2021 (3) TMI 1185 - AT - Wealth-tax

Reopening of wealth tax assessment - assessee has not filed any wealth tax return as on the basis of cash in hand - HELD THAT - As notice u/s.17 of the Wealth Tax Act, 1957, was issued by the Assessing Officer after verification of balance-sheet filed by the assessee along with return of income pertaining to income-tax assessment, the Assessing Officer has noticed that assessee has shown cash in hand to the amount of ₹ 85 lakhs in the balance-sheet. Assessee has neither paid wealth tax nor filed any wealth-tax return. Therefore, the Assessing Officer has reopened the wealth tax assessment after recording due reasons and obtaining necessary approval. Looking to the aforesaid facts and circumstances of the case, we do not find any infirmity in justifying the reopening of wealth-tax assessment and further on the basis of notices issued to the assessee, we consider that sufficient opportunities were provided to the assessee at the time of wealth-tax assessment. In view of the above, Ground Nos.1 to 3 of the assessee s appeal are rejected. Treating disclosed cash in hand as part of total wealth-tax of the assessee - At the time of wealth-tax assessment, assessee has claimed that aforesaid cash was actually represented outstanding amount as a receivable and incorrectly shown as cash in hand in the balance-sheet. In this regard, it is noticed that assessee has not shown any debtor or any other receivable to substantiate his claim that actually the cash in hand was receivable. As gone through the paper-book filed by the assessee and noticed that assessee has failed to produce any material to authenticate his contention that the cash in hand in his account was actually receivable and pertained to the sales. In the light of above facts and circumstances, it is clear that assessee has not rendered any cogent explanation or documentary evidence to support his contention before the authorities below or before us at the time of appellate proceedings. Even the assessee has not given the basic details of list of debtors from whom the aforesaid amount was receivable. Therefore, no merit in the ground of assessee s appeal.

Summary

Issues Involved:
1. Validity of reopening of wealth tax assessment under section 17 of the Wealth Tax Act, 1957.
2. Treatment of disclosed income debited to cash on hand as actual cash on hand or receivable in cash.

Analysis:

Issue 1: Validity of Reopening of Wealth Tax Assessment
The appeal was filed against the order of the Commissioner of Wealth Tax (Appeals) regarding the reopening of assessment under section 17 of the Wealth Tax Act, 1957. The Assessing Officer initiated proceedings under section 17 as the assessee had not filed a wealth tax return despite showing cash in hand of ?85 lakhs in the balance-sheet. The appellant contended that the initiation of action under section 17 was invalid and the assessment deserved to be quashed. The Commissioner of Wealth Tax (Appeals) dismissed the appeal, stating that the notice under section 17 was issued based on an audit objection during the income tax assessment. The Commissioner held that the audit objection did not pertain to wealth tax assessment, and therefore, the initiation of proceedings under section 17 was valid. The Commissioner relied on legal precedents to support the decision, emphasizing that the audit party's role is to point out factual errors or omissions in assessments, justifying the reopening of cases based on such errors. The Commissioner concluded that the appellant was provided with adequate opportunities and there was no violation of natural justice principles.

Issue 2: Treatment of Disclosed Income
The second issue pertained to the treatment of ?85 lakhs disclosed as cash in hand by the assessee. The Assessing Officer treated this amount as actual cash on hand, adding it to the total wealth of the assessee. The Commissioner of Wealth Tax (Appeals) upheld this decision, stating that the assessee had declared the amount as cash in hand during a search. The Commissioner rejected the claim that the amount was receivable instead of actual cash, noting that the assessee failed to provide evidence or list of debtors to support this claim. The Commissioner emphasized that the burden of proof was on the assessee to substantiate the claim that the cash in hand was not actual cash but a receivable. The Commissioner also deleted certain additions made by the Assessing Officer, considering the nature of business assets not liable for wealth tax. The appellate tribunal, after considering the arguments from both sides and perusing the records, dismissed the appeal, affirming the decision of the Commissioner of Wealth Tax (Appeals) regarding the treatment of the disclosed income.

In conclusion, the appellate tribunal upheld the decisions regarding the validity of reopening the wealth tax assessment under section 17 and the treatment of disclosed income as cash on hand. The appeal of the assessee was dismissed, and the order was pronounced on 22/03/2021.