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TMI Blog2016 (5) TMI 1430X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the W.T. Act and that is erroneous and prejudicial to the interest of the Revenue. 3. The learned CWT ought to have appreciated that no penalty u/s.18(1)(c) of the Act is leviable in the facts of the present case. 4. Briefly, in the facts of the case, the assessee had furnished return of wealth declaring net wealth of Rs. 16,64,000/- on 30.07.2008. Notice under section 17 of the Act was issued to the assessee, in response to which, the assessee filed the revised return of wealth declaring total wealth of Rs. 1,67,95,900/-. The Wealth Tax Officer vide order passed under section 16(3) r.w.s. 17 of the Act accepted the net wealth of assessee as per revised return of wealth. Penalty proceedings under section 18(1)(c) of the Act were initiated against the assessee. Thereafter, the said penalty proceedings were dropped vide order passed under section 18(1)(c) of the Act dated 26.06.2012. 5. The Commissioner on perusal of record noted that the Wealth Tax Officer had dropped penalty proceedings on the basis of letter filed by the assessee on 06.06.2012. The Commissioner observed that there was nonapplication of mind by the Wealth Tax Officer on the subject matter as there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercepted at the airport and where the assessee had declared the said cash as part of her wealth and revised her return of wealth filed on 30.07.2009, pursuant to notice under section 17 of the Act, provisions of Explanation (5) to section 18(1)(c) of the Act were attracted and he further pointed out that the assessee in the statement recorded during the course of search, copy of which is attached in the Paper Book fully declared the manner in which the said net wealth was earned and hence, no penalty under section 18(1)(c) of the Act was leviable. It was further pointed out by him that though Explanation 5A has been inserted under section 271(1)(c) of the Income Tax Act but no such Explanation has been inserted under section 18(1)(c) of the Act. He further stressed that where the assessee had declared the additional wealth in the revised return of wealth, which in turn, has been accepted in toto by the Wealth Tax Officer and where penalty though was initiated but was dropped, there was no merit in the revision order passed by the Commissioner. 8. The learned Departmental Representative for the Revenue pointed out that there was total non-application of mind by the Wealth Tax Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8(1)(c) of the Act. The first para of the said letter referred to the wealth tax return filed by the assessee on 26.11.2010 declaring total wealth of Rs. 1.67 crores, against which the tax payable was Rs. 1,52,959/-. A request was made to the Wealth Tax Officer to adjust the same against the cash seized by the Income Tax Department during the course of search proceedings. The assessee further acknowledged that the same was accepted by the Wealth Tax Officer in the wealth tax order passed on 27.12.2012. Vide para 3 of the said letter, it was stated as under:- "3. In view of this, we once again request you to adjust the said demand against the cash seized and kindly drop the penalty proceedings-initiated u/s 18(1)(c) of the Wealth Tax Act, 1957." 12. The Wealth Tax Officer on receipt of said letter has dropped penalty proceedings. In the order dropping penalty under section 18 of the Act, though there is reference to search action under section 132 of the Act conducted in the case of assessee on 09.12.2009, the next reference is to the assignment of said case to the Wealth Tax Officer and then, thereafter, t here is dropping of penalty proceedings under section 18(1)(c) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer. In the absence of the same, we find no merit in the plea of the assessee in this regard. Since the same needs to be addressed by the Assessing Officer, accordingly, we uphold the order of Commissioner in setting aside the order of Wealth Tax Officer. Hence, the grounds of appeal raised by the assessee are dismissed. 13. Now, coming to the appeal In WTA No.02/PN/2014, where also the Commissioner had exercised his power of revision under section 25(1) of the Act against wealth tax assessment order passed by the Assessing Officer under section 16(3) of the Act. The assessee for assessment year 2010-11 had furnished the return of wealth declaring net wealth at Rs. 27,45,600/- on 26.11.2010. As referred in the other appeal, during the course of search and seizure action under section 132 of the Act, which took place on 09.12.2009, cash of Rs. 1.67 crores was seized. The Commissioner noted that Wealth Tax Officer in the assessment order had accepted the net wealth return filed by the assessee at Rs. 27,45,600/- and finalized wealth tax assessment under section 16(3) of the Act on 27.12.2011. The Commissioner further noted that while completing assessment, the cash seized by the De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Department for deposit of money in PD Account of Commissioner on 10.12.2009. He further stated that undoubtedly, the amount belonged to the assessee, but once the same was deposited in PD Account, the same changed colour and could not be added as net wealth of assessee on account of it being cash in hand. Reliance was placed on the ratio laid down by the Hon'ble Supreme Court in K.C.C. Software Ltd. and Ors Vs. Director of Income Tax (Inv.) and Ors. in Appeal (Civil) No.769 of 2008, judgment dated 29.01.2008. 16. The learned Departmental Representative for the Revenue on the other hand, placed reliance on the ratio laid down by Pune Bench of Tribunal in Gangadhar D. Kshirsagar Vs. DCWT in WTA No.20/PN/2010, relating to assessment year 2006-07, order dated 19.07.2012. 17. We have heard the rival contentions and perused the record. The Commissioner is empowered to exercise his jurisdiction of revision under section 25(1) of the Act, where he finds that the assessment order passed in the case is both erroneous and prejudicial to the interest of Revenue. The requirement of the Act is that both the conditions of order being erroneous and prejudicial to the interest of Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income Tax Department in PD Account of the Commissioner. The PD Account of the Commissioner is maintained with the bank and the cash in hand held by the assessee changes its form and becomes deposit in a bank account. Under the amended definition of assets, as per section 2(ea) of Wealth Tax Act , such deposits in the bank account are not assessable to wealth tax; however, cash in hand, exceeding Rs. 50,000/- is to be included as an asset in the hands of assessee as on valuation date. The assessee stated that during the course of search and seizure, voluntary disclosure of cash was Rs. 1.70 crores, out of which Rs. 1.60 crores was seized and the balance cash in hand of Rs. 10 lakhs was available with the assessee, which was included as part of her net wealth as on 31.03.2010. The cash seized having been deposited in PD Account of Commissioner is not in the form of cash as on valuation date i.e. 31.03.2010. 20. The Hon'ble Supreme Court in K.C.C. Software Ltd. and Ors Vs. Director of Income Tax (Inv.) and Ors. (supra) while deciding the issue of cash seized and deposited in the Personal Deposit Account of the Commissioner held that same does not become part of Consolidated Fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are deposited in a Bank, the relationship that is constituted between the banker and the customer is one of the debtor and creditor and not trustee and beneficiary. The banker is entitled to use the monies without being called upon to account for such user, his only liability being to return the amount in accordance with the terms agreed between him and the customer. And it makes no difference in the jural relationship whether the deposits were made by the customer himself, or by some other persons, provided the customer accepted them. There might be special arrangement under which a Banker might be constituted a trustee, but apart from such an arrangement, his position qua Banker is that of a debtor, and not trustee. The law was stated in those terms in the old and well- known decision of the House of Lords in Foley v. Hill (1848 11 H.L.C. 289 E.R. 1002) and that has never been questioned. 18. In the judgment of House of Lords in Foley v. Hill [(1843 to 1860) All E.R. Re-print 16] referred in the aforesaid judgment of the Constitution Bench, it was inter alia held as under: Money, when paid into a bank, ceases altogether to be the money of the owner, it is then the money of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances of the case, where the amount of cash seized from the assessee is now deposited in PD Account of Commissioner, the same is not includable in the net wealth of assessee as on 31.03.2010. Consequently, the assessment order passed by the Wealth Tax Officer in not including the same in the hands of assessee is not erroneous. In this regard, we find no merit in the exercise of power by the Commissioner for revision of assessment order passed under section 16(3) of the Act. The learned Departmental Representative for the Revenue had placed reliance on the ratio laid down by Pune Bench of Tribunal in Gangadhar D. Kshirsagar Vs. DCWT (supra), which does not hold in view of the ratio laid down by the Hon'ble Supreme Court in K.C.C. Software Ltd. and Ors Vs. Director of Income Tax (Inv.) and Ors. (supra) and applying the same, we cancel the revision order passed by the Commissioner under section 25(1) of the Act. The grounds of appeal raised by the assessee are thus, allowed. 22. In the result, the appeal of assessee relating to assessment year 200910 is dismissed and the other appeal relating to assessment year 2010-11 is allowed. Order pronounced on this the 20th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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