the Respondent. ORDER Vijay Pal Rao, Judicial Member This appeal by the assessee is directed against the order dated 27.7.2011 of the CWT(A) for the AY 2006-07. 2. The assessee has raised the following grounds in this appeal: I. First Ground of Appeal: 1. The Commissioner of Wealth Tax (A) has erred in confirming validity of the issuance of notice u/s 17 of the Wealth Tax Act. 2. He failed to appreciate that the notice u/s 17 and assessment order passed u/s 16(3) was illegal and without jurisdiction. 3. The appellant prays that the assessment order passed u/s 16(3) read with section 17 be treated as illegal and without jurisdiction and be quashed. II Second Ground of Appeal: 1. The Commissioner of Wealth Tax (A) has erred in confirming an addition of Rs.5,00,91,438 to the net wealth of the assessee. 2. He further erred in stating that whether the premises is in the nature of commercial establishment or complex has not been proved by the appellant. 3. He failed to appreciate that: ( a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the net wealth of the assessee is assessable to tax has escaped assessment. Therefore, it was contended that the reassessment is only on suspicion and therefore, the same is not valid. 4.1 On the other hand, the ld. DR has submitted that the assessee did not file any return of net wealth and only from the income tax proceedings, the Assessing Officer came to know that the assessee has let out the premises in question on lease and received rental income, which was assessed as income from house property. Therefore, there is good and sufficient reason to believe that the net wealth assessable to tax has escaped assessment. He has relied upon the orders of the authorities below. 5. We have considered the rival contention as well as the relevant material on record. Undisputedly there is no original assessment prior to issuing the notice u/s 17 of the W T Act because the assessee did not file any return of net wealth. The income tax assessment was completed vide order dated 31.10.2008 u/s 143(3) whereby the rental income received by the assessee has been assessed as income from house property. After completion of the income tax assessment, the Assessing Officer issued not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter to be considered at this stage of the proceedings. The point is that on the basis of the additional material which was a visible on record, the Assessing Officer issued a notice for reopening the assessment for the assessment year 2004-05. In our considered view, the Assessing officer did have tangible material to reopen the assessment under section 147 of the Act and to form a reason to believe that income had escaped assessment Clause (c)(iv) of Explanation 2 to section 147 creates a deeming fiction where though the assessment has been made, income chargeable to tax is under assessed. In such a case, law deems that income chargeable to tax has escaped assessment. For these reasons, we are of the view that recourse to the provisions of section 147 cannot be faulted." 5.3 The Hon'ble High Court has given the finding after discussing various decisions of the Hon'ble Supreme Court and earlier decisions of the Hon'ble High Court, it has been observed that the Assessing Officer while seeking the reopening the assessment u/s 147 is not precluded from relying on an order of assessment in the subsequent year where additional material has emerged before the Assessing Officer le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his premises on leave and license to be used for the purpose of business of the licensee; therefore, it falls under the category of commercial establishment or complex as provided u/s 2(ea) (i)(5). In support of his contention, the ld. AR has relied upon the decision of the Pune Bench of the Tribunal in the case of Satvinder Singh v. Dy. CWT , [2007] 109 ITD 241/[2009] 27 SOT 13 (URO) and submitted that when the premises was leased out and allowed to be used for business purpose of the licensee, then the same is in the nature of commercial building and falls under the category of commercial establishment as provided u/s 2(3) (1) (5) of the W T Act. He has referred para 32 of the order of the Pune Bench. 8.1 On the other hand, the ld. DR has submitted that the premises in question falls under the main provisions of sec. 2(ea)(i) and not under any exception provided there under. Since the premise was not used for the purpose of the business of the assessee and was let out being an office; therefore, the same cannot be treated as the business establishment or complex as provided under exception (5). He has relied upon the order of the authorities below. 9. We have conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Satvinder Singh ( supra ), as relied upon by the ld. AR of the assessee, the Pune Bench of the Tribunal has observed in para 32 as under: "32. With regard to the office premises of 24, East Street Yogesh House, we have gone through the purchase deed, lease agreement cantonment tax receipt. This property was purchased by these assessees in the month of September, 1994 from M/s. Elegant Marbles (P.) Ltd. In this agreement it is stipulated that the parties have agreed to sell and purchase these office premises specified therein. The assessee-purchaser was in need of acquiring an office which has been accordingly purchased by this purchase agreement. The floor plan is also attached to the agreement which indicates that the premises are in the nature of office premises. The assessee has let out these premises on rent on leave and licence basis to M/s. D.S.S. Mobile Communications Ltd., who is allowed to use the said premises for their business of radio paging services and related activities. The licensee is thus using the said premises for carrying on their business of radio paging services and related activities. This property is subjected to property tax by the Pune Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is 625 sq.ft. along with the terrace. At the upper portion of page 6 of the agreement it is mentioned that the assessee-purchaser has agreed to purchase and acquire from the promoters an office No. 2 on 2nd Floor measuring 625 sq.ft. along with the terrace built up in the said building for the price of Rs. 2,25,000. However, in para No. 3 at page 6, it is mentioned that the assessee agrees to discharge the consideration of Rs. 2,04,070 for the acquisition of the said flat It is thus not clear as to whether this is a part of commercial complex or establishment On perusal of the plan annexed thereto, it appears that living room, kitchen, WC etc. are mentioned therein. This property has been given on rent on leave and licence basis to National Eggs Research Institute of Indian Council of Medical Research, New Delhi for office purpose. The National Eggs Research Institute of Indian Council of Medical Research, New Delhi has taken the premises for the purpose of their dispensary- cum -laboratory and not for the purpose of carrying on any business or trade. The property is not being used for the purpose of any business or trade. No evidence as to the nature of the property supported by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Ltd. [2002] 258 ITR 667/123 Taxman 1002 has held that when the revenue has accepted the property in question as for the purpose of the business of the assessee, then the same falls under the exception as stipulated u/s 2(ea)(i)(3) of the W T Act. 12.2 The relevant portion of the decision of the Hon'ble High Court in the case of Bombay Conductors Electrical Ltd. ( supra ) reads as under: "Since the property in question was held to be used for business in the income-tax proceedings by the Income-tax Officer himself, the same property could not have been treated differently in the wealth-tax proceedings. If the property is being used for business purposes and it is accepted to be so in the income-tax proceedings, similar treatment is to be given in the wealth-tax proceedings and as such in the wealth-tax proceedings, the value thereof cannot be included in the net wealth of the assessee as it is specifically exempt under section 40(3) (vi) of the Finance Act, 1983. In view of the above, we are of the opinion that the Tribunal has rightly excluded the value of the property from the net wealth of the assessee. We, therefore, answer the above question in the affirmative, i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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