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of <h1>Appeals Dismissed on Reopening of Wealth Tax Assessment for 2010-11</h1> <h3>Sri D.U. Mallikarjuna, Smt. Gowri Mallikarjuna Versus ACIT of Wealth Tax Central Circle-2 (3) Bengaluru</h3> Sri D.U. Mallikarjuna, Smt. Gowri Mallikarjuna Versus ACIT of Wealth Tax Central Circle-2 (3) Bengaluru - TMI Issues:Challenging the validity of reopening of assessment and addition made under Wealth Tax Act.Analysis:The appeals were against the orders passed by Ld CIT(A)-11, Bangalore for the assessment year 2010-11. The AO reopened the assessment due to non-filing of wealth tax returns by the assessees after search operations. The AO assessed the value of plot and construction under progress as taxable wealth. The assessees challenged the reopening of assessment, but Ld CIT(A) upheld it, stating that the AO followed the correct procedure.On the merits, Ld CIT(A) held that the value of the building under construction is not liable to wealth tax, only the plot is taxable. The assessees argued that the plot's size was less than 500 sq. mts., exempt under sec. 5(vi) of the Wealth Tax Act. However, Ld CIT(A) disagreed, stating that wealth tax is payable for a plot exceeding 500 sq. mts. The appeals were dismissed based on this reasoning.During the hearing, the Ld A.R reiterated that the plot's size was below 500 sq. mts., thus exempt from wealth tax. The Ld D.R supported Ld CIT(A)'s decision, emphasizing that if exemption for a house is claimed, no separate exemption for a plot is allowed. The Tribunal analyzed sec. 5(vi) provisions, concluding that if exemption for a house is claimed, no separate exemption for a plot is permissible. The proviso to sec. 5(1)(vi) does not allow separate exemptions for a house and a plot. A proviso qualifies the main enactment and cannot be read independently. Thus, the assessees could not claim exemption for the plot separately if they had already claimed it for a house.Therefore, the Tribunal rejected the assessees' contentions, upholding Ld CIT(A)'s decision to dismiss the appeals. The appeals filed by both assessees were dismissed on 28th Sept, 2020.
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