2009 (12) TMI 686 - AT - Wealth-tax

Building in the occupation of a Ruler - assessee claimed 707 acres of land to be exempt under section 5(1)(iii) of the Wealth-tax Act - Assessing Officer did not include this 426 acres of land while completing reassessment but the Commissioner of Wealth-tax (Appeals) enhanced by including the same as taxable wealth Held that - Area comprising of 426 acres of land is situated within the same compound and in the use of palace and not put to alternative use said land was in the occupation of the ruler as official residence and by virtue of which accepted the entire land as exempt under section 5(1)(iii) of the Wealth-tax Act in favor of assessee

Issues Involved:
1. Condonation of delay in filing appeals.
2. Admissibility of additional ground regarding jurisdiction.
3. Validity of reassessment notice and order.
4. Exemption of land under section 5(1)(iii) of the Wealth-tax Act.

Detailed Analysis:

1. Condonation of Delay in Filing Appeals:
The appeals were time-barred by one year, four months, and 14 days. The assessee filed a condonation application supported by affidavits from Shri Nitin Shripad Pujari and Dr. Mrunalini Devi Puar explaining the delay. The learned counsel for the assessee argued that the delay was unintentional and due to human error. The Commissioner of Income-tax-Departmental representative opposed the condonation, stating the delay was inordinate and the reasons unconvincing. The Tribunal, referencing the Supreme Court's interpretation of "sufficient cause" in the case of N. Balakrishnan v. M. Krishnamurthy, found the delay reasonable and not mala fide. Consequently, the delay was condoned, and the appeals were admitted.

2. Admissibility of Additional Ground Regarding Jurisdiction:
The assessee raised an additional ground challenging the reassessment as bad in law, arguing it goes to the root of the matter. The learned counsel contended that jurisdictional issues could be raised at any stage, citing the case of P.V. Doshi v. CIT, where the Gujarat High Court held that mandatory jurisdictional provisions could not be waived. The Tribunal admitted the additional ground, agreeing that the issue of jurisdiction could be raised despite not being raised earlier.

3. Validity of Reassessment Notice and Order:
The reassessment notices were issued beyond four years from the end of the respective years, focusing on the inclusion of gold ornaments. The original assessments under section 16(3) had exempted 426 acres of land under section 5(1)(iii). The Tribunal found that the assessee had disclosed all material facts fully and truly, and the reassessment proceedings initiated beyond the statutory period were not valid. The Tribunal referenced the Gujarat High Court's judgment in P.V. Doshi v. CIT, emphasizing that conditions precedent for reassessment, such as reasonable belief and recording of reasons, were mandatory and not fulfilled in this case.

4. Exemption of Land Under Section 5(1)(iii) of the Wealth-tax Act:
The assessee claimed exemption for 707 acres of land adjoining the palace under section 5(1)(iii). The original assessments had allowed this exemption, but the reassessment included 426 acres of this land as taxable. The Tribunal noted that the land was within the same compound and used in the same manner as before. The Tribunal also referenced the Central Board of Direct Taxes Circular and the Rajasthan High Court's decision in H.H. Maharao Brijraj Singh v. Union of India, which supported the exemption of such lands. The Tribunal concluded that the 426 acres of land were exempt under section 5(1)(iii) and quashed the reassessment proceedings as bad in law.

Conclusion:
The Tribunal allowed the assessee's appeals, condoning the delay, admitting the additional ground on jurisdiction, and quashing the reassessment proceedings as invalid. The Tribunal also upheld the exemption of the 426 acres of land under section 5(1)(iii) of the Wealth-tax Act.

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