Income Tax Appellate Tribunal - Chennai
Ito International Txtion 1 (2), Chennai vs Shri. Mafas Mohammed, Chennai on 29 July, 2022
आयकर अपीलीय अिधकरण, 'बी' ायपीठ, चे ई
IN THE INCOME-TAX APPELLATE TRIBUNAL 'B' BENCH, CHENNAI
ी वी दु गा राव ाियक सद एवं ी जी. मंजुनाथा, लेखा सद के सम
Before Shri V. Durga Rao, Judicial Member &
Shri G. Manjunatha, Accountant Member
W.T.A. Nos.35, 36 & 37/Chny/2018
िनधारण वष/Assessment Years: 2010-11, 2011-12 & 2012-13
The Income Tax Officer, Vs. Shri Mafaz Mohammed,
International Taxation - 1(2), Room No. 4th Floor, Celestial Centre,
413, 4th Floor, Tower-1, BSNL Building, South Usman Road, T. Nagar,
16, Greams Road, Chennai 600 006. Chennai 600 017.
[PAN:AFOPM1910N]
(अपीलाथ /Appellant) ( थ /Respondent)
अपीलाथ की ओर से / Appellant by : Shri Guru Bashyam, CIT-DR
थ की ओर से/Respondent by : Shri S. Sridhar, Advocate
सु नवाई की तारीख/ Date of hearing : 14.07.2022
घोषणा की तारीख /Date of Pronouncement : 29.07.2022
आदे श /O R D E R
PER V. DURGA RAO, JUDICIAL MEMBER:
These three appeals filed by the Revenue are directed against different orders of the ld. Commissioner of Income Tax (Appeals) 16, Chennai, all dated 28.02.2018 relevant to the assessment years 2010- 11, 2011-12 and 2012-13. Since the facts are identical and common issues have been raised, all the appeals were heard together and being disposed of by this common order for the sake of brevity. In the assessment year 2010-11, the Revenue has raised the following 2 W.T.A. Nos. 35-37/Chny/18 common grounds:
1. The Order of the learned Commissioner of Income Tax (Appeals) is contrary to the Law and facts of the case.
2. The Ld CIT(A) erred in holding that the land at Egattur held by the assessee is agricultural land and hence will not constitute 'Capital Asset' within the meaning of Sec. 2(14) of the Act.
2.1. The Ld. CIT(A) has erred in law in not considering the following decisions of the Hon'ble Supreme Court:
(a) The case of Smt. Sarifabibi (204 ITR 631-SC) wherein the Apex Court observed that just because that the land being mentioned as Agricultural land in the Revenue Records it is not conclusive evidence to prove its character since the property was situated in a place where there are colleges, shopping malls, housing projects, tech parks, information technology companies and restaurants.
(b) The decision of Hon'ble Supreme Court in the case of Shri Giridhar Yedalam V CWT (384 ITR 52-SC) wherein it was held that when the property is given for development, unless the building is completed, it will not be construed as 'building' and hence liable for wealth tax as urban land.
(c) The decision of Hon'ble Supreme Court in the case of G M Omer Khan (196 ITR 269) wherein it was held that the population of the entire Municipality has to be considered and not that of a particular area/village (population below 10000) for the purpose of section 2(14)(iii) of the Act.
2.2 The Ld. CIT(A) is erred in not applying the ratio of the Chennai ITAT decision in the case of ITO, International Taxation 1(1), Chennai V. Aboobucker (157 ITD 717Chennai), on similar issue, which is in favour of the Revenue.
2.3. The Ld. CIT(A) erred in not appreciating the fact that the developer M/s SSPDL had applied for Zone reclassification with Chennai Metropolitan Development Authority (CMDA) and the same was approved as per notification of the Government of Tamil Nadu Government vide gazette notification in No.VI(l)/109/2009 dated 09-03-2009. 2.4. The Ld. CIT(A) erred in not appreciating the fact that the developer had received an advance of Rs. 22.50 Cr on 11-04.2008 from M/s IGH and M/s Accent, only because of the fact that the developer had applied for 3 W.T.A. Nos. 35-37/Chny/18 reclassification of said property for construction multi-storeyed building and commercial complex.
2.5. The Ld. CIT(A) is erred in holding that subsequent land registration by the assessee made on 05.02.2010 in favour of the buyers M/s IGH and M/s Accent is continuation of JDA, since the buyers refused to register through Power of Attorney Holder and therefore the JDA was cancelled through an unregistered cancellation deed dated 04-02-2010.
3. The Ld. CIT(A) erred in deleting wealth tax levied by the Assessing Officer on the Velachery property.
3.1. The Ld. CIT(A) erred in holding that the transfer of asset u/s 2(47) of the Act took place on 25.06.2007 (as JDA with Srijan Realtors was made on that date) i.e. in F.Y. 2007-08 in view of the fact that the JDA was not registered and no possession was handed to the developer on that date. 3.2 The Ld. CIT(A) erred in not considering the fact that the assessee himself admitted capital gains on sale of Velachery property only in the A.Y. 2014-15, which is evident from the return of income filed by the assessee for A.Y. 2014-15.
3.3 The Ld. CIT(A) has erred in not considering the ratio of the decision of the Hon'ble Supreme Court of India in the case of Commissioner of Income Tax Versus Balbir Singh Maini (in Civil Appeal No. 15619 of 2017), wherein the Apex Court has upheld the order of the Hon'ble High Court of Punjab and Haryana, in which it was held that to qualify "transfer" of a capital asset u/s 2(47)(v) of the Act, there must be a contract which can be enforced in law under section 53A of Transfer of Property Act. 3.4 Ld. CIT(A) erred in not appreciating the fact that no contract can be taken cognizance of, for the purpose of specified section 53A of Transfer of Property Act, after amendment of Registration Act in 2001 unless the said contract is registered as per law.
3.5 The Ld. CIT(A) failed to take note of the fact that as per para 7.3 of JDA, the Developer upon only as a exclusive licensee of owners of land, to carry out construction, not as a transferee.
3.6 The Ld. CIT(A) failed to consider the fact that in JDA dt. 25.06.2007, a special provision was made in Para 7.3, which clearly states that the Developer could not make any possessory right over the property which constitutes transfer as per Income Tax Act. With this special provision of JDA, the intension of both the parties was clear that none of them were willing to transfer the property through this JDA. 4 W.T.A. Nos. 35-37/Chny/18
4. The Ld.CIT(A) has erred in directing the Assessing Officer to recalculate the interest u/s 17B as per sub-sec (3) of Sec. 17B of the Act, since the above sec. is applicable only in cases where notice u/s 17(1) was issued after determination of net wealth under section 16(1) or 16(3) or 16(5) or section 17 4.1. The Ld. CIT(A) failed to appreciate the fact that in the present case no wealth tax return was filed u/s 14 or 15 or section 17 and also that the assessment was made for the first time.
4.2 The Ld. CIT(A) failed to note that the above view of the Assessing Officer is supported by the Hon'ble ITAT Bangalore in its decision in the case of M. R. Prabhavathy Vs. Assistant Commissioner of Income Tax (2002) 80 ITD 250(Bang.)
5. For these and other grounds that may be adduced at the time of hearing, it is prayed that the Order of the Learned CIT(A) may be set aside and that of the Assessing Officer be restored."
2. Brief facts of the case are that the assessee is a non-resident. For the assessment year 2011-12, the assessee has not filed return of wealth. During the course of income tax assessment proceedings for the assessment year 2010-11, the Assessing Officer has noticed that the assessee along with two others during financial year 2009-10 sold vacant land of 1.85 acres out of 9.32 acres at Egattur for ₹.37.50 Crores. The assessee's share being 1/3rd out of the same. The assessee claimed the entire sale consideration as exempt stating that the land was agricultural land. However, it was noticed during scrutiny proceedings that the said land was notified as area for construction of high rise multi-storeyed building by the Government of Tamil Nadu gazette notification. Hence the entire sale consideration was brought to 5 W.T.A. Nos. 35-37/Chny/18 tax as long term capital gains and taxed accordingly. Since the assessee is the 1/3rd owner of the whole property, including the land sold, as on 31.03.2010 and no return of wealth was filed, the Assessing Officer had reasons to believe that wealth chargeable to tax had escaped assessment and hence the case was reopened by issue of notice u/s 17 dated 15.04.2016 of the Wealth-tax Act 1957. In response to notice under section l7 of the Act, the assessee has filed return of wealth for the assessment year 2010-11 on 19.09.2016 admitting net wealth at ₹.23,10,900/- (being cash in hand) and claimed the same as exempt under section 2(ea)(vi) of the Wealth Tax Act, 1957. Subsequently, a notice under section 16(2) dt.21.09.2016 was also issued and the case was posted for hearing on 29.09.2016. After considering the written submissions filed by the assessee vide his reply dated 05.12.2016, the Assessing Officer has observed that the property owned by the assessee i.e. 1/3rd share on 9.32-1.85 = 7.47 acres of land as on 31.03.2010 is liable for wealth tax. Since the assessee has not offered the same for wealth in the return of wealth, the said property is treated as wealth as on 31.03.2010 and bought to tax. During the financial year 2009-10, the assessee along with others sold a part of the property of 1.85 acres for ₹.37.50 crores. Taking the 6 W.T.A. Nos. 35-37/Chny/18 said value into consideration, the Assessing Officer has determined the value of the unsold property of 7.47 acres (9.32-1.85) as on 31.03.2010 at ₹.50,47,29,730/- (₹.37,50,00,000 x 7.47/1.85x3) and the same has been treated as wealth escaped assessment and added to the net wealth admitted in the return. On appeal, the ld. CIT(A) allowed the appeal of the assessee.
2.1 Similarly property at Velachery was treated as vacant urban plot liable to wealth tax and accordingly assessed the wealth at ₹.52,91,21,760/-. On appeal, the ld. CIT(A) allowed the appeal of the assessee.
3. Aggrieved, the Revenue is in appeal before the Tribunal. The ld. DR has submitted that the ld. CIT(A) has erred in holding that the land at Egattur held by the assessee is agricultural without applying the ratio of the Tribunal in the case of ITO, International Taxation 1(1), Chennai v. Aboobucker (157 ITD 717-Chennai) and pleaded for reversing the order passed by the ld. CIT(A).
4. On the other hand, the ld. Counsel for the assessee has strongly supported the order of the ld. CIT(A), besides, relying upon the 7 W.T.A. Nos. 35-37/Chny/18 decision of the Tribunal in assessee's own case for the assessment year 2010-11 in I.T.A. No. 2337/Chny/2016 dated 18.01.2019 dealing with income tax appeal filed by the Revenue against the order of the ld. CIT(A).
5. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including paper book. In the assessment order, the Assessing Officer has held that the property owned by the assessee i.e. 1/3rd share on 9.32-1.85 = 7.47 acres of land at Egattur as on 31.03.2010 is liable for wealth tax. Accordingly, the Assessing Officer determined the value of the unsold property of 7.47 acres (9.32-1.85) as on 31.03.2010 at ₹.50,47,29,730/- and brought to tax. On appeal, by following the decision of the ld. CIT(A) in income tax matter [ITA No.36/CIT(A)-16/2010-11] dated 27.05.2016, the ld. CIT(A) has directed the Assessing Officer to delete the addition of wealth made on this account.
5.1 Against the appellate order in income tax matter, the Revenue preferred further appeal before the Tribunal. By passing elaborate order in the income tax matter, vide order dated 18.01.2019 in I.T.A. 8 W.T.A. Nos. 35-37/Chny/18 No. 2337/Chny/2016 for the assessment year 2010-11, in page Nos. 51, 52 & 53, the Tribunal has observed and held as under:
A reading of the para 14 of the judgment clearly indicate that primary requirement is classification of land as agricultural in adangal records. Their lordships clearly held that it was not necessary to cumulatively satisfy all the conditions set out by Hon'ble Gujarat High Court in the case of CIT vs. Siddharth J. Desai, (1983) 139 ITR 628. As to the relevance of the intention of the purchaser, in deciding on the nature of the land sold, ld. Commissioner of Income Tax (Appeals) who went adverse to the assessee Smt. Syed Abdul Kader Aysthath Fasleen Amina, had himself stated at para 34 of his order that out of 13 conditions set out in this judgment, assessee had satisfied atleast four. Just because assessee received an amount higher than the guideline value would not show that the land was non agricultural. Agricultural land cannot become non agricultural only for a reason that were development of a commercial nature in the nearby areas. As already noted by us, Co-ordinate Bench in the case of Smt. Ayisha Fathima (supra) had held that a piece of land in the immediate neighbourhood in very same village was agricultural. Hon'ble Jurisdictional High Court in the case of M.S. Srinivasa Naicker and Others vs. ITO, (2007) 292 ITR 481 has clearly held that development in nearby areas was not relevant. Coming to the decisions in the case of Co-ordinate Bench in the case of Aboobucker (supra), Vijay Shah (supra) and that of Cochin Bench in the case of Abdul Rahmin (supra) in our opinion these decisions pale into insignificance, considering the subsequent judgment of Hon'ble Jurisdictional High Court in the case of Mansi Finance Limited (supra) which followed the earlier judgments of the very same court.
In the circumstances, we are inclined to follow the decision of ld. Commissioner of Income Tax (Appeals) in the case of Shri. S.A. Mafaz Mohammed and uphold the view that the land sold by the assessees, in so far assessment year 2010-2011 is concerned was agricultural and not a capital asset coming within the meaning of Section 2(14) of the Act. The gains on sale thereof was not exigible to tax.
5.2 However, the ld. DR has relied on the decision of the Tribunal decision in the case of ITO, International Taxation 1(1), Chennai V. Aboobucker (supra), wherein, it has been held that the land could not be treated as agricultural land under section 2(14) of the Act merely 9 W.T.A. Nos. 35-37/Chny/18 because land was situated beyond the distance of 8 km. from municipality limits and recorded an agricultural land in revenue records. 5.3 In assessee's own case in the income tax matter, the Coordinate Bench has observed [reproduced hereinabove in para 5.1] that "the decisions in the case of Co-ordinate Bench in the case of Abookucker (supra), Vijay Shah (supra) and that of Cochin Bench in the case of Abdul Rahmin (supra) in our opinion these decisions pale into insignificance, considering the subsequent judgment of Hon'ble Jurisdictional High Court in the case of Mansi Finance Limited (supra) which followed the earlier judgments of the very same court. Moreover, in present assessee's case, after considering various judgments of Hon'ble Jurisdictional High Court in the case of Mrs. Sakunthala Vedachalam and Mrs. Vanitha Manickavasagam vs. ACIT, (2014) 369 ITR 558, CIT vs. Smt. Sakunthala Rangarajan, (2016) 389 ITR 103, CIT vs. KRN Prabhakaran (Huf) T.C.A. No.1189/2015, dated 17.08.2016 and PCIT vs. Mansi Finance Ltd, (2016) 388 ITR 514, wherein, it has been clearly stated that the basic test on the nature of the land was what was mentioned in the Revenue records, and the Tribunal decided the issue in favour of the assessee. Over and above, while adjudicating the appeal proceedings in the case of ITO v. 10 W.T.A. Nos. 35-37/Chny/18 Aboobucker (supra), the Bench had no occasion to consider the amendment enacted through Finance Act, 2013, which was ordered under section 10(2)(b) of the Wealth Tax Act, 1957 by the CBDT vide Circular No. 11/2015 [F.No. 325/02/2014-WT] dated 11.06.2015. The relevant portion of the circular is reproduced as under:
"Prior to amendment by Finance Act 2013, sub clause (b) of Explanation 1 to clause (ea) of section 2 of the Wealth-tax Act 1957 (Act) provided that an urban land shall be chargeable to wealth-tax. This inter alia included land situated in any area which is comprised within the jurisdiction of a municipality or a cantonment board and which has population of not less than ten thousand according to the last preceding census; or land situated in any area within such distance not being more than eight kilometers from the local limits of any municipality or cantonment board as the Central government may, having regard to the extent of, and scope for, urbanization of that area and other relevant considerations specify in this behalf by notification in the official gazette. Subsequently, by Finance Act 2013 the said sub clause (b) of Explanation 1 to clause (ea) was amended to provide that the term "urban land" would not include land classified as agricultural land in the records of the Government and used for agricultural purposes. Accordingly, such land stands exempt from wealth-tax. This amendment was done with retrospective effect from 1.4.1993."
Thus, the case law relied on by the ld. DR by raising a specific ground No. 2.2 has no application to the facts of the present case. 5.4 Respectfully following the decision of the Tribunal in assessee's own case in income tax matter in I.T.A. No. 2337/Chny/2016 & ors dated 18.01.2019 as well as amendment to sub-clause (b) of Explanation 1 to clause (ea) of the Wealth Tax Act, 1957, we are inclined to uphold the view of the ld. CIT(A) that the land sold by the 11 W.T.A. Nos. 35-37/Chny/18 assessee was an agricultural land and not a capital asset. Therefore, the gain on sale thereof was not exigible to tax. Thus, the ground raised by the Revenue is dismissed for all the assessment years under consideration.
6. The next common ground raised in the appeals of the Revenue is relating to assessing the property at Velachery as 'Urban land' liable to Wealth Tax. In the case of M/s Paramount Builders (Chennai) Ltd., survey was conducted under section 133A of the Act by the Investigation Wing of the Income tax Department on 05.03.2014. During the said operation, it was ascertained that the assessee and 13 others had entered into Joint Development Agreement with M/s P.S. Housing Finance Ltd and M/s Srijan Realty Private Limited for development of property situated at Velachery, Chennai - 600 042, for construction of building complex, food court and residential building, in which the assessee has 4.70% of shareholding. It was further ascertained from the return of wealth filed by the assessee for the assessment year 2011-12 that this property was not shown as wealth in the return filed on 19.09.2016. The case was posted for hearing on 29.09.2016, however none appeared. As the assessee has not appeared for hearing, a show-cause notice dated 04.11.2016 was 12 W.T.A. Nos. 35-37/Chny/18 issued to file objection to the following proposal and the case was posted for hearing on 15.11.2016:
"Further the assessee is the owner of landed property (having 4. 70 % of shareholding) in the property situated at No. 137, Velachery Main Road, Velachery, Chennai -42 totalling to 51.54 grounds (1,23,710 sq. ft). However the assessee has not reported the said wealth in the return of wealth filed for the A.Y.2009-10 on 19.09.2016. The value of the properly as per TNREGINET is Rs.3500/- per sq.ft. . Thus the total value of the property works out to Rs. 43,29,85,000/-. Since the assessee is having 4.70 % of shareholding in the property, it is proposed to add/assess the wealth at Rs.2,03,50,395/-, being value of the property as on 31.03.2011, to the total wealth already admitted in the return."
After considering the submissions of the assessee as well as relying on decision of Hon'ble Apex court in the case of Giridhar Yedalam v. CWT & Another 384 ITR 52 (SC), the Assessing Officer has held that the property under construction is liable for wealth tax and therefore, an amount of ₹.2,39,31,130/- which was not offered for wealth tax has been treated as wealth escaped assessment and accordingly brought to tax. On appeal, by following the judgement of the Hon'ble Supreme Court in the case of Giridhar Yedalam v. CWT & Another (supra), the ld. CIT(A) has directed the Assessing Officer to delete the addition. 6.1 Aggrieved, the Revenue is in appeal before the Tribunal. By relying upon the decision of the Hon'ble Supreme Court of India in the case of Commissioner of Income Tax v. Balbir Singh Maini (in Civil Appeal No. 15619 of 2017) for the preposition that no contract can be 13 W.T.A. Nos. 35-37/Chny/18 taken cognizance of, for the purpose of specified section 53A of Transfer of Property Act ["TOPA" in short], after amendment of Registration Act in 2001 unless the said contract is registered as per law, the ld. DR has submitted that in view of the invalid JDA, the entire transaction in hand envisage a transfer exigible to wealth tax as per section 53A of TOPA and pleaded for reversing the order of the ld. CIT(A).
6.2 On the other hand, the ld. Counsel for the assessee has strongly supported the order of the ld. CIT(A) and submitted that from the assessment year 2010-11 onwards, once the property cannot be construed as "Urban Land" the question of showing this property as wealth in the return filed for the assessment year 2010-11 does not arise nor application of section 53A of the TOPA and prayed for confirming the order passed by the ld. CIT(A).
6.3 We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including case law relied on by both the parties. The case of the Department is that the property at Velachery is an urban land, which was not declared in the wealth tax return, is liable to wealth tax in view of the decision of 14 W.T.A. Nos. 35-37/Chny/18 the Hon'ble Supreme Court in the case of Giridhar Yedalam v. CWT & Another (supra) as well as in the case of CIT v. Balbir Singh Maini (2017) 398 ITR 531. However, the case of the assessee is that as on the assessment year 2010-11, the property at Velachery was not an "urban land" as per section 2(ea)(v) of the Wealth Tax Act and liable for wealth tax since the construction of the building was completed in the financial year 2009-10 relevant to the assessment year 2010-11 and started selling the super build-up area and undivided share of land from the financial year 2009-10 onwards.
6.4 We have gone through the judgement of the Hon'ble Supreme Court in the case of Giridhar Yedalam v. CWT & Another (supra), wherein it was held that when the property was given for development, unless the building is completed, it will not be construed as "building" and have liable for wealth tax as urban land. The relevant head-notes are reproduced as under:
"On the plain language of clause (ii) of Explanation 1(b) to section 2(ea)(v) of the Wealth-tax Act, 1957, by which "land occupied by any building which has been constructed with the approval of the appropriate authority" is excluded from the purview of "urban land", the benefit of the clause would be applicable only in respect of the building "which has been constructed". The expression "has been constructed" obviously cannot include within its sweep a building which is not fully constructed or in the process of construction. The land cannot be treated to be occupied by a building where it is still under construction. The purposive interpretation has to be rejected because : in a taxing statute, it is the plain language of the 15 W.T.A. Nos. 35-37/Chny/18 provision that has to be preferred where the language is plain and is capable of one definite meaning, strict interpretation to the exemption provision is to be accorded, and the purposive interpretation can be given only when there is some ambiguity in the language of the statutory provision or it leads to absurd results.
Although the purpose and objective of introducing the provision was to stimulate productive assets the Legislature in its wisdom conferred the benefit of exemption in respect of urban vacant land only when the building is fully constructed and not when the construction activity has merely started."
6.5 By respectfully relying on the above judgement, the ld. CIT(A) has observed that the land at Velachery cannot be construed as an "Urban land" under section 2(ea)(v) of the Wealth Tax Act for the reason that after obtaining proper planning permission, the building was constructed and the assessee has sold the built-up area from the assessment year 2010-11 to 2014-15. Therefore, the ld. CIT(A) has directed the Assessing Officer to delete the addition made to wealth in the assessment year 2010-11.
6.6 Another case law relied on by the ld. DR in the case of CIT v. Balbir Singh Maini (supra) has no application to the fact of the present case for the reason that the performance of JDA falling within the domain of section 53A of TOPA was not the point at issue emanating from the order of the ld. CIT(A) and the point at issue in the present case is whether the property at Velachery can be construed within the meaning section 2(ea)(v) of the Wealth Tax Act or not when the 16 W.T.A. Nos. 35-37/Chny/18 assessee after obtaining proper planning permission, the building was constructed and sold the built-up area from the assessment year 2010- 11 to 2014-15.
6.7 Under the above facts and circumstances of the case and in view of the judgement of the Hon'ble Supreme Court in the case of Giridhar Yedalam v. CWT (supra), the ground raised by the Revenue is dismissed for all the assessment years under consideration.
7. The next common ground raised in the appeals of the Revenue relates to charging of interest under section 17B of the Wealth Tax Act. In the assessment order, the Assessing Officer has levied the interest from the original due date of filing of wealth tax return. On appeal, the ld. CIT(A) directed the Assessing Officer to recalculate the interest under section 17B(3) of the Wealth Tax Act.
7.1 Before us, the ld. DR has submitted that the calculation of interest under sub-section (3) of section 17B of the Wealth Tax Act is applicable only in case where notice under section 17(1) was issued after determination of net wealth under section 16(1) or 16(3) or 16(5) or section 17. Since the assessee has not filed wealth tax return under section 14 or 15 or section 17 and also the assessment was made for 17 W.T.A. Nos. 35-37/Chny/18 the first time, by relying upon the decision of ITAT Bangalore Bench in the case of Smt. M.R. Prabhavathy v. ACIT [2002] 80 ITD 520 (Bang.) the ld. DR pleaded to set aside the order passed by the ld. CIT(A) and that of the Assessing Officer is restored.
7.2 On the other hand the ld. Counsel for the assessee supported the order passed by the ld. CIT(A).
7.3 We have considered the rival submissions as well as perused the decision relied on by the ld. DR in the case of Smt. M.R. Prabhavathy v. ACIT (supra), wherein, the Bangalore Benches of the Tribunal has held as under:
From the provision of section 17B it is clear that interest under section 17B is attracted in a case where the return of net wealth was furnished after the due date or where no such return was filed before the completion of the assessment. In the present case, the assessees did file the return of net wealth on 15-2-1994 as against the due date of 30.6.1991. Thus, apparently, there was a delay in filing the returns. The argument of the assessee that since the returns had been considered non-est in law, they did not come within the purview of section 17B(1), did not hold water. Sub-section (3) of section 17B is attracted only in a case where assessment has been done originally and return is filed subsequently in pursuance of notice under section l7. No doubt sub-section (3) did not apply to the facts of the case as in the present cases assessments had been done for the first time and, therefore, it had to be seen whether sub-section (1) of section 17B which envisages the following situations was applicable to the present situations:
(i ) Return is furnished after the due date under sub-section (1) of section 14;
(ii ) Return is furnished after the due date under section 15;18 W.T.A. Nos. 35-37/Chny/18
(iii ) Return is furnished after the due date in response to notice under section 16(4)(i);
(iv) Where no return is filed before completion of assessment Section 14(1) deals with voluntary filing of the return on the part of the assessee, for which a due date has been prescribed. Section 15 deals with a case where the assessee wants to file a return where he has not furnished a return under section 14(1) or 16(4) or where he wants to file a revised return when the earlier return is found to have any omission or mistake. Section 16(4)(1) comes into play when the Assessing Officer calls upon the person to file a return of wealth when there is an omission to file the return under section 14(1). Section 17 deals with a case of reopening of assessment in case of escapement of net wealth for assessment or a fresh assessment for an assessment year for which the normal time for assessment has elapsed Section 17 inter alia provides that the provisions of the Act 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. Explanation 3 under section 17B(1) makes it 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. When the assessees were served with notices under section 17, they requested, by a letter dated 26.12.1994 to treat the returns originally filed on 15.2.1994 as filed in pursuance to notice under section 17. This meant that the returns filed on 15.2.1994 bad been regularized and treated as the returns for the purpose of the assessment under section 17. Since these assessments had been made for the first time, they were regular assessments made under the Act. Therefore, the assumption that a regular assessment had been completed under the Act and all natural consequences of such assessment would 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. The intention of the Legislature in enacting the provisions of section 17B is crystal 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. In the present case, such a delay had occurred on the part of the assessees in not filing the returns of net wealth on or before the due date, i.e. 30-6-1991.
The assessees chose to do so only on 15-2-1994. The returns disclosed substantial net wealth assessable to tax. Consequently, there was a delay in the filing of the return during the period between the aforesaid dates. Hence, interest was clearly chargeable under section 17B. In the circumstances, it was to be concluded that the Assessing Officer had rightly invoked his jurisdiction under section 35 in levying the interest under section 17B which was mandatory under the provisions of the Act. The Commissioner (Appeals) was justified in dismissing the appeal not only in limine for non payment of 19 W.T.A. Nos. 35-37/Chny/18 admitted tax under the provisions of section 23(2A) (which is also mandatory and does not admit of any discretion on his part to waive this condition), but also on merits of the case with regard to the leviability of interest under section 17B."
7.4 Admittedly, in the present case, the assessee has not filed the wealth tax return under section 14 or 15 or under section 17 and moreover, the assessment was made for the first time. Hence, respectfully following the above decision of the Bangalore Benches of the Tribunal, we reverse the order of the ld. CIT(A) on this issue and allow the ground raised by the Revenue.
8. In the result, all the appeals filed by the Revenue are partly allowed.
Order pronounced on 29th July, 2022 at Chennai.
Sd/- Sd/- (G. MANJUNATHA) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER Chennai, Dated, 29.07.2022 Vm/- 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.