Tribunal orders reassessment under amended law for agricultural land exemption

The Tribunal remanded the appeals to the Assessing Officer to reconsider based on the amended provisions of the Wealth Tax Act exempting agricultural land from wealth tax retrospectively from 1.4.1993. The assessee was directed to seek refund from the Principal Commissioner under section 25 of the Act within a one-year timeline, in accordance with CBDT Circular No.11/2015. The Tribunal partially allowed the appeals due to the CIT (A) orders predating the Circular, emphasizing that taxes should align with the law and legitimate taxes due should only be collected.

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Issues:
Appeal against order of CIT (A) regarding wealth tax assessment and refund based on retrospective amendment to section 2(ea) of the Wealth Tax Act.

Analysis:
1. The assessee filed wealth tax returns admitting net wealth, but later an amendment to section 2(ea) of the Wealth Tax Act exempted agricultural land from wealth tax retrospectively from 1.4.1993. The assessee sought refund of wealth tax paid.

2. The CIT (A) dismissed the appeals stating that since the assessee admitted net wealth to tax, the appeals were not maintainable. The assessee raised grounds for appeal, including the amendment to the Wealth Tax Act and treatment of lands as stock-in-trade.

3. The assessee argued that the lands were purchased and sold as agricultural land, falling outside the purview of the Wealth Tax Act post-amendment. The CBDT Circular No.11/2015 directed refund applications for taxes paid on agricultural land due to the retrospective amendment.

4. The Tribunal referred to Article 265 of the Constitution of India, emphasizing that taxes should not be collected without authority of law. Citing legal precedents, the Tribunal highlighted that tax collection should align with the law and legitimate taxes due should only be collected.

5. Considering the CBDT Circular and legal principles, the Tribunal remanded the appeals to the AO to reconsider based on the amended provisions of the Act. The assessee was directed to seek refund from the Principal Commissioner under section 25 of the Act, with a one-year disposal timeline.

6. The Tribunal partially allowed the appeals for statistical purposes due to the CIT (A) orders predating the CBDT Circular. The order was pronounced on 11th March, 2020.

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