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2016 (6) TMI 471 - ITAT AHMEDABAD

2016 (6) TMI 471 - ITAT AHMEDABAD - TMI - Escapement of wealth chargeable to tax - cash found in excess of ₹ 50,000/-, being the limit prescribed under Wealth Tax Act, 1957 - Held that:- Revenue’s submission that since the cash balances are in excess of the limit prescribed under Wealth Tax Act, 1957, the cash balance in excess of ₹ 50,000/- are to be treated as wealth of the assessee. On the other hand, apart from other submissions, it is assessee’s submission that the cash which is .....

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h as at the close of year that belongs to the assessee. We therefore remit the issue to the file of AO to decide the taxability of cash as wealth as noted herein. The assessee is also directed to co-operate by promptly furnishing all the details called for by the authorities. - Decided in favour of revenue for statistical purposes. - WTA Nos. 3 to 6/Ahd/2014, CO Nos. 229 to 232/Ahd/2014 - Dated:- 31-5-2016 - Shri Anil Chaturvedi, Accountant Member And Shri S. S. Godara, Judicial Member For the R .....

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Shah of Nadiad on 03/04/2008. During the course of search, documents including laptop were seized. In the laptop, there existed books of accounts of 65 companies for different periods. During the course of search as well as post search enquiries, key person of the group Shri Rameshbhai Babulal Shah had stated that the accounts were being maintained for various business transactions which may either totally out of books or partly out of books. Shri Rameshbhai Babulal Shah also owned various enti .....

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Commission the availability of cash and the cash balances in the each of the years were in excess of ₹ 50,000/-, the cash balance in excess of ₹ 50,000/-was an asset in view of provisions of section 2(ea)(vi) of Wealth Tax Act, 1957 and, therefore, the AO had reason to believe that wealth chargeable to tax has escaped assessment for AYs 2004-05 to 2007-08. He accordingly issued notice u/s.17 on 22/03/2011 requiring the assessee to file the return of Wealth. Assessee vide letter dated .....

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addition of ₹ 3,43,07,850/- in AY 2006-07 and addition of ₹ 1,86,28,867/- in AY 2007-08 were made by AO. Aggrieved by the order of the AO, assessee carried the matter before ld.CWT(A), who by a consolidated order for all the four assessment years, decided the issue in favour of assessee by holding as under:- 5.2 I have considered the submissions furnished by the appellant and have gone through the assessment orders. 5.3 The contention of the appellant appears to be reasonable. There .....

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ement commission in the settlement order. Section 2(ea)(vi) stipulates that the cash exceeding ₹ 50,000/-, not used for business has to be considered for the purpose of computing wealth tax. In the case of A. A. Salam v/s ACWT, Cir.1. Kollam [20071 13 SOT 446 (Cochin), it was held that government was keen on stimulating the investment in 'productive assets'. The 'productive assets' has been defined as shares, securities, mutual funds and 'non-productive assets' has .....

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above, it is held that these cash balances, being the commercial assets are not "assets" within the meaning of section 2(ea) of the W.T. Act. Therefore, the AO was not justified in treating these cash balances as 'assets' chargeable to W.T. Act. Therefore, the additions made by the AO in all the four year are hereby deleted. This ground of appeal for all the years is allowed. 2.3. Aggrieved by the order of the CWT(A), Revenue is now in appeal before us and has raised following .....

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et within the meaning as defined under the provisions of section 2(ea) of WT Act? 2. On the facts of the case and on the circumstances and in law the CWT(A)-IV Ahmedabad has erred in holding that productive asset do not attract Wealth Tax though there is no provision in the definition clause or in any other section of the Wealth Tax Act authorizing the WTO to exclude cash in hand if it is found to be productive asset as supported by the decision of High Court of Kerala in the case of Commissione .....

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t Commission as valid and in accordance with law. The proceedings initiated u/s 17 in case of appellant are bad in law and deserves to be deleted. 2. In law and in fact and circumstances of the case, the Ld. Assessing Officer has erred in reopening Assessment Proceedings on the basis of material and other information produced before Hon'ble Settlement Commission more particularly when the application made by the appellant was not abated or declared invalid by the Hon'ble Settlement Commi .....

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- 34 of Settlement Application filed by appellant and considered for the purpose determining wealth tax liability is beyond the scope of section 2(ea) of Wealth Tax as such balance represents balance arrived at on the basis of movement of funds of capital and loan accounts amount various partnership firm, individuals and other entities and not represent actual cash balance and this fact is also observed by Hon'ble Settlement commission in its order. 4. The appellant craves leave to add, alte .....

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ee. He further submitted that the ld.CWT(A) had relied on the decision in the case of A.A.Salam vs. ACWT reported in (2007) 13 SOT 446 (Cochin). He submitted that the aforesaid decision of the Tribunal has been overruled by Hon ble Kerala High Court. He, therefore, submitted that considering the aforesaid facts, the order of the AO needs to be upheld. 4.1. Ld.AR on the other hand reiterated the submissions made before the AO and CWT(A) and further submitted that at the time of search no actual c .....

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ion was therefore called for. As an alternate submission, ld.AR submitted that the cash only in excess of ₹ 50,000/- which belonged to the assessee could be taxed in assessee s hands and since the cash balance is the combined cash balance of more than 65 entities, the entire addition of the cash balance of all the 65 entities could not be made in the hands of the assessee. He further submitted that since in the orders of authorities below, there is no finding of individual cash balance of .....

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t of the 65 groups entities, 31 entities were partnership-firms of the group while remaining 34 entities have been owned by the assessee. It is also a fact that the laptop contained transactions pertaining to period prior to 01/04/2002 of these 65 entities. It is also a fact that the assessee had offered ₹ 6.50 crores as income of the entire group in the statement recorded u/s.132(4) of the Act. It is also a fact that subsequently. assessee filed settlement petition before Settlement Commi .....

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