2020 (8) TMI 288 - AT - Wealth-tax

Tribunal revises asset classification under Wealth Tax Act, citing ambiguity in land ownership

Shri Nishith Surendra Soni Versus Asstt. Commissioner of Wealth–Tax, Circle-10, Ahmedabad

Shri Nishith Surendra Soni Versus Asstt. Commissioner of Wealth–Tax, Circle-10, Ahmedabad - TMI Issues:1. Validity of notice issued under section 17 and consequential order under section 16(3) r.w.s. 17 of the Wealth Tax Act, 1957.2. Classification of residential plots as assets under section 2(ea) of the Wealth Tax Act, 1957.3. Challenge to the validity of the assessment framed under section 16(3) read with section 17 of the Act.Analysis:1. The appeal raised concerns regarding the validity of the notice issued under section 17 and the subsequent order under section 16(3) r.w.s. 17 of the Wealth Tax Act, 1957. The appellant argued that the notice was issued without acquiring valid jurisdiction. The appellant challenged the assessment, contending that the residential plots held should not be considered as assets under section 2(ea) of the Act. The Wealth Tax Officer had information about the acquisition of residential plots by the assessee, leading to the issuance of a show cause notice. The appellant claimed that the construction on the land was ongoing and, therefore, not subject to wealth tax. However, the Assessing Officer disagreed, treating the investment in the lands as taxable wealth. The CIT (A) also rejected the appellant's contentions, leading to the appeal before the Tribunal.2. The appellant further argued that the impugned land belonged to a cooperative housing society, and the membership acquired should not be considered part of the appellant's wealth. Despite presenting the balance sheet of the cooperative society, the authorities did not find sufficient evidence to support the appellant's claim. The Tribunal noted a lack of clarity regarding whether the lands acquired were from the society or other sources. As a result, the matter was remitted back to the wealth tax officer for re-examination, as both parties agreed. The Tribunal allowed the appellant's appeal on this ground for statistical purposes.3. The Tribunal also addressed the delay in pronouncing the order due to exceptional circumstances, such as the Covid-19 pandemic and subsequent lockdown. Citing legal precedents and notifications, the Tribunal extended the time for pronouncing the order, considering the extraordinary disruptions in judicial proceedings. Despite the delay, the Tribunal proceeded to pronounce the order, allowing the appeal of the assessee and dismissing the appeal of the Assessing Officer. The order was pronounced beyond the usual 90-day period, in acknowledgment of the challenges posed by the prevailing circumstances.In conclusion, the Tribunal's decision addressed the issues raised by the appellant regarding the validity of the notice, classification of assets, and delay in pronouncing the order, providing detailed reasoning and legal interpretations to support its conclusions.