2019 (2) TMI 199 - AT - Wealth-tax

Validity of Wealth Tax Assessments - section 25 (2) of Wealth Tax Act - whether inquires were carried out by the ld. WTO, during the course of the assessments? - Held that - When a ld. WTO, who is having a duty to do a Wealth Tax assessment after conducting enquiry which are required of him, in discharge of his duties, does not do so, there is a clear non application of mind. Merely because details were filed by assessee or claim was made through a return would not make it a case, where necessary enquiries required under the Act were carried out - thus, there was indeed a lack of enquiry on the aspect of cash balance held by the respective assessees and such lack of enquiry rendered the Wealth Tax Assessments erroneous and prejudicial to the interest of the Revenue. Ld PCWT was justified in holding so. There are no reasons to interfere with the orders of the ld. PCWT(A) - the appeals of the assessee are dismissed.

Summary

Issues involved:
Appeals against Wealth Tax assessments; Interpretation of provisions of the Wealth Tax Act; Enquiry conducted by the Wealth Tax Officer; Set-off of debts against cash balance; Change of opinion in assessment; Application of Rule 1 of Schedule III of the Act.

Analysis:
1. The appeals were filed by various assessees against Wealth Tax assessments done by the Principal Commissioner of Wealth Tax (PCWT) for different assessment years. The main contention was that the PCWT ruled the assessments as erroneous and prejudicial to the Revenue's interest, specifically regarding the set-off of loans against cash balance for computing net wealth.

2. The assessees argued that they had filed returns as required by the Wealth Tax Act, and the Assessing Officer had accepted the net wealth returned after due consideration. They contended that the PCWT's view on loans not being set-off against cash balance was incorrect and contrary to the Act's provisions, specifically Rule 1 of Schedule III. They relied on legal precedents to support their position.

3. On the contrary, the Departmental Representative argued that the Wealth Tax Officer had not conducted the necessary enquiries before finalizing the assessments, rendering them erroneous. The Tribunal noted that the assessment orders indicated some examination but found no specific enquiry regarding the set-off claimed by the assessees against cash balance, which is essential for computing net wealth under the Act.

4. The Tribunal observed that the Wealth Tax Officer's lack of enquiry into the set-off claimed by the assessees against cash balance constituted a clear non-application of mind. Merely filing details or making claims in returns was not sufficient to fulfill the duty of conducting necessary enquiries as required by the Act. This lack of enquiry rendered the assessments erroneous and prejudicial to the Revenue's interest, justifying the PCWT's decision.

5. The Tribunal upheld the PCWT's orders, dismissing the appeals of the assessees. The judgment emphasized the importance of conducting proper enquiries by the Wealth Tax Officer to ensure accurate assessment of net wealth as per the provisions of the Wealth Tax Act.

This detailed analysis highlights the key arguments, legal interpretations, and the Tribunal's reasoning in the judgment regarding the Wealth Tax assessments and the set-off of loans against cash balance for computing net wealth.