2017 (12) TMI 1267 - AT - Wealth-tax

Wealth tax assessment reopened u/s. 17 - assessing the value of 10 acres of land - AO adopted the taxable wealth at ₹ 3.35 Crores based on the adoption of market value for the 10 acres of land stated to be in the ownership of assessee as per the agreement of sale - Held that - It is interesting to note that assessee has entered into an agreement of sale with the said persons for sale of 10 acres of land on his own. In that agreement, in para 1 of the recitals, it was clearly stated that The Vendor hereto being the sole legal heir of the said original owner Sri G. Bharat Reddy inherited and succeeded the Schedule Property as absolute owner and possessor thereof in perpetuity in evidence of which the Hon ble High Court of Andhra Pradesh in WP No. 18422 of 2006 by its order dt. 11-09-2006 directed the District Collector, RR district and MRO Balanagar to issue Pattedar Pass books and title deeds .. The fact is that there is no such order by the Hon ble High Court and the copy of Hon ble High Court placed on record do indicate that writ petition was dismissed with a direction to appropriate authorities to pass necessary orders on the application of petitioner within a period of four weeks from the date of receipt of copy of the order. The report of the Dy. Collector do indicate that the claim of assessee is not correct and the land is shown as Government land and in fact, was allotted to various other persons by the Government. Therefore, the very ownership of the land is in dispute. Since similar issue in Income tax proceedings was restored to the file of AO for examination in the Revenue appeal, we are of the opinion that this matter also should be restored to the file of AO to examine the facts afresh and decide the wealth tax liability, after giving due opportunity to assessee.

Summary

Issues:
Assessment of the value of 10 acres of land for wealth tax purposes based on an agreement of sale found during search and seizure proceedings.

Analysis:
The appeal was filed against the order of the Commissioner of Wealth Tax(Appeals) regarding the valuation of 10 acres of land for wealth tax assessment. The initial assessment was based on an agreement of sale found during search and seizure proceedings, indicating a consideration of ?1 Crore for the land. The Assessing Officer (AO) adopted the taxable wealth at ?3.35 Crores, considering the market value of the land mentioned in the agreement. The assessee contended that the assessment reopening was unlawful and raised issues regarding possession, ownership disputes, and equal shares with a brother, challenging the valuation and ownership of the property.

The Commissioner of Wealth Tax (CWT) upheld the reopening of assessment and the valuation of the property. The CWT found the document of the agreement for sale to be a valid reason for reopening the assessment under section 17 of the Wealth Tax Act. The CWT determined that the assessee was the sole legal heir of the original owner, establishing ownership over the land. Despite the assessee's claims of lack of possession and disputes over ownership, the CWT concluded that the assessee was the absolute owner of the property, which was considered non-agricultural land subject to wealth tax. The CWT supported the valuation of the property at ?3.5 Crores based on the Agreement for Sale and prices indicated by the Sub-Registrar's Office.

The assessee argued that despite entering into an agreement of sale, they were not in possession of the property, citing a writ petition and a report indicating the land was recorded as Government land and allotted for various public purposes. The Tribunal noted discrepancies in the High Court order mentioned in the agreement and the actual dismissal of the writ petition, casting doubt on the ownership claims. Considering the unresolved ownership issues and the ongoing Income tax proceedings related to the same agreement, the Tribunal decided to allow the appeal for statistical purposes and referred the matter back to the Assessing Officer for a fresh examination of the facts and determination of wealth tax liability after providing the assessee with due opportunity.