2022 (5) TMI 137 - AT - Wealth-tax

Wealth tax assessment - assessment of cash in hand in the hands of individual assessee - whether liable to wealth tax or not? - assessee claimed that he runs a big retain chain of business in the State wherein the daily cash sales clocks in an average of Rs.1.5 crores and availed overdraft facility from Indian Bank, T.Nagar Branch against the security of current asset, mainly of stock in trade with the condition that the realization of sale proceeds is to be deposited with them - HELD THAT - We noted that the assessee may be having big retail chain of business but assessee is an individual. Admittedly, the assessee has cash in hand of Rs.1,41,65,793/-. As per the Wealth Tax Act, Section 2(ea) i.e., definition of assets in relation to assessment year commencing on the 1st day of April 1993 or any subsequent assessment year means (vi) cash in hand, in excess of fifty thousand rupees, of individuals and Hindu undivided families and in the case of other persons any amount not recorded in the books of account We noted that assessee is an individual and this cash in hand is kept in the capacity of individual and not kept as cash in books of accounts. As per the definition of section 2(ea)(vi) of the Act, the excess cash in excess of rupees fifty thousand will be treated as asset and will be included in the net wealth of the assessee. In term of the above, we find no infirmity in the orders of lower authorities and accordingly this issue of assessee s appeal is dismissed.

Summary

Issues:
Assessment of cash in hand for wealth tax liability.

Analysis:
The appeal pertains to the assessment of cash in hand amounting to Rs.1,41,65,793 in the hands of an individual assessee and whether it is liable to wealth tax. The Assessing Officer (AO) found that the cash exceeded Rs.50,000, making it liable for wealth tax. The Commissioner of Wealth Tax (Appeals) affirmed the AO's decision, stating that cash exceeding Rs.50,000 is considered an asset for wealth tax purposes for individuals and Hindu Undivided Families. The appellant argued that the cash should be treated as a business asset and exempt from wealth tax, citing a decision by ITAT. However, the CIT(A) referenced a High Court ruling that clarified cash in hand exceeding Rs.50,000 is to be treated as a nonproductive asset for individuals and HUFs. The Tribunal noted the appellant's claim of running a retail business but upheld the lower authorities' decision, stating that the excess cash constitutes an asset under the Wealth Tax Act and must be included in the net wealth of the assessee. Consequently, the appeal was dismissed, affirming the inclusion of cash in hand for wealth tax assessment.

In conclusion, the Tribunal upheld the assessment of cash in hand exceeding Rs.50,000 as a taxable asset for wealth tax purposes, rejecting the appellant's argument that it should be considered a business asset. The decision was based on the statutory definition of assets under the Wealth Tax Act, which mandates the inclusion of excess cash in an individual's net wealth. Despite the appellant's contentions regarding the nature of the cash as part of a retail business operation, the Tribunal found no error in the lower authorities' rulings and dismissed the appeal accordingly.