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2016 (5) TMI 1430

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..... , 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. Commissioner power of revision under section 25(1) against wealth tax assessment order passed by the Assessing Officer under section 16(3) of the Act - Held that:- where the money is deposited in the PD Account of Commissioner, which in turn, is held on behalf of the assessee has changed the form from being cash in hand available with the assessee, which was seized by the Department and is now available in the form of bank deposit. Once the form of cash has changed into a bank deposit, the same is not includable in the hands of assessee as cash in hand as on valuation date. In the totality of the above said 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 fo .....

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..... oner was of the view that penalty order passed on 26.06.2012 by the Wealth Tax Officer was both erroneous and prejudicial to the interest of Revenue. In view thereof, notice under section 25 of the Act was issued to the assessee to explain as to why the order passed under section 18(1)(c) of the Act should not be set aside / modified within meaning of section 25 of the Act. In reply, the assessee furnished explanation and it was pointed out that the fact there was search and revised return of wealth had been filed after search was very well known to the Wealth Tax Officer, while he was considering the issue of justification of penalty under section 18(1)(c) of the Act. Reference was made to the order dropping penalty by the Wealth Tax Officer, wherein it has been mentioned that search and seizure action was conducted under section 132 of the Act in the case of assessee on 09.12.2009. The assessee further pleaded that where the Wealth Tax Officer had taken into consideration the fact that search was conducted in the case and though return was filed after search operation, such an order could not be regarded as erroneous. The Commissioner after considering the submissions of assessee .....

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..... even consider whether the provisions of Explanation 5 to section 18(1)(c) of the Act are attracted or to be applied in the present case. Our attention was drawn to the order passed by the Wealth Tax Officer and the note thereunder, which was part of assessment folder. He further pointed out that the issue was whether the Commissioner was correct in invoking its jurisdiction, where the search was not under section 25 of the Act. 9. The learned Authorized Representative for the assessee in rejoinder pointed out that Panchanama authorized the search party under both the Acts i.e. under Income Tax Act and Wealth Tax Act. He further pointed out that before the Commissioner, the assessee has furnished reply as to nonapplication of Explanation 5 to section 18(1)(c) of the Act and consequently, no penalty to be levied against the assessee. 10. We have heard the rival contentions and perused the record. The Commissioner is empowered to exercise his power of revision under section 25(1) of the Act, where the assessment order passed by the Wealth Tax Officer is both erroneous and prejudicial to the interest of Revenue. Both the limbs of said section have to be fulfilled before any acti .....

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..... the office note which is available in the assessment folder produced by the learned Departmental Representative for the Revenue, the note only talks about reply given by the assessee dated 06.06.2012. The perusal of reply filed by the assessee dated 06.06.2012 and the order dropping the penalty proceedings under section 18(1)(c) of the Act reflects that though there is mention of search and seizure operation but the same in the letter filed by the assessee is with regard to adjustment of cash against the amount due pursuant to the wealth tax return filed by the assessee. In the order passed by the Wealth Tax Officer, there is also reference to search and seizure action, but then the same is referred vis- -vis assignment of case of the assessee to the Wealth Tax Officer. Both in the explanation filed by the assessee and order dropping the penalty under section 18(1)(c) of the Act, since it is a case of search and seizure, the relevant provisions are not even referred to and also the assessee has failed to plead his case as to why penalty proceedings initiated against him should not be levied. It is a case where the assessee had furnished return of wealth initially and after search, .....

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..... the Department at ₹ 1.60 crores was lying in PD Account as on 31.03.2010 was not considered for wealth tax purpose. The Commissioner thus held that inadvertent error in the wealth tax order had resulted in under assessment of wealth and consequently, the order passed by the Wealth Tax Officer was erroneous and prejudicial to the interest of Revenue. In view thereof, show cause notice was issued to the assessee and in reply to which the assessee pointed out that the cash was seized during the course of search operation on 09.12.2009 at Pune airport and since the said cash was not held by the assessee on the valuation date, therefore, the same was not liable to wealth tax. The assessee explained that as against the disclosure of ₹ 1.70 crores, cash of ₹ 10 lakhs was available with the assessee as on 31.03.2010 which has been declared in the wealth tax return. He also referred to note in the computation of wealth itself, wherein it is clearly mentioned that any tax liability may be adjusted against the seized cash of ₹ 1.60 crores. The Commissioner was of the view that though the cash was lying in PD Account with the Department as on 31.03.2010, the legal owne .....

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..... d prejudicial to the interest of Revenue are to be satisfied, before the Commissioner can exercise his power of revision. 18. In the facts of the present case before us, search and seizure action was taken against the assessee, during which cash of ₹ 1.69 crores was found from the possession of assessee on 09.12.2009 i.e. during the course of accounting period relating to the year under appeal. The said cash which was seized from the possession of assessee thereafter on 10.12.2009 itself was deposited in PD Account of the Commissioner. The necessary evidence in this regard is placed in the Paper Book. The assessee for the year under consideration filed the return of wealth declaring total wealth of ₹ 27,45,600/-. In the computation of net wealth, the assessee made disclosure by way of Note No.4, which reads as under:- Note : 4 In her statement recorded u/s 132(4), the assessee admitted that she received cash of ₹ 1.70 Crores in April, 2008 towards sale proceeds of property at Punjabi Bagh, Delhi. Out of this, ₹ 1.60 Crores was seized by Income Tax Department on 09.12.2009 at Pune Airport. This clearly shows that assessee held the ba .....

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..... zed and deposited in the Personal Deposit Account of the Commissioner held that same does not become part of Consolidated Fund of India, but is deposited in separate PD Account of the concerned Commissioner and is held in custody till final determination of tax liability by the Assessing Officer for the relevant assessment years. The Hon ble Supreme Court further held that on a bare reading of the Manual, it is clear that the same is relatable to cash seized and cash in bank is conceptually different from cash in hand. Reliance was placed on the decision of House of Lords, wherein it has been held that money when paid into a bank, ceases altogether to be the money of the owner, it is then the money of banker, who is bound to return an equivalent by paying similar sum to that deposited with him when he is asked for it. The relevant findings of the Hon ble Supreme Court are as under:- 5.02 Deposit of Cash. The cash seized is required to be deposited in the Personal Deposit Account of the Commissioner, at the earliest opportunity preferably on the next working day. However, if due to unavoidable reasons, it is not possible, the cash with other valuables may be kept in the strong .....

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..... ution 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 the banker, who is bound to return an-equivalent by paying a similar sum to that deposited with him when he is asked for it. The money paid into the bankers, is money known by the customer to be placed there for the purpose of being under the control of the banker; It is then the banker s money; he is known to deal with it as his own; he makes what profit on it he can, which profit he retains to himself, paying back only the principal, according to the custom of bankers in some places, or the principal and a small rate of interest, according to the custom of bankers in other places. He is guilty of no breach of trust in employing it, he is not answerable to the customer if he puts it into jeopardy, if he engages in a hazardous speculation; he is not bound to keep it or deal with it as the property of the customer, but he is, of course, answerable for the amount because he has contracted, having received that money, to repay to the customer, when demanded, a sum equivalent to that paid into his hands. That has been the subject of discuss .....

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