Smt. Santosh Sehdev, Phagwara V. The Wealth-tax Officer, Phagwara

CO 36/ASR/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0938 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 01-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAVISH SOOD
• Keywords: Additional evidence; Valuation report; Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. PRAMOD KUMAR, ACCOUNTANT MEMBER AND SH. A.D.JAIN, JUDICIAL MEMBER W.T.A. NOS. 6 TO 10/ASR/2014 ASSESSMENT YEARS: 2006-07 TO 2010-11 PAN : AJAPS9903M THE WTO, WARD -3, PHAGWARA VS. SHRI. SURJEET KUMAR SEHDEV THROUGH L/H SMT. SANTOSH SEHDEV, C/O M/S PMS DIESELS, G T ROAD PHAGWARA (APPELLANT) (RESPONDENT) C.O. NOS. 41 TO 45/ASR/2014 ASSESSMENT YEARS: 2006-07 TO 2010-11 SHRI. SURJEET KUMAR SEHDEV THROUGH L/H SMT. SANTOSH SEHDEV, C/O M/S PMS DIESELS, G T ROAD PHAGWARA VS. THE WTO, WARD -3, PHAGWARA (CROSS OBJECTOR) (RESPONDENT) W.T.A. NOS. 1 TO 5/ASR/2014 ASSESSMENT YEARS: 2006-07 TO 2010-11 PAN : AJAPS9902L THE WTO, WARD -3, PHAGWARA VS. SHRI. SANTOSH SEHDEV, C/O M/S PMS DIESELS, G T ROAD PHAGWARA (APPELLANT) (RESPONDENT) WTO NOS. 1 TO 10 /ASR/2014 CO NOS. 36 TO 45/ASR/2014 AYS- 2006-2011 2 C.O. NOS. 36 TO 40/ASR/2014 ASSESSMENT YEARS: 2006-07 TO 2010-11 SHRI. SANTOSH SEHDEV, C/O M/S PMS DIESELS, G T ROAD PHAGWARA VS. THE WTO, WARD -3, PHAGWARA (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY: SH. TARSEM LAL RESPONDENT BY: SH. RAVISH SOOD DATE OF HEARING: 02.06.2015 DATE OF PRONOUNCEMENT: 05.06.2015 ORDER PER A.D.JAIN (JM): WTAS NO. 6 TO 10 ARE DEPARTMENTS APPEAL FOR THE A SSESSMENT YEAR 2006-07 TO 2010-11, IN THE CASE OF ASSESSEE SHRI SU RJEET KUMAR SAHDEV AND WTAS NO. 1 TO 5 ARE DEPARTMENTS APPEAL FOR THE SA ME YEARS IN THE CASE OF HIS WIFE SMT SANTOSH SAHDEV. THE RESPECTIVE CROSS O BJECTIONS HAVE BEEN FILED BY BOTH THE ASSESSEES. ALL THE APPEALS RAISE D COMMON ISSUES. WTA NO. 6 IS THE LEAD CASE, AS THE LD. CWT(A) DECIDE TH IS MATTER FIRST AND FOLLOWED THE DECISION IN ALL THE OTHER APPEALS. SO, FOR FACILITY, WE ARE DECIDING ALL THESE APPEALS AND CROSS OBJECTIONS BY THIS CONSOLIDATED OR4DER, TAKING THE FACTS FROM WTA NO. 6, FOR CONVENIENCE. 2. THE FIRST ISSUE IS THE DEPARTMENTS CHALLENGE AG AINST THE LD. CWT(A)S ACTION IN DELETING THE ADDITION MADE BY TH E AO WITH REGARD TO WTO NOS. 1 TO 10 /ASR/2014 CO NOS. 36 TO 45/ASR/2014 AYS- 2006-2011 3 LAND SITUATED AT VILLAGE MAULI, NEAR PHAGWARA. THE AO HELD THE LAND OWNED BY THE ASSESSEE TO BE A TAXABLE ASSET IN THE ASSESS EES HANDS. IT WAS HELD THAT THE LAND WAS BEING USED BY SMT. MAYA DEVI SAHDEV ED UCATIONAL SOCIETY, RUNNING VICTORIA INTERNATIONAL PUBLIC SCHOOL THEREA T; THAT THE ASSESSEE INTENDS TO SELL THIS PIECE OF LAND TO THE SAID SOCI ETY AND FOR THAT PURPOSE AGREEMENT TO SELL WAS EXECUTED, AS PER WHICH THE AS SESSEE GOT THE LAND EVALUATED FROM THE REGISTERED VALUER , VALUED THE S AME AT RS. 2,80,50,000/- AS ON 11/08/1999; AND THE ASSESSEE WAS NOT RECEIVIN G ANY RENT FROM THE SAID SOCIETY. 3. SECTION 2(EA)(V) OF THE WEALTH TAX ACT 1957 DESC RIBE LAND TO MEAN, INTERALIA, URBAN LAND. EXPLANATION 1(B) TO SECTION 2(EA)OF THE ACT DEFINES URBAN LAND NOT TO INCLUDE, INTERALIA LAND OCCUPI ED BY ANY BUILDING WHICH HAS BEEN CONSTRUCTED WITH THE APPROVAL OF THE APPRO PRIATE AUTHORITY. 4. IN THE PRESENT CASE, IT IS AN ADMITTED FACT, AS EVIDENT FROM THE ASSESSMENT ORDER ITSELF, THAT THERE WAS A SCHOOL RU NNING ON THE LAND IN QUESTION. IT IS NOBODYS CASE THAT THE CONSTRUCTION OF THE SCHOOL BUILDING WAS WITHOUT THE APPROVAL OF THE COMPETENT AUTHORITY, I. E., THAT IT WAS AN UNAUTHORIZED CONSTRUCTION. NOW, ONCE THAT IS SO, I MMEDIATELY, THIS LAND GOES OUT OF DEFINITION OF ASSET WITHIN THE MEANING OF SECTION 2(EA) OF THE WEALTH TAX ACT. NOW, AS PER SECTION 3(1), WEALTH TA X IS TO BE CHARGED IN RESPECT OF NET WEALTH. ACCORDING TO SECTION 2(M), NET WEALTH MEANS EXCESS OF AGGREGATE VALUE OF ALL ASSETS OVER AGGREG ATE VALUE OF ALL DEBT OWED. SO, IF THE LAND IS NOT AN ASSET AT ALL, IT CANNOT B E ASSESSED THE WEALTH TAX. WTO NOS. 1 TO 10 /ASR/2014 CO NOS. 36 TO 45/ASR/2014 AYS- 2006-2011 4 THEREFORE, THE DEPARTMENTS GRIEVANCE BY WAY OF GRO UND NO. 1 REMAINS WITH NO FORCE AND IS REJECTED AS SUCH. 5. OUR ABOVE OBSERVATIONS SHALL APPLY EQUALLY TO AL L THE OTHER NINE (9) APPEALS ALSO. 6. SINCE THE LAND STANDS EXCLUDED FROM BEING AN ASS ET OF THE ASSESSEE, NOTHING REMAINS TO BE TAXED AND SO, THE PRELIMINARY OBJECTION AND THE APPLICATION FOR ADDITIONAL EVIDENCE FILED BY THE AS SESSEES IN ALL THESE APPEALS ARE RENDERED INFRUCTUOUS AND ARE REJECTED AS SUCH. 7. THE CROSS OBJECTION ARE SOUGHT TO BE WITHDRAWN. DISMISSED AS WITHDRAWN. 8. REGARDING THE SECOND ISSUE, THE DEPARTMENT CONTE NDS THAT THE LD. CWT(A) HAS ERRED IN DELETING THE ENHANCEMENT MADE B Y THE AO IN THE VALUES OF CERTAIN PROPERTIES OF THE ASSESSEE, AMOUN TING TO RS. 2,33,50,000/-, RS.1,02,86,000/-, RS. 6,07,500/-, RS. 2,00,000/-,AN D RS, 7,50,000/-, BY CONSIDERING THEM AS COMMERCIAL ESTABLISHMENTS, WITH OUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO SUBSTANTIATE THE V ALUE DECLARED WITH EVIDENCE DURING THE ASSESSMENT PROCEEDINGS. 9. SO FAR AS REGARD THE FIRST TWO PROPERTIES IN QUE STION, THE VALUE THEREOF WAS RAISED BY THE AO WAS SHOWN AT RS. 72,75,000/- A ND RS. 14,39,000/-, TO RS. 3,06,25,000/- AND RS. 1,17,25,000/- RESPECTIVEL Y, THEREBY ENHANCING THESE VALUES TO RS. 2,33,50,000/- AND RS. 1,02,86,0 00/-, RESPECTIVELY. WITH WTO NOS. 1 TO 10 /ASR/2014 CO NOS. 36 TO 45/ASR/2014 AYS- 2006-2011 5 REGARD TO THESE PROPERTIES, THE LD. CWT(A) HELD THE M TO BE SITUATED AT A DISTANCE OF MORE THAN 2 KM FROM THE MUNICIPAL LIMIT S OF PHAGWARA AND THEREFORE, NOT TO BE ASSETS UNDER SECTION 2(EA) OF THE WEALTH TAX ACT. 10. THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED REL IANCE ON THE OBSERVATIONS OF THE CWT ACT IN THIS REGARD. THERE I S NOTHING ON RECORD TO CONTROVERT THESE FINDINGS OF THE LD. CWT (A). HENCE , THERE IS NO FORCE IN THE SUBMISSIONS OF THE DEPARTMENT THAT THE ASSESSEE FAI LED TO SUBSTANTIATE THE VALUE DECLARED WITH REGARD TO THESE PROPERTIES IN T HE ASSESSMENT PROCEEDINGS. ONCE THE LAND IS NO LONGER AN ASSET, IT CANNOT BE C HARGED THE WEALTH TAX. THEREFORE, LD. CWT(A)S FINDINGS ON THIS ASPECT OF THE MATTER ARE CONFIRMED AND THIS PART OF THE GRIEVANCE RAISED BY THE DEPART MENT IS REJECTED. 11. SO FAR AS THE REGARD THE OTHER THREE PROPERTIES , THE AO RAISED THE VALUE DECLARED FROM RS. 8,92,500/- TO RS. 15,00,000/-, MA KING AN ENHANCEMENT OF RS. 6,07,500/-, FROM RS. 12,00,000/- TO 14,00,000/- , THEREBY ENHANCING THE VALUE BY RS. 2,00,000/- AND FROM RS. 7,50,000/- TO 15,00,000/-, THEREBY MAKING AN ENHANCEMENT OF RS, 7,50,000/-. WITH REGAR D TO THESE PROPERTIES, THE LD. CWT(A) OBSERVED THAT THE AO HAD INCREASED T HE VALUE OF THE PROPERTIES WITHOUT ANY BASIS AND HE REMITTED THE MA TTER TO THE AO TO RE- COMPUTE THE WEALTH BY SUBSTANTIATING THE VALUE AS S HOWN BY THE ASSESSEE. 12. IN THIS REGARD THE GRIEVANCE OF THE DEPARTMENT AGAIN IS THAT THE ASSESSEE HAD FAILED TO BRING EVIDENCES WITH REGARD TO THE VALUE DECLARED, DURING THE ASSESSMENT PROCEEDINGS, WHERE AS THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE VALUATION REPORTS WITH R EGARD TO THESE THREE WTO NOS. 1 TO 10 /ASR/2014 CO NOS. 36 TO 45/ASR/2014 AYS- 2006-2011 6 PROPERTIES ARE VERY MUCH ON THE AOS RECORD. IT HAS BEEN CONTENTED THAT THIS WAS ALSO THE SUBMISSION MADE BEFORE THE LD. CWT(A), VIDE WRITTEN SUBMISSIONS DT. 20/01/2013, IS REPRODUCED IN PARA 7 .1 OF THE IMPUGNED ORDER. 13. IN THIS REGARD, IT IS DIRECTED THAT THE AO, WHI LE RE-COMPUTING THE WEALTH OF THE ASSESSEE AS PER THE DIRECTIONS ISSUED BY THE LD. CWT(A), WILL DECIDE THE MATTER BY TAKING INTO CONSIDERATION THE VALUATION REPORT WITH REGARD TO THESE PROPERTIES, IF THEY ARE ON RECORD, AS CONTENTED BY THE LD. COUNSEL FOR THE ASSESSEE. THE DIRECTION ISSUED BY T HE LD. CWT(A) ARE MODIFIED ACCORDINGLY. 14. AGAIN, OUR ABOVE OBSERVATIONS SHALL APPLY EQUAL LY TO ALL THE TEN APPEALS. 15. IN THE RESULT, ALL THE APPEALS ARE DISMISSED AN D ENTIRE CROSS OBJECTIONS ARE DISMISSED AS WITHDRAWN. ORDER PRONOUNCED IN THE OPEN COURT ON 05 /06/2015. SD/- SD/- (PRAMOD KUMAR) (A.D. J AIN) ACCOUNTANT MEMBER JUDIC IAL MEMBER DATED: 05.06.2015 AG COPY TO: 1.THE APPELLANT, 2. THE RESPONDENT, 3. THE CIT, 4. THE CIT(A), 5. THE DR BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR