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Anita Rani Mahajan , 2, Avenue Cassia, Westend Greens, Rajkori, New Delhi vs. The Commissioner of Wealth Tax , Central-III, New Delhi
May, 14th 2019

Subject:- The assessee is on jurisdictional issue and does not require the investigation of fresh facts and therefore, same may be admitted

Referred Sections:
Section 17 of the Wealth Tax Act
Section 25 of the Act
Section 263 of the Income Tax Act,
Section 147

Referred Cases / Judgments
Westlife Development Ltd Vs. Pr. CIT

               INCOME TAX APPELLATE TRIBUNAL
                 DELHI BENCH "A": NEW DELHI
          BEFORE SHRI H.S.SIDHU, JUDICIAL MEMBER
                            AND
       SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER


                     WTA No. 16 to 19/Del/2013
               (Assessment Year: 2003-04 to 2006-07)
        Anita Rani Mahajan ,      Vs.   The Commissioner of
     2, Avenue Cassia, Westend              Wealth Tax ,
     Greens, Rajkori, New Delhi             Central-III,
         PAN: AAEPR2569P                     New Delhi
             (Appellant)                   (Respondent)


            Assessee by :             Shri Salil Kapoor, Adv
                                     Ms. Soumya Singh, Adv
                                     Ms. Ananya Kapoor, Adv
             Revenue by:            Shri Munish Kumar Gupta,
                                             CIT DR
          Date of Hearing                  09/05/2019
       Date of pronouncement               13/05/2019


                             ORDER

PER PRASHANT MAHARISHI, A. M.

1.   These are the four wealth tax appeals for Assessment Year 2003-
     04, 2004-05, 2005-06 and 2006-07 against the order of THE
     COMMISSIONER OF WEALTH TAX passed u/s 25(2) of THE
     WEALTH TAX ACT, 1957 dated 18/03/2013, for all the four
     years wherein, the ld Commissioner Of Wealth Tax has held that
     original order passed by The WTO u/s 16(3) read with section 17
     of the Wealth Tax Act assessing total wealth of the assessee of
     Rs. 1433854/-, 2461070/-, 2354720/- and Rs. 2385060/-          for
     respective years are erroneous and prejudicial to the interest of








                                                                Page | 1
     revenue. The grounds of appeal for all the four years are similar
     as under:-

     "1. That the notice issued U/s 25 and the Order passed U/s
         25(2) of the Wealth-tax Act, 1957, both are illegal, bad in law
         and without jurisdiction.
     2.    That the Commissioner of Wealth Tax has failed to appreciate
           that there is no erroneous committed by the AO while passing
           the Wealth-tax Order and there is no prejudice caused to the
           Revenue, hence, the order passed by the Commissioner of
           Wealth Tax U/s 25(2) of the Act, is liable to be quashed.
     3.    That the Learned Commissioner erred in law as well as on
           facts of the present case, in exercising its jurisdiction u/s 25
           of the Wealth Tax Act, 1957 to revise the assessment order
           dated 26.12.2011, {passed by the Assistant Commissioner of
           Wealth Tax, Central Circle-22, New Delhi (hereinafter referred
           as ,,AO)} passed u/s 16(3) of the Wealth Tax Act, 1957.
     4.    That the Learned Commissioner further erred in law and on
           facts to adjudicate in its order dated 18.03.2013 that how
           the wealth tax assessment order (for the year under
           consideration), passed by the AO, is erroneous and
           prejudicial to the interest of the revenue.
     5.    That the Learned Commissioner further erred in law and on
           facts in adjudicating and disclosing the details of assets /
           wealth which escaped and could not be taxed under the
           provisions of the Wealth Tax Act, 1957 that necessitated the
           revision of assessment order passed u/s 16(3) of the Wealth
           Tax Act, 1967.
     6.    Without prejudice, that the order passed by the
           Commissioner of Wealth Tax U/s 25(2) of the Act, is illegal
           and bad in law as the Commissioner of Wealth Tax has
           travelled beyond the scope of the Wealth Tax Act and has
           failed to appreciate that the Wealth Tax Order has to be seen
           w.r.t. Wealth Tax Act of the same is erroneous and
           prejudicial to the interest of the Revenue."
2.   The assessee has raised the following additional ground of appeal
     in WTA No. 17/Del/2013 for the Assessment Year 2004-05:-
     "1.   That order passed u/s 25(2) cancelling the assessment
           passed u/s 16(3) r.w. 17 is illegal, bad in law and without


                                                                     Page | 2
          jurisdiction as notice issued u/s 17 and assessment framed
          r.w. 17 is illegal, bad in law and without jurisdiction. "
3.   During the course of hearing the assessee has filed an
     application for admission of additional grounds of appeal stating
     that the order passed u/s 25(2) cancelling the assessment
     passed u/s 16(3) read with Section 17 is illegal, bad in law and
     without jurisdiction as original notice issued u/s 17 and
     consequent assessment framed u/s 63 read with section 17 is
     illegal, bad in law and without jurisdiction.
4.   The ld AR adverting to the application for admission of additional
     ground of appeal submitted with above ground could not be
     raised in the original appeal memo due to inadvertent reason and
     therefore, same is raised now. He submitted that omission to
     raise this ground of appeal in the original appeal memo cannot
     harm the right of the assessee , therefore it is challenged now as
     it goes to the root of the matter. He further submitted that
     additional ground raised by the assessee is on jurisdictional
     issue and does not require the investigation of fresh facts and
     therefore, same may be admitted.
5.   The ld DR vehemently opposed the application for admission of
     additional ground of appeal and submitted that it does not arise
     from the order of the Commissioner of Wealth Tax passed u/s 25
     of the Act. He therefore, submitted that this additional ground of
     appeal should not be admitted now.
6.   We have carefully considered the rival contentions and find that
     by raising the additional ground of appeal the assessee is
     challenging the root of the matter     of the order passed by the
     Commissioner of Wealth Tax about its legality submitting that
     the original order passed by the WTO itself suffers from severe
     jurisdictional lapses, therefore, it goes to the root of the matter.

                                                                   Page | 3
     Further, it is found that the omission to raise this ground of
     appeal in the original appeal memo is also not alleged to be
     intentional. The assessee or revenue can challenge the legal
     ground at any time during the appeal proceedings. In view of this
     we admit the additional ground and proceed to adjudicate the
     same.
7.   The assessee is an individual. In Nimitya Group of Cases a
     search operation was carried out on 0611.2008, therefore, the
     assessee was issued notice u/s 17 of the Wealth Tax Act on
     01.10.2010 for Assessment Year 2003-04 for the valuation date
     dated 31.03.2003. The assessee submitted returned of Wealth on
     15.12.2011 declaring net wealth of Rs. 1433854/-. Notice u/s
     16(2) of the Act was issued on 15.12.2011 and total Wealth was
     assessed at Rs. 1433854/- as per order passed u/s 16(3) read
     with Section 17 of the Act on 26.12.2011. Subsequently, the ld
     CWT examined the records and he found that the ld WTO has
     accepted the property valuation at Chawla, Nazafgar   gate at Rs.
     24686500/- which was claimed exempt by the assessee in the
     computation of net wealth. The ld CWT noted that in Income Tax
     Proceedings for Assessment Year 2007-08 the assessment u/s
     153A of the Act was completed on 31.12.2010 u/s 153A of the
     Act where the addition of Rs. 28538030/- was made on account
     of long term capital gain on the sale of land at village Chawla.
     The above addition was made on the basis of seized documents
     found during the course of search on 06.11.2008 which showed
     that the assessee has sold the above property on 01.12.2006 at
     the consideration of Rs. 3 crores. However, in the wealth tax
     return the valuation of the above property was shown at much
     less than its market value and therefore, notice u/s 25 of the

                                                                Page | 4
     Wealth Tax was issued on 05.02.2013. The assessee submitted
     its reply to the notice submitting    that    ld   WTO passed the
     assessment order u/s 16(3) after the verification of information
     available. Therefore, the order passed by the ld WTO was not at
     all erroneous and much less prejudicial to the interest of
     revenue. The ld CWT found that the ld AO did not enquiry to the
     correct value of the land at Rs. 3 crores but accepted it at Rs.
     24686500/- and accepted it as exempt. Therefore, on account of
     failure on the part of the ld AO to make the enquiry the order is
     erroneous and prejudicial to the interest of revenue, hence he
     directed the ld AO to frame assessment after the examination
     and pass speaking order. Consequently, order u/s 25(2) of the
     Act was passed on 18.03.2013 for Assessment Year 2003-04
     which is under challenge before us.
8.   The ld AR submitted that assessment of the assessee was
     reopened by issue of notice u/s 17 of the Wealth Tax Act without
     recording any reason for reopening and therefore, the original
     order passed u/s 16(3) read with Section 17 dated 26.12.2011
     itself is bad in law and consequent revision of such order itself is
     bad and liable to be quashed.
9.   The ld DR vehemently opposed the arguments of the assessee
     and submitted that in the revisionary proceedings u/s 25 of the
     Act the assessee does not have any right to object to the original
     order passed by the ld WTO. He submitted that if the grievance of
     the assessee is so then appeal against the order passed u/s 16(3)
     of the Wealth Tax Act should have been filed. As the assessee
     has not done so the assessee cannot in this appeal challenge it.
10. The ld AR vehemently contested the above argument of the
     assessee and submitted that provision of section 25 of the Act






                                                                   Page | 5
     are similar to the provision of section 263 of the Income Tax Act,
     1961. He further stated that in 263 proceedings the assessee can
     challenge the original order which is passed u/s 143(3) or section
     147 read with section 263 of the Act if it is found to be without
     jurisdiction or illegal, subsequent proceedings u/s 263 of the Act
     deserves to be cancelled. He submitted that such a issue has
     been considered in Westlife Development Ltd Vs. Pr. CIT in ITA
     No. 688/Mum/2016 dated 26.06.2016, wherein, in para 8
     onwards these issues are discussed and such order passed was
     cancelled. He therefore, submitted that the issue is squarely
     covered in favour of the assessee.
11. We have carefully considered the rival contentions and find that
     assessee can challenge the validity of the original order passed
     u/s 16(3) of the Act in appeal against the order passed u/s 25(2)
     of the Act, where the original order passed u/s 16(3)   which was
     was subject to revision. The issue that has been decided by the
     coordinate bench in the case of Westlife Development (supra)     is
     in Income Tax matter but the principles laid down squarely
     applies to the wealth tax matter also as respective section of the
     assessment, reassessment and revision are similar. In view this,
     we hold that there is no infirmity in the argument of the ld AR in
     challenging the validity of the assessment which is subject to
     revision.
12. Now as per the earlier order of the coordinate bench in this
     appeal on the order sheet it was found that the original records
     were required to be produced by the department. Such records
     were produced before us by the ld CIT DR. On     request to show
     the reasons recorded for issue of notice u/s 17 based on which
     the assessment u/s 16(3) was made, the ld CIT DR could not

                                                                 Page | 6
     show us such reasons recorded from the records. Order sheet of
     the assessment proceedings also did not show that any such
     reasons were recorded by the WTO. In view this, it is apparent
     that the original order passed u/s 16(3) of the Act read with
     section 17 of the WTA Act is passed without recording any reason
     showing escapement of wealth from taxation. In absence of any
     such reason shown to us, we do not have any other alternative
     but to quash the order u/s 25(2) of the WT Act        passed by
     Commissioner of Wealth Tax. Consequently, we hold that order
     passed u/s 25(2) of the Act is invalid and hence quashed.
     Accordingly, appeal of the assessee for Assessment Year 2003-04
     is allowed.
13. Similarly, in other assessment years 2004-05 to 2006-07 the
     situation is similar as reasons for reopening of the wealth tax
     assessment in case of the assessee    are not available on record
     as well as not decipherable from the order sheet of the WTO,
     accordingly,   we also quash the order passed by the CWT u/s
     25(2) for all these years also.
14. Accordingly, appeals of the assessee for all these four years are
     allowed.
     Order pronounced in the open court on 13/05/2019.

          -Sd/-                                  -Sd/-
      (H.S.SIDHU)                         (PRASHANT MAHARISHI)
     JUDICIAL MEMBER                       ACCOUNTANT MEMBER

Dated: 13/05/2019
A K Keot

Copy forwarded to

  1. Applicant
  2. Respondent
  3. CIT
                                                                Page | 7
4. CIT (A)
5. DR:ITAT
             ASSISTANT REGISTRAR
                 ITAT, New Delhi




                           Page | 8

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