2019 (6) TMI 1199 - AT - Wealth-tax

Wealth-tax assessment - certain assets can be excluded from the net wealth of the assessee - HELD THAT - When a non-taxable income by mistake is disclosed in the return of income the same cannot be assessed to tax. The asset not belonging to the assessee or asset which are to be excluded from the net wealth of the assessee cannot be brought to the net wealth for the purpose of Wealth-tax Act though the same has been disclosed by the assessee in the return of wealth by mistake. When the assessee realizes his mistake certainly the assessee can retract his mistake and raise the contention before the appellate authority that the assets disclosed in the return of net wealth cannot be included in the net wealth for the purpose of wealth-tax assessment. Similar view was held in the case of Raghavan Nair v. ACIT Anr. 2018 (1) TMI 863 - KERALA HIGH COURT We are of the view that the matter needs to be considered by the Wealth-tax Officer. WTO shall examine the documents and come to a conclusion whether the claim of the assessee that certain assets should be excluded from the net wealth of the assessee for the Wealth-tax assessment. For the above said exercise the entire issues raised in these appeals are restored to the Wealth-tax Officer. The assessee shall co-operative with the Wealth-tax Officer and prove his case whether assets needs to be excluded from the net asset of the assessee for the wealth-tax assessment - Appeals filed by the assessee are allowed for statistical purposes.

Summary

Issues:
Whether certain assets can be excluded from the net wealth of the assessee for the purpose of wealth-tax assessment.

Analysis:
The appeals before the Appellate Tribunal ITAT COCHIN involved the issue of excluding certain assets from the net wealth of the assessee for wealth-tax assessment. The background revealed that the assessee, engaged in real estate business, had assets liable for wealth tax under the Wealth-tax Act, 1957. The initial assessments were completed accepting the wealth returned by the assessee for the relevant years. Subsequently, the assessee contended before the first appellate authority that certain assets, such as landed properties and motor vehicles, were mistakenly included in the net wealth and should be excluded as they were part of the business's stock-in-trade. However, the CIT(A) dismissed the appeals stating that since no additions were made by the Assessing Officer, the assessee had no grounds for grievance against the assessment.

The Tribunal considered the submissions made by the assessee and noted that the assets in question were mistakenly disclosed in the net wealth, not wholly owned by the assessee, and were part of the real estate business's stock-in-trade. The Tribunal emphasized that business assets, like land, should be excluded from wealth-tax assessment. The assessee's disclosure of income from subsequent sales of these assets as business income, not capital gains, further supported the contention that these assets were part of the business. Citing legal precedent, the Tribunal highlighted that non-taxable income mistakenly disclosed cannot be assessed, and assets not belonging to the assessee should not be included in the net wealth for wealth-tax purposes.

In the interest of justice and equity, the Tribunal decided to remand the matter to the Wealth-tax Officer for re-examination. The Wealth-tax Officer was directed to review the documents provided by the assessee and determine whether the assets should indeed be excluded from the net wealth for wealth-tax assessment. The assessee was instructed to cooperate with the Wealth-tax Officer in proving the case for exclusion. Consequently, the appeals filed by the assessee were allowed for statistical purposes, and the matter was referred back to the Wealth-tax Officer for further assessment.

This detailed analysis of the judgment highlights the core issue of excluding certain assets from the net wealth of the assessee for wealth-tax assessment, the arguments presented by the parties, the reasoning of the Tribunal, and the final decision reached in remanding the matter for re-examination by the Wealth-tax Officer.