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Hitachi Home & Life Solution (I) Ltd. Versus Asst. Com. of Wealth Tax, Circle- 4, Ahmedabad

2016 (4) TMI 293 - ITAT AHMEDABAD

Penalty proceedings u/s 17 of the Wealth-tax Act, 1957 - Held that:- From going through the submissions of the ld. AR as well as the observations made by ld. CWT(A) we find that assessee company passed through scrutiny assessment u/s 143(3) of the I.T. Act, 1961 and during the course of assessment proceedings ld. Assessing Officer observed that assessee company owns motor cars (vehicles having WDV at ₹ 1.51 cr.) and also assessee company owns Guest House. There was no record available show .....

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f debt against the value of movable and immovable properties - Held that:- Looking to the disparity of facts appearing in the submissions of assessee and the orders of lower authorities and also observations of ld. Assessing Officer and ld. CWT(A) that assessee has not been able to prove proper nexus of the vehicle loan taken as well as ECB in regard to the movable and immovable wealth shown in the computation of wealth, it will be proper that the matter arising in this ground of appeal to be re .....

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2 /Ahd/2014 - Dated:- 18-3-2016 - Shri Rajpal Yadav, JM And Manish Borad, AM For the Appellant : Shri P.M. Mehta, AR For the Respondent : Shri. Narendra Singh, Sr. DR ORDER Per Manish Borad, Accountant Member This appeal of the assessee is directed against the order of ld. CWT(A)-VIII, Ahmedabad dated 24.12.2013. Order u/s 16(3) r.w.s. 17 of the W.T. Act, 1957 (in short the Act) was framed for Asst. Year 2006-07 on 30/11/2011 by ACWT, Circle-4, Ahmedabad. Assessee has raised following grounds :- .....

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for the reason that it has been passed without observing elementary principles of natural justice;" The learned CWT(A) ought to have appreciated the peculiar facts and circumstances of the appellant's case as elaborately explained in the very Statement of Facts accompanying the appellant's appeal before him and decided the aforesaid Ground in favour of the appellant. 2) Without prejudice to the foregoing, in law and in the facts and circumstances of the appellant's case, the le .....

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stances of the appellant's case, the learned CWT(A) has grossly erred in dismissing Ground No. 3 of the appellant's appeal before him on the ground that mere initiation of penalty proceedings u/s. 18(1)(c) of the Wealth-tax Act, 1957 was not appealable. He ought to have appreciated, inter alia, that in the peculiar facts and circumstances of the appellant's case, there being absolutely no warrant/justification for initiating the penalty proceedings, he ought to have ordered for their .....

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17 of the Act and secondly against the action of ld. CWT(A) for not allowing assessee s claim for deduction of liabilities to the extent they had been incurred specifically for acquisition of taxable assets. 3. Briefly stated facts are that the assessee is a limited company engaged in the business of manufacturing and trading of home appliances. During the course of assessment proceedings u/s 16(3) r.w.s. 17 of the Act, from going through the balance sheet of the company for the year ending 31.3 .....

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ing Officer has mentioned that assessee has filed return of wealth on 19.4.2011 disclosing net wealth at ₹ 14,49,400/-. Further during the course of assessment proceedings ld. Assessing Officer observed that assessee has disclosed the motor cars at ₹ 1,12,46,559/- under the head movable property and against this item of asset assessee has claimed vehicle loan at ₹ 60,13,100/- and External Commercial Borrowings (ECB) of ₹ 44,98,624/- in all aggregating to ₹ 1,05,11,6 .....

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ficer, and accordingly claim was not allowed and wealth tax of assessee was assessed at ₹ 1,23,75,163/- after allowing liability of wealth at ₹ 62,186/- from total value of wealth from movable and immovable property as discussed above at ₹ 11,90,790/- and movable property at ₹ 1,12,46,559/-. Aggrieved, assessee went in appeal and ld. CWT(A) dismissed the first ground of assessee challenging the jurisdiction of assumed by the Assessing Officer for initiation of proceedings .....

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h is reproduced hereunder :- 2.1 Appellant's submission:- "2.1 The appellant's assessment under the Income-tax Act, J96J for the present assessment year 2006-07 was made vide assessment order passed u/s. 143(3) on 26.2.20 Pertinently, during the course of the income-tax assessment proceedings, the learned Assessing Officer had, vide his Notice dated 7.5.2008, raised a specific issue as to whether the appellant was liable to be assessed under the Wealth-tax Act. In this connection, t .....

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Act? If yes, submit detail of wealth fax return filed by the company. If no, give detailed submission in this regard." The said notice is attached herewith vide Annexure-1 for your ready reference. In response to the said notice so issued, the assessee company had submitted vide submission dated 14th June, 2008 as under: "As (regards the point no. 1((iv) for assessment under Wealth Tax Act it is submitted that the assessee company has no wealth liable to wealth tax except motor cars. H .....

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ourse of. l. T. assessment proceedings that it was not liable to wealth tax as on the last day of the previous year relevant to the assessment year under consideration i.e.A.Y.2006-07. It was stated that the assessee company had no net wealth liable to wealth tax except motor car. However, the cars were purchased out of borrowed funds [loans] and the difference between the cost of the cars and the loan amount was paid through cash credit account. It was added that the net wealth as on the last d .....

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elevant and necessary information for initiation of .the wealth fax assessment proceedings were on records. Hence, when no material or fact is brought in notice of the assessing authority, it follows that the assessing authority does not have a reason to believe that the wealth has escaped assessment. On this basis, it is submitted that the wealth tax assessment proceedings cannot be initiated and should be dropped." 2.2 A copy of the appellant's above written submissions raising object .....

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Income-tax Act 1961 had been, made vide assessment order passed on 26.2.20IO, the reasons for initiating the proceedings were recorded only on 30.3.20! I and the Notice u/s. 17 of the Wealth-tax Act was served on 31.3.2011 which was the last day for initiating those proceedings In terms of the relevant provisions for limitation under that Act. This apart; it had also been explained that payments for all the motor cars owned by the appellant had been made with borrowed funds as under: [a] By mea .....

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Officer (attached at Annexure-'B'J, the appellant's objections to initiation of the proceedings under S. 17 were summarily dismissed. 4. In response to the Notice u/s. 17 and before the appellant had been provided with a copy of the reasons recorded for initiating the proceedings u/s. 17, the appellant had filed Its Return of Net Wealth on 19.4.2011 showing net wealth of R$. 14,49,400. A copy of the Statement of Computation of Net Wealth is attached at Annexure - 'C' hereof .....

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s from the following chronology of events :- (a) That the appellant's return was filed on 19.4.2011; (b) That the order rejecting the appellant's objections for initiation of proceedings u/s. 17 were dismissed vide communication dated 15.11.2011. (c) That the impugned assessment order was passed on 30.11.2011and served on the appellant on 20.12.2011 7. On the other hand ld. DR supported the orders of lower authorities. 8. We have heard the rival contentions and perused the material on re .....

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on 17 of the Wealth Tax Act was issued. Therefore, there is no question of change of (opinion as alleged by the appellant. The AO has properly issued the notices by recording the reasons, the objections raised by the appellant have also been duly disposed of and communicated to the appellant. Therefore, from procedural point of view the proceedings have been properly initiated and completed. The claim of the appellant that it is a change of opinion is therefore, not accepted and the ground of ap .....

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and in view of these reasons and notice u/s 17 of the W.T. Act was issued and he further found that ld. CWT(A) has accordingly issued proper notice and duly disposing the objection raised by the assessee and had communicated to the assessee. Therefore, we are of the view that ld. CWT(A) has rightly dismissed the ground of assessee in accordance with law. We uphold the same. This ground of assessee is dismissed. 9. Ground no.2 is against the action of ld. CWT(A) confirming the action of the Asse .....

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the ld. Assessing Officer failed to give said deduction. 11. Ld. AR further submitted with reference to the claim of debt against value of motor car that out of total claim of ₹ 1,12,46,559/- an amount of ₹ 60,13,000/- was on account of vehicle loan and ₹ 52,33,559/- was on account of 66.16% of ECB. Ld. AR also submitted that annual report of the company was submitted before the WTO and the claim should have been allowed. 12. On the other hand, ld. DR supported the orders of l .....

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r purchasing the motor cars as no evidence was furnished by the appellant. The appellant has submitted that amount of borrowed funds should be proportionately distributed amongst the total assets owned by the company and shown in the balance sheet. If the same is done the cost of assets taxable for wealth fax would be proportionately reduced and the wealth which is taxable would become Nil. The claim of the appellant that the cost of the assets should be reduced by proportion6fely distributing t .....

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rnatively claimed that since the borrowings are direct with reference to the assets it should be allowed as deduction for computing the wealth tax. it has shown that for the block of vehicles totaling to Rs, 11246559/- the appellant has taken a loan of ₹ 6014166/-. It has also given copies of the loan statement of various banks in support! of its claim. The claim of the appellant is in order and once it has given the evidences in support of the claim a deduction from the cost of assets sho .....

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ind that necessary details showing specific nexus between the assets purchased and borrowings thereon were neither produced before the ld. Assessing Officer nor before the ld. CWT(A) and, therefore, ld. CWT(A) has set aside the issue to the file of Assessing Officer to verify the claim of assessee. 15. We further notice that as per the computation of wealth submitted by assessee in the paper book net wealth is shown at Rs.Nil at the time of filing of return whereas in the wealth tax assessment o .....

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