2017 (11) TMI 241 - AT - Wealth-tax

Initiation of reassessment proceedings under section 17 of the Wealth Tax Act - non supply of reasons to believe - Held that - Copy of the reasons for reopening of the assessment under Wealth Tax have not been supplied to the assessee within the period of limitation. The submissions of the assessee made before the A.O. and Ld. CWT(A) have not been rebutted by the department through any evidence or material on record. It, therefore, stands proved that the copy of the reasons for reopening of the assessment under Wealth Tax Act have not been supplied to the assessee within time. Therefore, the re-assessment is liable to be quashed - Decided in favour of assessee.

Summary

Issues:
1. Reopening of assessment under section 17 of the Wealth Tax Act.
2. Addition on merit in the assessment for A.Y. 2006-2007.

Analysis:

Reopening of Assessment:
The appeal was against the order of the CWT(A)-14, New Delhi, for the assessment year 2006-2007. The assessment for this year was reopened based on allegations that the assessee had not filed a wealth tax return despite possessing jewelry worth ?55 lakhs at the time of her marriage. The main contention raised was the non-supply of the reasons recorded for initiating proceedings under section 17 of the Wealth Tax Act to the assessee. The counsel for the assessee argued that failure to provide reasons within the statutory time period renders the reopening invalid, citing relevant case law. The ITAT held that the reopening was bad in law and liable to be quashed as the reasons were not provided within the stipulated time frame. The tribunal also noted a similar case involving the father of the assessee where the reopening of assessment was quashed by the ITAT, Chandigarh Bench. Consequently, the ITAT Delhi quashed the initiation of reassessment proceedings under section 17 of the Wealth Tax Act and deleted all additions made in the reassessment order.

Addition on Merit:
The assessee had also challenged the addition on merit in the assessment. The ITAT, after considering the rival contentions, found in favor of the assessee. It was observed that the department failed to rebut the submissions made by the assessee regarding the non-supply of reasons for reopening the assessment. The tribunal concluded that since the reasons were not provided within the statutory time limit, the reassessment was liable to be quashed. Additionally, the ITAT highlighted a previous case where similar allegations regarding the transfer of jewelry were made against the father of the assessee, resulting in the reopening being quashed and additions on merit being deleted. Consequently, the ITAT Delhi allowed the appeal of the assessee, setting aside the orders of the authorities below and quashing the initiation of reassessment proceedings under section 17 of the Wealth Tax Act, leading to the deletion of all additions made in the reassessment order.