Income Tax Appellate Tribunal - Pune
Gangadhar D. Kshirsagar,, Satara vs Assessee on 21 May, 2012
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IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
Before Shri I.C. Sudhir Judicial Member
and Shri R.K. Panda Accountant Member
WTA No. 20/PN/2010
(Asstt.Year : 2006-07)
Gangadhar D. Kshirsagar,
Flat No.115-74, Shreyas Apartment,
Yado Gopal Peth, Satara.
PAN No. ABOPK 9867E .. Appellant
Vs.
DCWT, Central Circle 1(1), Pune .. Respondent
Assessee by : Sri M.K.Kulkarni
Respondent by : Sri Alok Mishra
Date of Hearing : 21-05-2012
Date of Pronouncement : 19-07-2012
ORDER
Per R.K. Panda, AM
This appeal filed by the assessee is directed against the order dated 04-03- 2010 of the CWT(A)-I, Pune relating to assessment year 2006-07.
2. Facts of the case, in brief, are that the assessee is engaged in the business of sale of lottery tickets besides the business of plying vehicles on hire. There was a search action conducted by the police authorities in the residential premises of the assessee on 21-07-2005 during which, interalia, cash of Rs. 1,71,72,012/- was seized by them. Consequent to issuance of warrant u/s.132A of the I.T. Act, the seized cash/documents were handed over to the Income Tax Department. The assessee filed his return of wealth declaring taxable wealth of Rs. 1,13,74,000/- on 18-04-2007. However, the assessee subsequently filed a revised return of wealth on 03-12-2007 wherein the net wealth chargeable to wealth tax was disclosed at Rs. 8,50,913/- after excluding the cash requisitioned by the Department u/s.132A post the search operations by the police authorities.
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3. During the assessment proceedings, on being confronted by the AO for such exclusion of the seized cash it was submitted that once the cash was seized and deposited by the department in the P.D. Account maintained by the Commissioner it could no longer be considered as wealth chargeable to wealth tax. However, this contention of the assessee was not found acceptable by the Assessing Officer. According to the him, though the cash seized was in possession of the Department, its ownership still vested with the assessee. The AO further noted that part of the cash had been returned to the assessee after discharging his tax liability. It was emphasized by the Assessing Officer that the cash legally belonged to the assessee and the department was only a custodian of the same till the tax liability of the assessee was discharged. The AO was of the opinion that the original return of income filed by the assessee showing cash in hand as his asset chargeable to tax was proper. Accordingly, the claim of the assessee that cash seized in possession of the department was not subject to wealth tax was rejected by the AO who adopted the gross wealth as per original return of wealth filed. While computing the net wealth, the Assessing Officer gave credit for the tax liability for the block period amounting to Rs. 65,34,498/- and net wealth was assessed at Rs. 1,13,74,000/-.
4. Before the CIT(A), it was submitted that as per definition of Assets under section 2(ea) (vi), cash in hand in excess of fifty thousand rupees in case of individual is liable for Wealth Tax. It was argued that since the Department has seized the cash amounting to Rs. 1.71 Crore on 25-07-2005 and deposited the same in Bank in P.D. Account of the CIT, therefore, it lost its character of Cash in hand and therefore, the same cannot be charged to wealth tax in the hands of the assessee as only "Cash in Hand" of the assessee is treated as an asset and balance in bank account will not be treated as an asset as per charging section of Wealth Tax Act. Referring to the provisions of the Wealth Tax Act, it was submitted that 3 wealth tax is leviable only on six assets mentioned in the Charging Section of the Wealth Tax Act and that too only when they belong to Assessee. If the asset has been spent, lost, destroyed or transferred by the assessee before the valuation date, it is not held by the assessee on the valuation date and therefore, the value of such asset shall not be included in the Net Wealth of the assessee. It was accordingly pleaded that the revised return filed by the assessee excluding cash seized by the Department and deposited in P.D. Account be accepted.
5. It was argued that the meaning of the expression "belonging to the Assessee" were considered by the Hon'ble Supreme Court in the case of CWT Vs. Bishwanath Chatterjee (1976) 103 ITR 536 wherein it was observed that 'belong' as per dictionary meant, "to be the property of rightful possession of". It was submitted that it is the property of a person or that 'which is in his possession as of right' is liable to wealth tax. Liability to wealth tax arises out of ownership of asset and not otherwise. It was argued that mere possession or joint possession unaccompanied by the right to, or ownership of, property would not be the property within the definition of net wealth as it would not be an asset belonging to the Assessee. It was submitted that the seized amount of Rs. 1.71 Crore became the property of Income Tax Department, at least to the tune of assessable taxes, penalties etc. and upto the period of finalization of block period assessments. During the said period, the assessee had no control over ownership of and right to use this amount as per his sweet will.
6. However the learned CIT(A) was not satisfied with the explanation given by the assessee. He analysed the provisions of section 2(ea) and 2(m) of the Wealth Tax Act and was of the opinion that the assets which fall within the definition of assets and belonging to the assessee as on the valuation date are chargeable to Wealth Tax. He observed that one of the assets included in the definition of assets 4 is cash in hand exceeding Rs. 50,000/- as on the relevant valuation date in the case of individuals and HUFs. However, in the case of the assessee cash of Rs. 1,71,72,012/- was seized by the Police authorities on 21-07-2005 which was requisitioned by the department on 25-07-2005 u/s.132(1) of the I.T. Act. Rejecting the argument of the assessee that the cash seized by the department and deposited in the P.D. account of the CIT has lost its character of cash in hand, he came to the conclusion that where the assessee is legal owner of the asset, the lack of possession of asset is no criteria to hold that the asset does not belong to the assessee. According to him mere seizure of an asset by a Government Agency (cash in the present case) does not in any way impair the ownership of the assessee in the cash seized. Unless the cash is confiscated after seizure the assessee continues to be the legal owner of the cash and it belongs to the assessee and is includable in Net Wealth.Since in the instant case the cash was not confiscated by the department and since there is no provision under the I.T. Act for confiscation of assets seized, therefore, he was of the opinion that the cash seized is asset belonging to the assessee and is chargeable to Wealth Tax as on the valuation date. For this proposition he relied on the decision of the Hon'ble Madhya Pradesh High court in the case of CWT Vs. Meghji Girdharilal reported in 176 ITR 63 and the decision of the Hon'ble Supreme Court in the case of Sri Nawab Sir Mir Osman Ali Khan Vs. CWT reported n 162 ITR 888.
7. Aggrieved with such order of the CWT the assessee is in appeal before us with the following grounds :
"1. On the facts & circumstances of the case in law the Ld. CWT(A) was not justified in confirming the assessment order of the WTO where the cash balance in the domain of P.D. Account of the Commissioner of Income Tax was taxed as assets viz., "Cash in hand'. In view of legal position such asset as "Cash in hand" which balance was in the domain of CIT, Pune in his P.D. Account could not be treated as "Cash in hand". The assessment be vacated.5
2. On the facts and circumstances of the case and in law the appellant denies to pay interest u/s.17B of the W.T. Act and it be deleted".
8. We have considered the rival arguments made by both the sides, perused the orders of the authorities below and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that cash amounting to Rs. 1,71,72,012/- seized by the Police was subsequently seized by the department and the amount was transferred to the PD account of the lerned CIT. It is the submission of the learned counsel for the assessee that since the cash was deposited in the P.D. account of the CIT, the assessee could not enjoy the same. It is also the submission of the learned counsel for the assessee that this amount was declared as income in subsequent year and the assessee had paid the tax, therefore, the same cannot be included on the valuation date. It is the submission of the learned D.R. that the provisions of section 132B shall be applicable since on the valuation date the money was not adjusted against any demand, therefore, the same shall be included as an asset on the valuation date.
9. We are of the opinion that the arguments advanced by the learned D.R. merits consideration. We find the provisions of section 2(m) read as under :
2(m) " net wealth" means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owned by the assessee [on the valuation date which have been incurred in relation to the said assets;]"
In the instant case admittedly the money which was seized by the Police from the assessee was transferred to the P.D. account of the Commissioner. Therefore, although the money was lying in the P.D. account of the learned CIT, still the 6 assessee is the owner of the money which shall be returned to him after appropriation of due taxes as per the provisions u/s.132B. The money so retained by the department in the P.D. Account of the CIT was not confiscated and was only a mere seizure. Therefore, the assessee in our opinion continues to be the legal owner of the cash and therefore it belongs to the assessee and is includable in his Net Wealth. In this view of the matter and in view of the detailed order passed by the CWT(A) on this issue, we do not find any infirmity in his order. Accordingly, the same is upheld. The various decisions relied on by the learned counsel for the assessee before the CWT(A) which were reiterated before us are distinguishable and not applicable to the facts of the present case. Accordingly, the grounds raised by the assessee are dismissed.
10. In the result, the appeal filed by the assessee is dismissed.
Pronounced in the Open court on this the 19th day of July 2012.
Sd/- Sd/-
(I.C. SUDHIR) (R.K. PANDA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Pune, dated : 19th July 2012
satish
Copy of the order is forwarded to :
1. The assessee
2. Department
3. The CWT(A)-I, Pune
4. D.R. "B" Bench, Pune
5. Guard File By order
// True Copy //
Senior Private Secretary,
Income Tax Appellate Tribunal,
Pune Benches, Pune
Order pronounced in the open court on 19-07-2012
Sd/- Sd/-
(R.K. Panda) (R.S. Padvekar)
Accountant Member Judicial Member
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