Udit Narain Agawal, Agra V. D.C.W.T.-4(1), Agra

WTA 1/AGR/2011

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0401 (ITAT-AGRA)
• Duration Of Justice: 7 year(s) 7 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-04-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 04-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: K K JAIN
• Keywords: Revised return; Ignorance of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER WTA NO. 01/AGRA/2011 ASSTT. YEAR : 2007-08 SHRI UDIT NARAIN AGARWAL, VS. D.C.W.T., 4(1) C/O AGRA ROLLER FLOUR MILLS, AGRA. MATHURA ROAD, ARTONI, AGRA. (PAN : AAKPA 0531 E) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.K. JAIN, ADVOCATE. RESPONDENT BY : SHRI A.K. SHARMA, JR. D.R. DATE OF HEARING : 25.04.2012 DATE OF PRONOUNCEMENT OF ORDER : 27.04.2012 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF WEALTH-TAX (APPEALS)-II, AGRA DATED 15.07.2011 FOR THE ASSESSMENT YEAR 2007-08 ON THE FOLLOWING GROUNDS : 1. BECAUSE THE VALUE OF PLOT MEASURING 336 SQ. MET ER AT GREEN FIELD, ARAVALI HILLS, HARYANA WAS WRONGLY AND INADVERTENTLY SHOWN IN THE RETURN OF WEALTH AS TAXABLE BY THE APP ELLANT WHICH WAS RECTIFIED VIDE LETTER DATED 06.11.2009 DURING THE C OURSE OF ASSESSMENT PROCEEDINGS. THE AUTHORITIES BELOW ERRED IN DENYING EXEMPTION BY RELYING ON THE DECISION OF APEX COURT IN GOETZ INDI A LTD. VS. CIT, 284 ITR 323 (SC) WHICH IS NOT APPLICABLE ON THE FACTS O F THE PRESENT CASE. WTA NO. 01/AGRA/2011 2 2. BECAUSE THE JUSTICE AND EQUITY HAS BEEN TOTALLY DENIED BY BOTH THE AUTHORITIES IN ASSESSING THE ASSET AS TAXA BLE WHICH IS TOTALLY EXEMPT U/S. 5(1)(VI) OF THE W.T. ACT, 1957. IT IS B OUNDEN DUTY OF THE AUTHORITIES BELOW TO MAKE A JUDICIOUS AND PROPER AS SESSMENT OF TAXABLE WEALTH IRRESPECTIVE OF THE FACT THE EXEMPTI ON IN RESPECT OF THAT ASSET COULD NOT BE CLAIMED IN THE RETURN. 3. BECAUSE UNDER LAW TAX CANNOT BE LEVIED ON AN IN COME/WEALTH NOT TAXABLE UNDER THE RELEVANT ACT AND IF A CLAIM I S MADE WHICH COULD NOT BE MADE IN THE RETURN DUE TO IGNORANCE OF LAW O R ON ACCOUNT OF OMISSION, IS TO BE CONSIDERED AND CLAIM OUGHT TO BE ALLOWED BY THE AUTHORITIES WHICH IS BONAFIDE AND HAS LEGAL BACKING UNDER THE ACT. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT ACCORDIN G TO THE ASSESSEE, A PLOT MEASURING 336 SQ. METER AT GREEN FIELD, ARAVALI HIL LS, HARYANA HAS BEEN WRONGLY SHOWN IN THE RETURN OF WEALTH INADVERTENTLY AS TAXA BLE. THEREFORE, THE AO HAS ERRED IN DENYING EXEMPTION U/S. 5(1)(VI) OF THE W.T. ACT SIMPLY FOR THE REASON THAT THE CLAIM HAS NOT BEEN MADE IN THE RETURN OF WEALTH AND IT CAN ONLY BE CLAIMED BY FILING THE REVISED RETURN, ALTHOUGH THE REQUEST WAS MADE FOR ALLOWING EXEMPTION IN WRITING DURING THE COURSE OF ASSESSMENT PROCEEDINGS . THE PLEA OF THE ASSESSEE WAS REJECTED BY THE AO IN VIEW OF THE JUDGMENT OF HONB LE SUPREME COURT IN THE CASE OF GOETZ INDIA LTD. VS. CIT, 284 ITR 323(SC) BECAUS E THE DEDUCTION NOT CLAIMED IN THE RETURN CANNOT BE ENTERTAINED BY THE AO OTHER WISE THAN BY FILING A REVISED WTA NO. 01/AGRA/2011 3 RETURN. THE ASSESSEE SIMILARLY PLEADED BEFORE THE L D. CWT(A) THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S. 5(1)(VI) OF THE W.T. AC T BECAUSE THE AREA OF THE PLOT WAS LESS THAN 500 SQ. METER. IT WAS ALSO PLEADED TH AT AS PER DEFINITION OF NET WEALTH IN THE W.T. ACT, THE SAME IS NOT CHARGEABLE TO TAX. THEREFORE, IT IS THE DUTY OF THE AO TO GRANT EXEMPTION TO THE ASSESSEE AS PER LAW. C ERTAIN DECISIONS WERE RELIED UPON IN RESPECT OF THE SAME. HOWEVER, THE LD. CWT(A ) ALSO CONFIRMED THE ORDER OF AO ON THE SAME REASONING AS GIVEN BY THE AO THAT TH E ASSESSEE HAD NOT MADE ANY CLAIM FOR EXEMPTION BY FILING THE REVISED RETURN. T HE APPEAL OF THE ASSESSEE WAS, ACCORDINGLY, DISMISSED. 4. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND RELIED UPON THE FOLLOWING DEC ISIONS : (I). CWT VS. N.B. ATAULLA KHAN, 217 ITR 17 (AP) (II). MAYANK PODDAR (HUF) VS. WTO, 262 ITR 633 (CA L.) (III). JUTE CORPORATION OF INDIA VS. CIT, 187 ITR 688 (SC) (IV). NATIONAL THERMAL POWER CORPORATION LTD. VS. CIT, 299 ITR 383 (V). DCIT VS. LAB INDIA INSTRUMENTS (P) LTD, 93 IT D 120 (PUNE) (VI). CIT VS. RAMCO INTERNATIONAL, 221 CTR 491 (P& H) (VII). CWT VS. LAXMI DUTT, 263 ITR 225 (ALL.). ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDER S OF THE AUTHORITIES BELOW. WTA NO. 01/AGRA/2011 4 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ACCORD ING TO SECTION 3 OF W.T. ACT, SUBJECT TO OTHER PROVISIONS CONTAINED IN THE A CT, THERE SHALL BE CHARGED FOR EVERY ASSESSMENT YEAR A WEALTH-TAX IN RESPECT OF NE T WEALTH ON THE CORRESPONDING VALUATION DATE OF EVERY INDIVIDUAL, HUF AND COMPANY AT THE RATE OR RATES SPECIFIED IN SCHEDULE-I. THE DEFINITION OF NET WEALTH HAS BEE N PROVIDED IN SECTION 2(M) OF THE W.T. ACT, MEANS THE AMOUNT BY WHICH THE AGGREGATE V ALUE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT, OF ALL THE ASSETS WHEREVER LOCATED, BELONGING TO THE ASSESSEE ON THE VALUATION DATE, IN CLUDING THE ASSETS REQUIRED TO BE INCLUDED IN HIS NET WEALTH AS ON THAT DATE UNDER TH IS ACT, IS IN EXCESS OF THE AGGREGATE VALUE OF ALL THE DEBTS OWNED BY THE ASSES SEE ON THE VALUATION DATE WHICH HAVE BEEN INCURRED IN RELATION TO THE SAID ASSETS. THE DEFINITION OF ASSET HAS BEEN PROVIDED IN SECTION 2(EA) OF THE W.T. ACT, MEANS AN Y LAND OR BUILDING APPURTENANT THERETO, WHETHER USED FOR RESIDENTIAL OR COMMERCIAL PURPOSE OR FOR THE PURPOSE OF MAINTAINING THE GUEST HOUSE OR OTHERWISE INCLUDING A FARM HOUSE SITUATED WITHIN 25 KILOMETERS FROM THE LOCAL LIMITS OF ANY MUNICIPALIT Y OR OTHER CANTONMENT BOARD, BUT DOES NOT INCLUDE CERTAIN ITEMS, WHICH ITEMS ARE NOT REPRODUCED HERE BECAUSE SAME ARE NOT RELEVANT FOR THE PURPOSE OF DECIDING T HE ISSUE IN CONTROVERSY. THE COMBINED READING OF THE ABOVE PROVISIONS WOULD SHOW THAT WEALTH-TAX SHALL BE CHARGED ON THE NET WEALTH SUBJECT TO OTHER PROVISIO NS CONTAINED IN THIS ACT AND THE NET WEALTH WILL BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT, OF ALL WTA NO. 01/AGRA/2011 5 THE ASSETS BELONGING TO THE ASSESSEE. THEREFORE, CH ARGING SECTION OF WEALTH-TAX AND DEFINING SECTION OF NET WEALTH WOULD CLEARLY REVEAL THAT NET WEALTH WOULD BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT AND ON SUCH NET WEALTH, WEALTH-TAX WOULD BE CHARGED SUBJECT TO OTHER PROVIS IONS CONTAINED IN THIS ACT. THE ASSESSEE STATED IN COMPUTATION OF WEALTH THAT THE P LOT AT GREEN FIELD, HARYANA IS LIABLE FOR WEALTH-TAX WHICH, IN OUR VIEW, TO SOME E XTENT WAS ALSO CORRECT BECAUSE AS PER DEFINITION OF ASSET IN SECTION 2(EA), THE LAND OR BUILDING APPURTENANT THERETO ARE SUBJECTED TO ASSET, BUT THE ASSESSEE AT THE ASSESSM ENT STAGE MADE A CLAIM BEFORE THE AO THAT SUCH NET WEALTH IS EXEMPT FROM TAX BECAUSE THE AREA OF THE PLOT WAS LESS THAN 500 SQ. METER. THE ASSESSEE MADE SUCH CLAIM U/ S. 5(1)(VI) OF THE W.T. ACT, WHICH PROVIDES AS UNDER : (VI). ONE HOUSE OR PART OF A HOUSE OR A PLOT OF LA ND BELONGING TO AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY : PROVIDED THAT WEALTH-TAX SHALL NOT BE PAYABLE BY AN ASSESSE E IN RESPECT OF AN ASSET BEING A PLOT OF LAND COMPRISING AN AREA OF FIVE HUNDRED SQUARE METRES OR LESS. 5.1 SINCE THE CHARGING SECTION AND DEFINING SECTION PROVIDES THAT NET WEALTH SHALL BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF TH IS ACT AND THAT WEALTH TAX IS PAYABLE SUBJECT TO OTHER PROVISIONS CONTAINED IN TH IS ACT, THEREFORE, IT WAS RELEVANT FOR THE AO TO HAVE REFERENCE TO SECTION 5(1)(VI) OF THE W.T. ACT WHILE FINALIZING THE ASSESSMENT IN THE MATTER. HOWEVER, THE AO DID N OT ACCEPT THE CONTENTION OF THE WTA NO. 01/AGRA/2011 6 ASSESSEE IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GOETZ INDIA LTD. VS. CIT (SUPRA) BECAUSE THE ASSESSEE DID NOT FILE ANY REVISED RETURN TO CLAIM SUCH EXEMPTION U/S. 5(1)(VI) OF THE W.T. ACT IN THE RETURN OF WEALTH. HOWEVER, THE SAID PROHIBITION WAS NOT APPLICABLE TO THE FIRST APPELLATE AUTHORITY AND AS SUCH A CLAIM SHOULD HAVE BEEN CONSIDERED BY THE LD. CIT(A) FOR DECIDING THE ISSUE IN ACCORDANCE WITH LAW. HONBLE DELHI HIGH CO URT IN THE CASE OF CIT VS. JAI PARABOLIC SPRINGS LTD., 306 ITR 42 (DELHI), CONSIDE RING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GOETZ INDIA LTD. VS. C IT(SUPRA), JUTE CORPORATION OF INDIA LTD VS. CIT (SUPRA) AND NATIONAL THERMAL POWE R CO. LTD. VS. CIT (SUPRA), DECIDED THE IDENTICAL ISSUE AS UNDER : THE ASSESSEE FILED A RETURN OF INCOME DECLARING A N ET LOSS AT RS.4,40,36,000 FOR THE ASSESSMENT YEAR 1990-91. THE LOSS WAS COMPUTED AT RS.4,27,63,353, INTER ALIA, BY MAKING S EVERAL ADDITIONS AND DISALLOWANCES. THE ASSESSEE INCURRED AN EXPENDI TURE OF RS.19,48,125 AS EXPENDITURE ON ACCOUNT OF CUSTOMER INTRODUCTION CHARGES WHICH WERE DEBITED AS DEFERRED REVENUE EXP ENSES IN THE BALANCE-SHEET. THE EXPENDITURE WAS WRITTEN OFF OVER A PERIOD OF FIVE YEARS STARTING FROM THE ASSESSMENT YEAR 1990-91 AND ACCORDINGLY THE ASSESSEE CLAIMED REDUCTION OF RS.3,89,625 IN THE RE TURN. THE CLAIM WAS ALLOWED BY THE ASSESSING OFFICER. IN APPEAL BEF ORE THE COMMISSIONER (APPEALS), THE ASSESSEE CLAIMED AN ADD ITIONAL GROUND THAT THE ENTIRE DEFERRED REVENUE EXPENSES WERE DEDU CTIBLE IN THE ASSESSMENT YEAR IN APPEAL. THE APPEAL WAS ALLOWED. THE TRIBUNAL RESTORED THE MATTER TO THE ASSESSING OFFICER. THE A SSESSING OFFICER ALLOWED ONLY A REDUCTION OF RS.3,89,625 AND DISALLO WED THE CLAIM OF RS.15,58,500 ON THE GROUND THAT THIS WAS NOT CLAIME D BY THE ASSESSEE IN ITS RETURN OF INCOME IN THE ASSESSMENT YEAR 1990 -91. THE COMMISSIONER (APPEALS) HELD THAT THE ASSESSING OFFI CER ERRED IN DISALLOWING THE EXPENDITURE ON THE SOLE GROUND THAT NO CLAIM FOR WTA NO. 01/AGRA/2011 7 DEDUCTION OF THE AMOUNT WAS MADE IN THE RETURN OF I NCOME. THIS ORDER WAS CONFIRMED BY THE TRIBUNAL. ON APPEAL : HELD, DISMISSING THE APPEAL, THAT THERE WAS NO PROHIBITIO N ON THE POWERS OF THE TRIBUNAL TO ENTERTAIN AN ADDITION AL GROUND WHICH ACCORDING TO THE TRIBUNAL AROSE IN THE MATTER AND F OR THE JUST DECISION OF THE CASE. THERE WAS NO INFIRMITY IN THE ORDER OF THE TRIBUNAL. 5.2 THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED UP ON THE DECISION IN THE CASE OF CWT VS. N.B. ATAULLA KHAN (SUPRA) IN WHICH THE HON BLE HIGH COURT CONSIDERING THE DEFINITION OF NET WEALTH HELD THAT TO ARRIVE AT THE CORRECT NET WEALTH IT IS NECESSARY TO TAKE INTO CONSIDERATION NOT ONLY THE A SSETS AND LIABILITIES, BUT ALSO THE EXEMPTION, TO WHICH AN ASSESSEE IS ENTITLED TO. JUS T AS IN A CASE WHERE THE ASSETS ARE NOT PROPERLY MENTIONED OR WHERE THE ASSETS WHICH HA VE TO BE INCLUDED BY VIRTUE OF THE PROVISIONS OF THE ACT, ARE NOT INCLUDED, HAVE T O BE TAKEN INTO CONSIDERATION BY THE WTO FOR ARRIVING AT THE CORRECT NET WEALTH, SO ALSO IT IS OBLIGATORY ON THE PART OF THE WTO TO TAKE INTO CONSIDERATION THE EXEMPTION GR ANTED BY THE ACT WHETHER SUCH EXEMPTIONS ARE CLAIMED OR NOT BY THE ASSESSEE BECAU SE THE WTO IS BOUND TO LEVY TAX ON NET WEALTH ARRIVED AT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, WHICH ALONE IS CHARGEABLE TO TAX UNDER THE ACT. IF THAT B E THE POSITION, WHICH WE BELIEVE TO BE, THE ACTION OF THE ASSESSEE IN NOT REFERRING TO THE EXEMPTION IN THE RETURN WOULD NOT PRECLUDE THE ASSESSEE FROM CLAIMING THE S AME AT THE APPELLATE STAGE; EQUALLY THAT WOULD NOT PRECLUDE THE APPELLATE AUTHO RITY TO ENTERTAIN THE APPEAL AND GRANT THE EXEMPTION IF THE ASSESSEE IS ENTITLED TO THEM UNDER THE ACT. WTA NO. 01/AGRA/2011 8 5.3. IN THE CASE OF MAYANK PODDAR (HUF) VS. WTO (SU PRA), IT WAS HELD THAT THERE CANNOT BE ANY AMBIGUITY IN A CHARGING SECTION. IF T WO VIEWS ARE POSSIBLE, THE ONE BENEFICIAL TO THE ASSESSEE IS TO BE ADOPTED. UNLESS A PROPERTY IS CHARGEABLE UNDER THE CHARGING SECTION, NO TAX CAN BE LEVIED THEREON. 5.4 IN THE CASE OF CIT VS. RAMCO INTERNATIONAL (SUP RA) , THE REVENUE SIMILARLY RELIED UPON THE DECISION IN THE CASE OF GOETZ INDIA LTD. VS. CIT(SUPRA), BUT THE DEPARTMENTAL APPEAL WAS DISMISSED. 6. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUM STANCES IN THE LIGHT OF THE ABOVE DECISIONS, WE ARE OF THE VIEW THAT SINCE THE PLOT OF LAND COMPRISING AN AREA OF 500 SQ. METER OR LESS IS NOT CHARGEABLE TO WEALT H TAX AS PER PROVISIONS OF SECTION 5(1)(VI) OF THE W.T. ACT, THEREFORE, THE SAME COULD NOT BE INCLUDED IN THE NET WEALTH FOR THE PURPOSE OF CHARGING WEALTH TAX ON TH E SAME. WEALTH-TAX IS TO BE COMPUTED SUBJECT TO PROVISIONS OF THE W.T. ACT AND SECTION 5 IS PART OF THIS ACT. THEREFORE, THE SAME CANNOT BE IGNORED EVEN IF THE A SSESSEE HAS NOT MADE ANY CLAIM OF EXEMPTION IN THE RETURN OF WEALTH. SINCE THE ASS ESSEE MADE CLAIM BEFORE THE FIRST APPELLATE AUTHORITY AND THE LD. CWT(A) DID NOT DECI DE THIS ISSUE AND AGREED WITH THE FINDING OF THE AO, THEREFORE, IN OUR VIEW THE M ATTER REQUIRES RE-CONSIDERATION AT WTA NO. 01/AGRA/2011 9 THE LEVEL OF THE LD. CWT(A) FOR FACTUAL VERIFICATIO N AND DECISION IN ACCORDANCE WITH LAW. WE, ACCORDINGLY, SET SIDE THE ORDER OF TH E LD. CWT(A) AND RESTORE THIS ISSUE TO HIS FILE WITH THE DIRECTION TO DECIDE THE ABOVE ISSUE IN ACCORDANCE WITH LAW AS OBSERVED ABOVE BY FACTUALLY VERIFYING THE CLAIM OF ASSESSEE FOR EXEMPTION. THE LD. CWT(A) SHALL GIVEN REASONABLE AND SUFFICIENT OP PORTUNITY OF BEING HEARD TO THE ASSESSEE AND THE AO. THE LD. CWT(A) IS DIRECTED TO DECIDE THE APPEAL OF ASSESSEE AS EARLY AS POSSIBLE WITHIN THE PERIOD OF SIX MONTH S FROM THE RECEIPT OF THIS ORDER. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY