Deputy Commissioner Of Wealth Tax vs. Smt. Rani Saraogi
What did the High Court hold?
The High Court held that there was no proof on record that the assessee had ever sought building permission for construction on the subject lands. It further held that non-filing of agricultural returns does not automatically render the land as urban land intended for construction. The issue of whether construction has been carried on or is intended to be carried on is a question of fact requiring evidence. In the absence of proof that the lands were diverted for construction activity, the appellate authorities' finding that the lands were primarily agricultural and thus exempted from wealth tax was not illegal or perverse. The Court also noted that the Assessing Officer's order was cryptic and unreasoned, which was rightly interfered with by the appellate authority. Consequently, no substantial question of law arose, and the appeals were dismissed.
What were the facts?
The Revenue has filed four Wealth Tax Appeals challenging a common order dated May 8, 2017, passed by the Income Tax Appellate Tribunal (ITAT). These appeals pertain to assessment years 2006-2007, 2007-2008, 2008-2009, and 2010-2011, arising from common orders of the Commissioner of Wealth Tax (Appeals). The Assessing Officer (AO) issued notices under Section 17(1) of the Wealth Tax Act, 1957, for the relevant assessment years. The assessee, Smt. Rani Saraogi, declared net wealth, but the AO considered lands purchased by her in village Dumartarai, Labhandi, and Rawabhata as urban land, not used for cultivation, and thus liable for wealth tax, as she had not shown agricultural income. The appellate authority had allowed the assessee's appeals, citing lack of recorded reasons for reopening and that the lands, though in urban areas, were urban agricultural lands not subject to wealth tax.
What were the issues?
1. Whether the reopening of assessment under Section 17(1) of the Wealth Tax Act, 1957, was vitiated due to the absence of recorded reasons by the Assessing Officer, making it null and void, as argued by the assessee based on the judgments in Radla Machinery Experts (197 ITR 493 All) and Y. Narayan Chetty (35 ITR 388 SC)? 2. Whether lands situated in an urban area, but used for agricultural purposes (urban agricultural lands), are exempt from wealth tax, even if within municipal limits or within 8 km thereof, as contended by the assessee? The Revenue argued that since the assessee did not file any agricultural income for the subject properties, there was no proof of agricultural activities. Therefore, the AO rightly treated the land as urban land suitable for construction, and the interference by the appellate authority and the Tribunal was unjustified. The assessee, through her reliance on the appellate authority's findings, argued that the reopening was bad for want of reasons and that the lands were agricultural lands exempt from wealth tax.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORDER Per Prashant Kumar Mishra, J 05/02/2018
Heard.
The present Wealth Tax Appeals have been preferred by the Revenue assailing the common order passed by the Income Tax Appellate Tribunal on 8.5.2017 deciding four appeals pertaining to the assessment years 2006-2007, 2007-2008, 2008-2009 & 2010-2011, which in turn had arisen out of the common order passed by the Commissioner of Wealth Tax (Appeals) -I in respect of the corresponding assessment years.
Facts essential for appreciating the issue involved in these appeals, as gathered from Tax Case No. 158/2017, are that the Assessing Officer
3 issued notice under Section 17(1) of the Wealth Tax Act (hereinafter referred to as 'the Act') in respect of the relevant assessment years, directing the assessee to submit return of Income. The assessee submitted her return declaring different net wealth for different assessment years, however, that did not found favour with the Assessing Officer for the reason that the lands purchased by the assessee at village Dumartarai, Labhandi and Rawabhata, were not used for cultivation because in her income tax return she has not shown any agricultural income in the corresponding years. The Assessing Officer also found that the land is urban land which is not exempted from wealth tax, therefore, since agricultural activity is not carried on, the assessee is liable to pay wealth tax.
The appellate authority allowed the appeal filed by the assessee on the grounds interalia that reopening of the assessment was made without first recording reasons for reopening, therefore, it is null and void in view of the judgment in the matter of Radla Machinery Experts 197 ITR 493 (All) and Y. Narayan Chetty and Another, 35 ITR 388 (SC); the lands though situated in an urban area are urban agricultural lands, therefore, even if they are situated within municipal limits or outside municipal limits but within a distance of 8 km, they cannot be subjected to levy of wealth tax.
Learned counsel appearing for the Revenue would argue that the assessee has not filed any agricultural income on the subject properties, therefore, there being no proof or carrying out any agricultural activities, the Assessing Officer has rightly treated the land to be urban land fit for 4 construction and the interference by the appellate authority as well as by the Tribunal is not justified.
Having heard learned counsel for the Revenue and on perusal of the material available on record, it is manifest that there is no proof on record that the assessee had ever sought building permission for raising any construction over the subject land. Similarly, non-filing of the agricultural return would not make the land as urban land, on which, the assess intends to raise construction. The issue as to whether any construction has been carried on or intended to be carried on in future, is a question of fact which needs to be established by collecting evidence.
In absence of any proof that the lands are diverted and construction activity is shortly to be commenced, the finding by the appellate authorities that the land primarily being agricultural land is exempted from payment of wealth tax, does not appear to be illegal or perverse.
We are also of the considered opinion that the appellate Court has passed a reasoned order. It is the Assessing Officer who has passed a very cryptic unreasoned order which has rightly been interfered with by the appellate authority. No substantial question of law arises in these appeal. Accordingly, all the appeals are dismissed.
(Prashant Kumar Mishra) (Ram Prasanna Sharma) Judge Judge sunita
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