2016 (11) TMI 143 - AT - Wealth-tax

Addition of taxable wealth of the assessee because of surrender of the cash found in locker during the course of search - Held that - The undisputed fact is that that assessee tried to explain the amount of cash seized from the locker with syndicate bank which was in the name of the assessee and the amount of ₹ 30 lakhs was found there from. Further, the explanation of the assessee was also not found to be correct that money belongs to the parents of the assessee as they gave this sum prior to year 2000 to the assessee because of the slips of the bank, which were bearing the dates of the year 2002 and 2003 and for which assessee did not offer any explanation. Further, the assessee in his statement has also disclosed the above sum as additional income and also paid due tax thereon. In view of these overwhelming evidence against the assessee, we are of the view that the the above sum of ₹ 30 lakhs belonged to the assessee. According to the provisions of section 3 of the wealth tax act every individual shall be charged tax on the net wealth as at the valuation date. Further, the net wealth has been defined under section 2 (m) of the wealth tax act to mean all the assets belonging to the assessee in excess of the debt owed as on the valuation date. According to the provisions of section 2(ea) of the act assets in case of individual includes cash in excess of ₹ 50,000/-. Therefore, as the above sum was belonging to the assessee as accepted by him as his income in income tax proceedings, now he cannot say that the above sum is not includible into the net wealth of the assessee. In view of this we confirm the order of the Ld. Commissioner of wealth tax confirming the addition of ₹ 30 lakhs on account of cash found in the locker belonging to the assessee and which was also added under section 69A of the income tax act in the hands of the assessee.

Issues Involved:
1. Legality of the assessment order under section 16(3) of the Wealth Tax Act.
2. Principles of natural justice and reasonable opportunity of being heard.
3. Initiation of proceedings under section 18(1)(c) of the Wealth Tax Act.
4. Addition of ?25,00,000 to taxable wealth on account of cash found in a locker.
5. Addition of ?6,54,750 to taxable wealth on account of an industrial plot at Narela.

Detailed Analysis:

1. Legality of the Assessment Order under Section 16(3) of the Wealth Tax Act:
The assessee challenged the assessment order passed by the Assessing Officer (AO) under section 16(3) of the Wealth Tax Act, claiming it was bad in law and wrong on facts. However, during the hearing, the assessee did not press this ground of appeal for the assessment years 2005-06 to 2008-09. Consequently, these grounds were dismissed.

2. Principles of Natural Justice and Reasonable Opportunity of Being Heard:
The assessee contended that the assessment order was against the principles of natural justice as it was passed without affording a reasonable opportunity of being heard. Similar to the first issue, the assessee did not press this ground during the hearing for the assessment years 2005-06 to 2008-09, leading to the dismissal of these grounds.

3. Initiation of Proceedings under Section 18(1)(c) of the Wealth Tax Act:
The assessee argued that the AO erred in initiating proceedings under section 18(1)(c) of the Wealth Tax Act. This ground was also not pressed by the assessee during the hearing for the assessment years 2005-06 to 2008-09, resulting in its dismissal.

4. Addition of ?25,00,000 to Taxable Wealth on Account of Cash Found in Locker:
During a search and seizure operation on 14/02/2008, ?30 lakhs were found in a locker in the name of the assessee. The assessee surrendered this amount as income for the assessment year 2005-06, and it was added to the total income. However, in the wealth tax proceedings, the assessee did not include this amount in his wealth tax return, claiming it belonged to his parents. The AO rejected this contention, adding ?25 lakhs (after a deduction of ?5 lakhs already disclosed) to the net wealth of the assessee.

The Tribunal upheld the AO's decision, stating that the money belonged to the assessee, as evidenced by the slips of the bank bearing dates of 2002 and 2003, which contradicted the assessee's claim that the money was given by his parents prior to 2000. The Tribunal confirmed the addition of ?25 lakhs to the net wealth of the assessee for the assessment years 2005-06 to 2008-09.

5. Addition of ?6,54,750 to Taxable Wealth on Account of Industrial Plot at Narela:
For the assessment years 2006-07 and 2007-08, the assessee contested the addition of ?6,54,750 to taxable wealth on account of an industrial plot at Narela, arguing that it did not fall under the definition of "assets" as per section 2(ea) of the Wealth Tax Act. The AO included this amount in the net wealth, treating it as "urban land."

The Tribunal found that the Commissioner of Wealth Tax had not disposed of this ground of appeal. Therefore, the Tribunal restored this issue back to the Commissioner of Wealth Tax to adjudicate on merit after providing the assessee a reasonable opportunity of hearing.

Conclusion:
- The appeals for the assessment years 2005-06 and 2008-09 were dismissed.
- The appeal for the assessment year 2006-07 was partly allowed, with the issue regarding the industrial plot being remanded back for fresh adjudication.
- The appeal for the assessment year 2007-08 was partly allowed, with a similar remand for the industrial plot issue.

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