Income Tax Appellate Tribunal - Chennai
Ravi Kumar Gupta, Bengaluru vs Acit, Central Cir 1(1), Chennai on 26 August, 2019
आयकर अपीलीय अिधकरण, 'सी' ायपीठ, चे ई
IN THE INCOME-TAX APPELLATE TRIBUNAL 'C' BENCH, CHENNAI
ी धु ु आर. एल रे ी, ाियक सद एवं ी एस जयरामन, लेखा सद के सम
Before Shri Duvvuru RL Reddy, Judicial Member &
Shri S. Jayaraman, Accountant Member
W.T.A. Nos.37, 38, 39, 40, 41 & 42/Chny/2019
िनधारण वष/Assessment Years: 2010-11 to 2015-16
Shri Ravi Kumar Gupta, The Assistant Commissioner of
No. 444, 3rd Block, 3rd Cross, Vs. Income Tax,
8th Main, Koramangala, Central Circle 1(1),
Bengaluru 560 095. Chennai.
[PAN: AADPG3089J]
(अपीलाथ /Appellant) ( थ /Respondent)
अपीलाथ की ओर से / Appellant by : Shri V.K. Gurunathan, Advocate
थ की ओर से/Respondent by : Shri R. Clement Ramesh Kumar, Addl.CIT
सुनवाई की तारीख/ Date of hearing : 11.07.2019
घोषणा की तारीख /Date of Pronouncement : 26.08.2019
आदे श /O R D E R
PER DUVVURU RL REDDY, JUDICIAL MEMBER:
These six appeals filed by the assessee are directed against the common order of the ld. Commissioner of Income Tax (Appeals)-18, Chennai, dated 12.12.2018 relevant to the assessment years 2010-11, 2011-12, 2012-13, 2013-14, 2014-15 and 2015-16. The assessee has raised the following grounds:
1. The learned Commissioner of Wealth-tax (A) ought to have appreciated that the appellant was entitled to the deduction towards income-tax liability while computing the net wealth of the appellant.2 W.T.A. Nos. 37-42/Chny/19
2. The learned CWT(A) ought to have appreciated that the income-tax liability was a charge on each and every asset of the appellant and accordingly it was charge on the jewellery held by the appellant and consequently even by applying the provisions of Sec.2(m) of the Wealth-tax Act, the income-tax liabilities are liable to be allowed against the value of the asset.
3. The learned CWT(A) ought to have allowed unsecured loan liability as claimed by the appellant since the loans were obtained for the acquisition of the jewellery.
4. Without prejudice, the disallowances are excessive, arbitrary and unreasonable and liable to be reduced substantially.
5. The learned CWT(A) erred in confirming the levy of interest u/s.17B of the Act.
6. For these and such other grounds that may be urged at the time of hearing of the appeal, the Appellant prays that the appeal may be allowed."
2. All the appeal filed by the assessee are delayed by 15 days, for which, the ld. Counsel for the assessee has filed a petition in support of an affidavit for condonation of the delay, to which; the ld. DR has not raised any serious objection. Consequently, since the assessee was prevented by sufficient cause, the delay of 15 days in filing of the appeals stands condoned and the appeals are admitted for adjudication
3. Brief facts of the case are that a search and seizure operation under section 132 of the Income Tax Act was carried out in the assessee's case and other related persons / companies on 07.08.2014. During the course of search in the residential premises of the assessee's son, Shri Alok Gupta, certain gold and diamond jewellery and silver articles were found and 3 W.T.A. Nos. 37-42/Chny/19 seized. Further, during the course of assessment proceedings of Shri Alok Gupta for assessment year 2015-16, it was stated that the 122.17 gms of gold jewellery, loose diamonds of 109.34 carats for ₹. 20.31 lakhs as on 31.3.1998 and silver articles of 13.75 kgs valued at ₹. 7.74 lakhs are owned by his father, Shri Ravi Kumar Gupta and in proof of the same filed copies of Wealth Tax return of his father for assessment year 1998-99. On perusal of the WT return filed, the Assessing Officer noticed that the assessee has owned urban land chargeable to Wealth Tax. These assets were valued at ₹. 9.32 lakhs as on 31.3.1998. Thus, the Assessing Officer was of the opinion that the assessee was having wealth chargeable to tax or the assessment year 2010-11 as per the information available on record. However, the assessee did not file his return for the impugned assessment years voluntarily. The Assessing Officer issued notice under section 17 of the wealth tax Act ["Act" in short] on 15.3.2017 since there was reason to believe that the net wealth chargeable to tax has escaped assessment. In response to the notice issued, the assessee filed its returns of wealth on 17.4.2017 for the following years as under:
A.Y. Gross Wealth Liabilities Net Wealth 2(ea)
wealth
2010-11 8,31,21,458 4,10,57,004 4,20,64,454 Nil
2011-12 18,93,37,943 9,33,04,899 9,60,33,044 Nil
2012-13 35,73,66,328 17,05,91,146 18,67,75,182 Nil
2013-14 58,11,03,531 27,26,14,517 30,84,89,014 Nil
2014-15 62,91,85,457 30,08,52,904 32,83,32,553 Nil
2015-16 70,39,87,368 35,34,93,484 35,04,93,884 Nil
4 W.T.A. Nos. 37-42/Chny/19
3.1 The Assessing Officer observed that in the return, the assessee computed gross wealth and net wealth and from the net wealth, he reduced exemption under section 2(ea) of the WT Act, thereby arriving at 'Nil'. Accordingly, a letter was issued to the assessee to clarity the basis of value of immovable properties, jewellery declared, statement of net wealth including taxable assets and deemed assets and to furnish evidence regarding liabilities incurred in relation to such assets for which there was no response. Hence, the Assessing Officer completed the assessment based on the material available on record thereby not allowing the claim of Income tax liability and determined the net wealth and taxable wealth as under:
A.Y. Wealth taxable
2010-11 50,75,900
2011-12 58,61,000
2012-13 1,12,85,781
2013-14 2,41,33,385
2014-15 3,16,70,400
2015-16 5,64,13,800
4. The assessee carried the matter in appeal before the ld. CIT(A). after considering the submissions of the assessee and by following the decision in the case of J. Jayalalitha v. ACWT [2009] 309 ITR 277 (Mad), the ld. CIT(A) dismissed the ground raised by the assessee.
5. On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the assessee was entitled to the deduction towards income tax liability while computing the net 5 W.T.A. Nos. 37-42/Chny/19 wealth of the assessee. It was further submission that the income tax liability was a charge on each and every asset of the assessee and accordingly, it was charge on the jewellery held by the assessee and consequently even by applying the provisions of section 2(m) of the Act, the income tax liabilities are liable to be allowed against the value of the asset. By relying upon the judgement of the Hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd. 88 ITR 192, the ld. Counsel for the assessee has submitted that since two views are possible in view of the decisions of the Hon'ble Madras High Court in the case of J. Jayalalitha v. ACWT (supra) and in the case of CIT v. Pierce Leslie & Co. Ltd. [1963] 48 ITR 1005 (Mad), the view in favour of the assessee should be followed.
6. On the other hand, the ld. DR strongly supported the orders of authorities below.
7. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. During the course of search in the residential premises of the assessee's son, Shri Alok Gupta, certain gold and diamond jewellery and silver articles were found and seized. Further, during the course of assessment proceedings of Shri Alok Gupta for assessment year 2015-16, it was stated that the 122.17 gms of gold jewellery, loose diamonds of 109.34 carats for ₹. 20.31 lakhs as on 6 W.T.A. Nos. 37-42/Chny/19 31.3.1998 and silver articles of 13.75 kgs valued at ₹. 7.74 lakhs are owned by his father, Shri Ravi Kumar Gupta and in proof of the same filed copies of Wealth Tax return of his father for assessment year 1998-99, wherein, the assessee owned urban land chargeable to Wealth Tax. These assets were valued at ₹. 9.32 lakhs as on 31.3.1998. The assessee did not file his return for the impugned assessment years voluntarily. Since there was reason to believe that the net wealth chargeable to tax has escaped assessment notice under section 17 of the Act was issued. In response to the notice issued, the assessee filed its returns of wealth on 17.4.2017 for the assessment years 2010-11 to 2015-16, wherein, the assessee computed gross wealth and net wealth and from the net wealth, he reduced exemption under section 2(ea) of the WT Act, thereby arriving at 'Nil'. The assessee was asked to clarity the basis of value of immovable properties, jewellery declared, statement of net wealth including taxable assets and deemed assets and to furnish evidence regarding liabilities incurred in relation to such assets for which there was no response from the assessee. Before the ld. CIT(A), the assessee claimed unsecured loans and income tax payable as liabilities against gross wealth. After considering the submissions of the assessee, the ld. CIT(A) has observed that as per the provisions of the Wealth Tax Act, the income tax liability is not an allowable liability and by following the decision in the case of J. Jayalalitha v. ACIT (supra), the ld. 7 W.T.A. Nos. 37-42/Chny/19 CIT(A) confirmed the addition made by the Assessing Officer. We have gone through the above decision of the Hon'ble Jurisdictional High Court, wherein, it was held as under:
"Section 2(m) of the Wealth-tax Act, 1957 - Net wealth - Debt owed - Assessment year 1993-94 - Whether income-tax and wealth-tax liabilities can be deducted as debts due in relation to taxable assets - Held, no."
Moreover, we have also perused the case law relied on by the ld. Counsel in the case of CIT v. Pierce Leslie & Co. Ltd. (supra) and find that the said decision also cannot come to the rescue of the assessee, because, in that case, the Hon'ble Jurisdictional High Court has held that the assessee can claim deduction only on the ascertained liability, whereas, the "debt" does not cover the amount reserved for tax liability in anticipation of the assessment or further demand if assessment has been made. It was further made it clear that when the Department had not even assessed assessee's income and levied tax, it was not a debt owed within the meaning of section 2(m) of the Wealth-tax Act. The relevant held-note is reproduced as under:
Section 2(m) of the Wealth-tax Act, 1957 - Net wealth - Debt owed - Assessment year 1957-58 - Assessee, a non-resident company, claimed to deduct following amounts as "debts" in computation of net wealth : (i) amount demanded under section 18A and outstanding on valuation date, (ii) amount of income-tax due and payable on valuation date as per notice of demand under section 29, and (iii) amount of estimated reserve for liability to pay income-tax not assessed on valuation date - Whether essential requisites of debts are : (i) ascertained or readily calculable amount; (ii) absolute unqualified and present liability in regard to that amount with obligation to pay forthwith or in future within time certain; and (iii) obligation must have accrued and subsisting and should not be that which is merely accruing - Held, yes - Whether liability to tax under the Act becomes debt only on service of notice of demand calling upon assessee to pay tax levied and term "debt" does not cover amount reserved for tax liability in anticipation of 8 W.T.A. Nos. 37-42/Chny/19 assessment or future demand if assessment has been made - Held, yes - Whether, in instant case assessee was entitled to deduct amounts mentioned at (i) and (ii) above, but not entitled to deduct amount at (iii) as it was not a debt owed within meaning of section 2(m) as department had not even assessed assessee's income and levied tax - Held, yes"
7.1 Since none of the case law relied on by the ld. Counsel are in favour of the assessee, there would not be any necessity to apply the decision of the Hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd. (supra) since in both the case law of Hon'ble Madras High Court same view was taken and no distinct view has been taken. Accordingly, the ground taken by the assessee stands dismissed.
8. With regard to the grounds raised in ground No. 3 to 6, the ld. Counsel for the assessee made an endorsement in the grounds of appeal that "gr.
No. 3 to 6 not pressed" and submitted that the grounds are not pressed for all the assessment years. Accordingly, the grounds raised in ground No. 3 to 6 are dismissed as not pressed for all the assessment years.
9. In the result, all the appeals filed by the assessee are dismissed.
Order pronounced on the 26th August, 2019 in Chennai.
Sd/- Sd/-
(S. JAYARAMAN) (DUVVURU RL REDDY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Chennai, Dated, 26.08.2019
Vm/-
9 W.T.A. Nos. 37-42/Chny/19
आदे श की ितिलिप अ ेिषत/Copy to: 1. अपीलाथ /Appellant, 2. थ / Respondent, 3. आयकर आयु (अपील)/CIT(A), 4. आयकर आयु /CIT, 5. िवभागीय ितिनिध/DR & 6. गाड फाईल/GF.