2017 (9) TMI 1535 - AT - Wealth-tax

Cash seized represents the asset u/s 2(ea) of the Wealth Tax Act - Held that - We find that the said sub clause (vi) of the clause (ea) of section 2 defines the assets to mean cash in hand in excess of ₹ 50,000 of individuals and HUF. Undisputedly, the assessee is an individual. The Longman Business dictionary defines cash in hand as the amount of money in the form of cash that a company has after it has paid all its costs; the amount of money held by a company in the form of notes and coins. But, in the case before us, the cash is no longer in the form of notes and coins, but is in the form of a deposit in PD A/c under the control of the Department. The interpretation of the provisions of the Wealth Tax Act by the learned CIT (A), in our opinion, is therefore, misplaced. The money belonging to the assessee was lying in the P.D A/c of the CIT as on the valuation date for appropriation in accordance with section 132B of the Act. Thus, it is not under the free control of the assessee. Therefore, cash in hand in excess of ₹ 50,000 found and seized by the Department from the premises of the assessee is not taxable under the Wealth Tax Act. - Decided in favour of assessee.

Summary

Issues:
1. Whether the cash seized from the assessee by the Department represents an asset under the Wealth Tax Act.
2. Whether the investment made by the assessee in a flat at Warangal represents an asset for the purposes of Wealth Tax.

Analysis:
1. The case involved an appeal for the Assessment Year 2009-10 where cash of ?1,32,02,650 was seized from the assessee during a search and seizure operation. The Assessing Officer (AO) held the assessee liable for wealth tax as no wealth tax return was filed. The CIT (A) upheld the assessment, leading to the appeal. The assessee argued that the cash seized was not available with them on the valuation date and, therefore, should not be considered as their wealth. The Department contended that the cash, though deposited in the Department's account, still belonged to the assessee. The Tribunal analyzed the provisions of the Wealth Tax Act, determining that the cash seized and deposited in the Department's account was not taxable as "cash in hand" under the Act. The Tribunal allowed this ground of appeal, noting that the cash was not under the free control of the assessee.

2. The second issue pertained to the undisclosed investment of ?11.00 lakhs in a flat at Warangal. The assessee did not provide significant arguments on this ground of appeal, leading to its rejection by the Tribunal. Consequently, the assessee's appeal was partly allowed based on the first ground of appeal related to the cash seized by the Department. The Tribunal's decision was pronounced on 27th September 2017, with the order favoring the assessee on the taxation of the seized cash but rejecting the appeal concerning the investment in the flat at Warangal.