TaxTMI 
TaxTMI 
2018 (3) TMI 1471
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....hort facts leading to filing of these appeals, are as follows: (i) The appellant/assessee, is an individual, regularly assessed, under the Income Tax Act. A search was conducted in his premises, on 24.11.2011, under Section 132, of the Income Tax Act. (ii) The assessee, though, liable to pay wealth tax, did not file any wealth tax return, for the assessment years 2007-08 and 2008-09. (iii) The Assessing Officer, issued a Notice under Section 17 of the Wealth Tax Act, 1957 (hereinafter referred to as the Act ) to the assessee on 12.11.2013, calling upon him to file the wealth tax returns. (iv) In response to the said notice, the assessee, filed wealth tax Returns on 19.02.2014, declaring a net worth of Rs. 8,85,84,300/-, for assessment year 2007-08 and Rs. 19,22,50,591/- for assessment year 2008-09. (v) These returns were taken up for scrutiny and assessments were completed on 30.01.2015, accepting the net wealth as stated in the returns. However, the respondent, proposed levy of interest under Section 17B(1) of the Act to the tune of Rs. 6,70,550/- for the assessment year 2007-08 and Rs. 12,39,879/- for the assessment year 2008-09, respectively. (vi) But the asses....
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....lowed the appeals filed by the assessee and held as follows: "As the facts of the instant case are identical with the case quoted above, respectfully following the Hon'ble Tribunal's decision, the AO is directed to modify the interest calculated accordingly. Hence this ground of appeal, for both the Ays 2007-08 and 2008-09, is allowed." 7. Aggrieved by the order of the Commissioner of Wealth Tax (Appeals)-18, the Revenue preferred appeals before the Income Tax Appellate Tribunal 'A' Bench, Chennai (in short the Tribunal ) in W.T.A.Nos.18 and 19 of 2017. 8. By placing reliance on the decision in the case of Smt.M.T.Prabhavathy Vs. ACIT reported in 80 ITD 520 (Bang) by a common order dated 16.08.2017, the Tribunal, reversed the order of the Commissioner of Wealth Tax (Appeals)-18, Chennai in respect of assessment years 2007-08 and 2008-09. The Tribunal observed that merely because the due date for filing of the Wealth Tax Return expired and the assessee had not filed his return within the due date, it cannot be said that the assessee is exempt from the levy of interest u/s 17B of the Wealth Tax Act. In respect of the period between the due date under Se....
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....17 stands allowed and WTA Nos.20 to 22/Mds/2017 stands dismissed and CO Nos.68 to 72/Mds/2017 stands dismissed as infructuous." 9. Aggrieved by the common order of the Tribunal dated 16.08.2017, the assessee has filed the instant tax case appeals before this Court with the following substantial questions of law: "(i) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the interest for defaults in furnishing return of net wealth would commence from the due date of filing of Wealth Tax return u/s.14(1) of the Wealth Tax Act, 1957, even in the case of a first time assessment u/s.17 of the Wealth Tax Act ? (ii) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in confirming the levy of interest u/s.17B(1) of the Wealth Tax Act instead of Section 17B(3) in the case of a first time assessment u/s.17 of the Wealth Tax Act ? (iii) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in confirming the levy of interest u/s.17B(1) of the Wealth Tax Act from the due date u/s/1....
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....date for filing of the wealth tax returns expired and the assessee had not filed his return within the due date, it cannot be said that the assessee is exempted from the levy of interest u/s.17B in respect of the period between the due date and the date of notice u/s.17. (iii) That the levy of interest u/s.17B was compensatory as held in Smt.M.R.Prabhavathy Vs. ACIT, reported in 80 ITD 520 (Bang.). 12. Learned counsel for the Revenue relied on a Hon'ble Division Bench decision of this Court in Textile Dye-Chem Corporation Vs. Assistant Commissioner of Income Tax reported in (2013) 85 CCH 0096 and prayed for dismissal of the tax appeals. 13. Heard the learned counsel appearing for the parties and perused the materials available on record. 14. From the materials available on record, it can be seen that at the first instant, before the Assessing Officer, the assessee, calculated interest under Section 17B(3) for 3 months only for the delay i.e. from the due date u/s 17 i.e. 12.11.2013, to the date of filing of return of wealth i.e. 19.02.2014, for the assessment years 2007-08 and 2008-09 respectively and accordingly, paid interest to the tune of Rs. 52,248/- and ....
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...., such assessment, has to be treated, as a regular assessment and thus, the interest has to be levied from the due date u/s 14(1) of the Act and not from the date of issue of notice u/s 17 of the Act. 19. Following the decision in Smt.M.R.Prabhavathy Vs. ACIT reported in 80 ITD 520 (Bang) the Tribunal held that in respect of the assessment years 2007-08 & 2008-09, the filing of the return of wealth is a mandatory duty on the assessee once the net wealth exceeds the prescribed limit. Just because, the due date for filing of the Wealth Tax Returns expired and the assessee had not filed his return within the due date, it cannot be said that the assessee is exempted from the levy of interest u/s.17B in respect of the period between the due date and the date of the notice u/s.17. Further stating that the levy of interest u/s.17B is compensatory in nature, the Tribunal reversed the order of the Commissioner of Wealth Tax (Appeals) levying interest u/s 17B(3) and restored the order of the Assessing Officer levying interest u/s 17B(1) of the Act. 20. In nut shell, the contention of the assessee is that interest should be calculated under Section 17B(3). But, according to the Assessin....
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....o is not an assessee within the meaning of the Income-tax Act, the valuation date for the purposes of this Act shall be the 31st day of March immediately preceding the assessment year; (iii) where an assessment is made in pursuance of section 19A, the valuation date shall be the same valuation date as would have been adopted in respect of the net wealth of the deceased if he were alive; *** "14. Return of Wealth. (1) Every person, if his net wealth or the net wealth of any other person in respect of which he is assessable under this Act on the valuation date exceeded the maximum amount which is not chargeable to wealth-tax, shall, on or before the due date, furnish a return of his net wealth or the net wealth of such other person as on that valuation date in the prescribed form and verified in the prescribed manner setting forth particulars of such net wealth and such other particulars as may be prescribed. Explanation. In this sub-section, due date in relation to an assessee under this Act shall be the same date as that applicable to an assessee under the Income-tax Act under the Explanation to sub-section (1) of section 139 of the Inco....
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....intimation under this sub-section where either no sum is payable by the assessee or no refund is due to him: Provided further that no intimation under this sub-section shall be sent after the expiry of two years from the end of the assessment year in which the net wealth was first assessable. (2) Where a return has been made under section 14 or section 15, or in response to a notice under clause (i) of sub-section (4) of this section, the Assessing Officer shall, if he considers it necessary or expedient to ensure that the assessee has not understated the net wealth or has not under-paid the tax in any manner serve on the assessee a notice requiring him, on a date to be specified therein, either to attend at the office of the Assessing Officer or to produce, or cause to be produced there, any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub-section shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished. (3) On the day specified in the notice issued under sub-section (2) or as soon afterwards as may be, after hearing such e....
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.... paid by the assessee under sub-section (1) shall be deemed to have been paid towards such regular assessment. (b) if no refund is due on regular assessment or the amount refunded under sub-section (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly. *** 17. Wealth escaping assessment. (1) If the Assessing Officer has reason to believe that the net wealth chargeable to tax in respect of which any person is assessable under this Act has escaped assessment for any assessment year whether by reason of under-assessment or assessment at too low a rate or otherwise, he may, subject to the other provisions of this section and section 17A, serve on such person a notice requiring him to furnish within such period, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth the net wealth in respect of which such person is assessable as on the valuation date mentioned in the notice, along with such other particulars as may be required by the notice....
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.... shall also be deemed to be cases where net wealth chargeable to tax has escaped assessment, namely: (a) where no return of net wealth has been furnished by the assessee although his net wealth or the net wealth of any other person in respect of which he is assessable under this Act on the valuation date exceeded the maximum amount which is not chargeable to wealth-tax; (b) where a return of net wealth has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the net wealth or has claimed excessive exemption or deduction in the return. (1B)(a) In a case where an assessment under sub-section (3) of section 16 or sub-section (1) of this section has been made for the relevant assessment year, no notice shall be issued under sub-section (1) by an Assessing Officer, who is below the rank of Assistant Commissioner or Deputy Commissioner, unless the Joint Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for the issue of such notice: Provided that after the expiry of four years from the end of the relevant assessment year....
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....nder sub-section (1) of section 16 or on regular assessment. Explanation 1. In this section, due date means the date specified in sub- section (1) of section 14 as applicable in the case of the assessee. Explanation 2. In this sub-section, tax payable on the net wealth as determined under sub-section (1) of section 16 shall not include the additional wealth-tax, if any, payable under section 16. Explanation 3. Where, in relation to an assessment year, an assessment is made for the first time under section 17, the assessment so made shall be regarded as a regular assessment for the purposes of this section. Explanation 4. In this sub-section, tax payable on the net wealth as determined under sub-section (1) of section 16 or on regular assessment shall, for the purposes of computing the interest payable under section 15B, be deemed to be tax payable on the net wealth as declared in the return. (2) The interest payable under sub-section (1) shall be reduced by the interest, if any, paid under section 15B towards the interest chargeable under this section. (3) Where the return of net wealth for any assessment year, required by a not....
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....2.2014, as against the due date of 01.10.2007, for the assessment year 2007-08 and for the assessment year 2008-09 return of net wealth has been filed on 19.02.2014, as against the due date of 01.10.2008. Thus, apparently, there is a delay in filing the return. 26. Since these assessments were made for the first time, they are regular assessment made under the Act. Therefore, we have to proceed that a regular assessment has been completed under the Act and all natural consequences of such assessment will have to follow under the different sections of the Act. No doubt, assessment implies not only the determination of net wealth liable to be taxed under the Act, but also the wealth-tax payable by the assessee on the net wealth assessed including liability to interest under Section 17B, if chargeable. 27. The intention of the Legislature in enacting the provisions of Section 17B is clear. It is to levy interest which is compensatory in nature for withholding the revenue due to the Government on account of delay in filing the return of net wealth. 28. In the present case, such a delay has occurred on the part of the assessee in not filing the return of net wealth for the asse....
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....) Section 17 inter alia provides that the provisions of the Wealth Tax Act, 1957 shall, so far as may be, apply as if the return filed under the section were a return required to be furnished under Section 14. (vi) Explanation 3 under Section 17B(1) makes it very clear that where in relation to an assessment year an assessment is made for the first time under Section 17, the assessment so made shall be regarded as a regular assessment for the purpose of this section. 31. Learned counsel for Revenue brought to our notice a Hon'ble Division Bench decision of this Court in Textile Dye-Chem Corporation Vs. Assistant Commissioner of Income Tax reported in (2013) 85 CCH 0096. The issue in the said case was: "Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that interest under Section 234B (Interest for defaults in payment of advance tax) is chargeable under Section 234B(1) and Section 234B(3) has no application " The Hon'ble Division Bench at paragraph 4 to 6 held as follows: "4. We do not agree with the submission of the assessee herein on the admitted fact that the ass....