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
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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
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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.
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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
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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
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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
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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
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4. CIT (A)
5. DR:ITAT
ASSISTANT REGISTRAR
ITAT, New Delhi
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