2019 (11) TMI 1124 - AT - Wealth-tax

Wealth escaping assessment - Lack of jurisdiction of ACIT, Circle-9(1), Bengaluru who issued notice u/s 17 of WT Ac t - HELD THAT - We find merits in the submissions made on behalf of the assessee that the validity of notice issued under section 17 of the Act is primarily required to be adjudicated before a decision can be rendered on the merits of the additions made in the assessment. Under section 124 of the Income Tax Act, 1961 when a challenge to jurisdiction is raised, it is incumbent on the part of the AO to adjudicate the same or he has to make reference of the issue of determination of jurisdiction to the authorities specified under section 124(2) of the Income Tax Act, 1961. In the light of the above statutory provisions, we are of the view that it is incumbent on the part of the CWT(A) to have adjudicated on this issue CWT(A), in the impugned order, has not addressed the issue at all and has proceeded on the basis that the reasons for reopening were valid without going to the question as to who formed the belief regarding escapement of wealth chargeable to tax and who subsequently continued the proceedings under section 17 of the Act and whether they authority in law to do so. In our opinion, these issues are very vital and since these issues are not been adjudicated by the CWT(A), we deem it fit and proper to set aside the order of the CWT(A) and remand the question of validity of initiation of reassessment proceedings under section 17 of the Wealth Tax Act, 1957 to the CWT(A) for fresh consideration, after due opportunity of being heard afforded to the assessee.

Summary

Issues:
1. Validity of initiation of proceedings under section 17 of Wealth Tax Act.
2. Jurisdictional concerns regarding notice issued under section 17 of the Act.
3. Assessment of the value of co-owned land for Wealth Tax purposes.
4. Inclusion of industrial land for Wealth Tax assessment.

Issue 1: Validity of initiation of proceedings under section 17 of Wealth Tax Act:
The case involved appeals by two assesses challenging the inclusion of co-owned land for Wealth Tax assessment. The central issue was the validity of proceedings initiated under section 17 of the Wealth Tax Act, 1957. Both assesses had not filed wealth tax returns, claiming their net wealth was below the taxable limit. The Assessing Officer (AO) issued notices under section 17, alleging escapement of wealth tax. The assesses contended that the notices were invalid as they were issued by an office lacking jurisdiction over them.

Issue 2: Jurisdictional concerns regarding notice under section 17 of the Act:
The assesses argued that the notices issued by the non-jurisdictional Assessing Officer were void ab initio, as the belief of wealth escapement can only be formed by the AO with proper jurisdiction. After a cadre restructuring, the cases were transferred to a different ACWT office. The assesses filed returns challenging the validity of the initial notices. The AO proceeded with assessments, including the value of properties in question, leading to appeals before the CWT(A) challenging the jurisdictional issues.

Issue 3: Assessment of the value of co-owned land for Wealth Tax purposes:
The AO included the value of co-owned land and industrial land for Wealth Tax assessment, leading to appeals by the assesses. The CWT(A) upheld the assessments, citing reasons for reopening the assessments and the assesses' participation in the proceedings. The assesses contended that the entire assessment was void due to the invalid notice issued by the non-jurisdictional AO, as per the provisions of the Wealth Tax Act and relevant case law.

Issue 4: Inclusion of industrial land for Wealth Tax assessment:
The assesses challenged the inclusion of industrial land for Wealth Tax assessment, arguing that the jurisdictional issues regarding the notice under section 17 had not been properly addressed. The Tribunal found merit in the assesses' submissions, emphasizing the importance of adjudicating the validity of the notice before assessing the additions made. The Tribunal set aside the CWT(A) order and remanded the case for fresh consideration on the validity of the reassessment proceedings under section 17 of the Wealth Tax Act, 1957.

Conclusion:
The Tribunal allowed the appeals for statistical purposes, emphasizing the need for proper adjudication of jurisdictional issues related to the initiation of reassessment proceedings under section 17 of the Wealth Tax Act. The case highlighted the significance of ensuring that the authority issuing notices has the requisite jurisdiction, as per the provisions of the Act and relevant legal principles.

This detailed analysis covers the key issues raised in the judgment, providing a comprehensive overview of the legal arguments and decisions made by the Tribunal.