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TMI Blog2009 (12) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer had accepted the same value under section 16(3) of the Act - substantial portion was rented out in the said property and the assessee had a reason to believe that value was required to be assessed in view of the basis of capitalization method as the said property was under lis – Held that:- it was not a case falling under section 18(1)(c) of the Act for imposing penalty – Penalty not sustainable – In favor of assessee. - 1 of 1996 and 12, 13 and 14 of 2001 - - - Dated:- 8-12-2009 - MISRA R. B., SURINDER SINGH, JJ. JUDGMENT Surinder Singh J.- 1. This judgment shall answer the points of reference and dispose of the appeals filed by the Revenue under section 27A of the Wealth-tax Act, 1957, in short "the Act". 2. The facts giving rise to the reference and appeals aforesaid can be stated thus. There has been 7077 sq. yards land situated at New Delhi, having a multi storeyed house over 5000 sq. yards called "Himalya House" and 2077 sq. yards land was located behind the said house having old built up structure and a vacant land, one-third thereof, i.e., 692 square yards fell in the share of the respondent-assessee. It was in the occupation of the family m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee at Rs. 71,99,700, vide order dated February 28, 1992. 8. Further, the respondent-assessee also filed the return on January 29, 1991, for the assessment year 1989-90 declaring the total wealth of Rs.7,90,500. The Assessing Officer started scrutiny assessment under sec- tion 16(3) of the Act. During the course of hearing, the Assessing Officer noticed the assessee's assets included the abovementioned property measuring 692 sq. yards valued at Rs. 200 per sq. yard. Since the property measuring 692 sq. yards, which included the tenanted premises of Shri Jagdish Mitra and this portion was not surrendered to MCD nor any service lanes were constructed, but its part was used as a common passage to approach "Himalya House" and back lawn measuring 147 sq. yards, remained in the possession of the Hindu undivided family. Under these circumstances, the Assessing Officer held that it was neither possible to value this property under rule 1BB nor in accordance with rules 3 to 7 of Schedule III appended to the Act, therefore, he determined it as per rule 20 of the Rules framed under the Act. Thus, he applied the value of the land at Rs. 23,000 per sq. metre as aforesaid and made an addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we hold that the Assessing Officer was justified in reopening the assessments. 17. As regards the merits of the case, we find that both the learned counsel for the assessee and the learned Departmental representative reiterated the same arguments and same points which were made by them for the assessment year 1989-90. For the reasons mentioned above while dealing with the assessee's appeal for the assessment year 1989-90, we direct the Assessing Officer to value the built-up portion the property in the light of rule 1BB so, however, that its value is not less than Rs. 20,730 as shown by the assessee, ignore the value of 32 sq. yds. of land in respect of the front lawn and of 118 sq. yds. by way of passage. The Assessing Officer shall add 50 per cent. of the value of land at the back lawn measuring 147 sq. yds. at Rs. 8,000 per sq. metre. The aggregate value thus arrived at shall stand substituted for the value of Rs. 1,59,130 as shown by the assessee." 13. By allowing the appeals the Income-tax Appellate Tribunal allowed the substantial relief to the assessee. 14. Aggrieved by the orders aforesaid the Revenue filed a reference under section 27(1) of the Act and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he value of the land was worked out to Rs. 1,33,07,800, however, an amount equal to 50 per cent. of the value of the property as determined above was adjusted treating the same as unearned increase in the value of the land. Therefore, the net value of the land is determined at Rs. 66,53,900 as against the value of the land declared by the assessee at Rs. 1,38,400. Thus, the difference was worked out to Rs. 65,15,500, which was added back to the net wealth of the assessee. 21. The net wealth of the assessee was computed as under : Rs. Net wealth as shown by the assessee 7,90,500 Add back : An addition of Rs. 65,15,500 is made as discussed in paragraphs 3 and 4 by the Income-tax Appellate Tribunal in details 65,15,500 Net wealth 73,06,000 Less : W. T. liability 1987-88 and 1988-89 (184135 + 199350) 3,83,485 Net wealth 69,22,515 69,22,500 22. As stated above, less wealth-tax liability for 1987-88 and 1988-89 was to the tune of Rs. 3,83,485, therefore, a penalty notice was issued under sec- tion 18(1)(c) of the Act. 23. According to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shall be the aggregate of the following amounts, namely :- (a) The amount arrived at by multiplying the net maintainable rent in respect of part of the house used for residential purposes by the fraction 100/8 ; and (b) The amount arrived at by multiplying the net maintainable rent in respect of the remaining part of the house, if any, by the fraction 100/9 : Provided that in relation to a house which is built on leasehold land, this sub-rule shall have effect, as if for the fraction 100/8 in clause (a), or, as the case may be, the fraction of 100/9 in clause (b), the fraction 100/9 and 100/10, respectively, have been substituted, Sub-rule (2)(a) defines the expression 'gross maintainable rent'; sub-rule 2(b) defines 'house' as including an independent residential unit and sub-rule (2)(c) the expression 'net maintainable rent'. Sub-rule (5), however, envisages a departure from the regime of sub-rule (1) and provides that where the Wealth-tax Officer, having regard to the facts and circumstances of the case, is of the opinion that it is not practicable to apply the provisions of the rules to such a case, he may apply the rule with the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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