The Commissioner of Income-tax, Chennai v. Sushila Devi Kejriwal
[Citation -2020-LL-0930-60]

Citation 2020-LL-0930-60
Appellant Name The Commissioner of Income-tax, Chennai
Respondent Name Sushila Devi Kejriwal
Court HIGH COURT OF MADRAS
Relevant Act Wealth-tax
Date of Order 30/09/2020
Assessment Year 2005-06
Judgment View Judgment
Keyword Tags quantum of penalty • audit objection • factual finding • low tax effect • revenue audit • net wealth • urban land • wealth tax • property
Bot Summary: Respondent in all the appeals Tax Case Appeals filed under Section 27A of the Wealth Tax Act, 1957 against the order made in W.T.A.Nos. 622 to 624 of 2018 COMMON JUDGMENT Judgment of the Court was delivered by T.S.SIVAGNANAM, J. These appeals have been filed by the revenue under Section 27A of the Wealth Tax Act, 1957, challenging the common order passed by the Income Tax Appellate Tribunal, Madras 'C' Bench, Chennai in W.T.A. Nos. Whether under the facts and circumstances of the case and in law, the Tribunal was right in dismissing the appeal of the department stating low tax effect when the tax effect mentioned in the CBDT Circular No.21/2015 is applicable only for income tax matters and while the impugned appeal is under the Wealth Tax Act. The first two substantial questions of law have to be answered against the revenue, in the light of the Circular issued by Central Board Direct Taxes for brevity, 'CBDT' bearing Circular No.5/2019 dated 05.02.2019, which reads as follows: 'Reference is invited to Board's Circular No.3 of 2018 dated 11.07.2018 vide which monetary limits for filing of income tax appeals by the Department before Income Tax Appellate Tribunal, High Courts and SLPs/appeals before Supreme Court were specified. Para 11 of the Circular states that the monetary limits specified in para 3 shall not apply to writ matters and Direct tax matters other than Income tax and filing of appeals in such cases shall continue to be governed by relevant provisions of statute and rules. For the purpose of Wealth Tax appeals: A.Para 4 of the Circular shall be read as follows: For this purpose, 'tax effect' means the difference between the tax on Net Wealth assessed and the tax that would have been chargeable had such Net Wealth been reduced by the amount of wealth in respect of the issues against which appeals is intended to be filed. In view of the above circular, the threshold limit fixed by the CBDT for the revenue to pursue the appeals has been made applicable to Wealth Tax Appeals also with effect from 05.02.2019.


T.C.A.Nos.622 to 624 of 2018 IN HIGH COURT OF JUDICATURE AT MADRAS DATED: 30.09.2020 CORAM: HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and HONOURABLE Mrs.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal Nos.622 to 624 of 2018 and C.M.P. Nos. 12728 and 12729 of 2018 Commissioner of Income Tax, Chennai .. Appellant in all appeals Vs. Smt. Sushila Devi Kejriwal .. Respondent in all appeals Tax Case Appeals filed under Section 27A of Wealth Tax Act, 1957 against order made in W.T.A.Nos.25, 26 & 27/Mds/2016 dated 23.11.2016 passed by Income Tax Appellate Tribunal, 'C' Bench, Chennai, for Assessment Years 2005-2006, 2006-2007 and 2007- 2008 respectively. In all appeals: For Appellant : Mr.J.Narayanasamy For Respondent : Mr.A.S.Sriraman http://www.judis.nic.in Page 1 of 8 T.C.A.Nos.622 to 624 of 2018 COMMON JUDGMENT [Judgment of Court was delivered by T.S.SIVAGNANAM, J.] These appeals have been filed by revenue under Section 27A of Wealth Tax Act, 1957 (the 'Act' for brevity), challenging common order passed by Income Tax Appellate Tribunal, Madras 'C' Bench, Chennai in W.T.A. Nos. 25, 26 & 27/Mds/2016 dated 23.11.2016 for Assessment Years 2005-2006, 2006-2007 and 2007-2008 respectively. 2. following substantial questions of law have been raised for consideration: 1. Whether under facts and circumstances of case and in law, Tribunal was right in dismissing appeal of department stating low tax effect when tax effect mentioned in CBDT Circular No.21/2015 is applicable only for income tax matters and while impugned appeal is under Wealth Tax Act. 2. Whether under facts and circumstances of case and in law, Tribunal was right in relying on CBDT Circular 3/2011 when same was superseded by CBDT Circular No.21/2015? http://www.judis.nic.in Page 2 of 8 T.C.A.Nos.622 to 624 of 2018 3. Whether under facts and circumstances of case and in law, Tribunal was right in not appreciating fact that present appeals involves revenue audit objection and Board Circular cannot be applied.' 3. We have elaborately heard Mr.J.Narayanasamy, learned counsel appearing for appellant/revenue and Mr.A.S.Sriraman, learned counsel appearing for respondent/assessee. 4. first two substantial questions of law have to be answered against revenue, in light of Circular issued by Central Board Direct Taxes [for brevity, 'CBDT'] bearing Circular No.5/2019 dated 05.02.2019, which reads as follows: 'Reference is invited to Board's Circular No.3 of 2018 dated 11.07.2018 (hereinafter, referred to as "the Circular") vide which monetary limits for filing of income tax appeals by Department before Income Tax Appellate Tribunal, High Courts and SLPs/appeals before Supreme Court were specified. Para 11 of Circular states that monetary limits specified in para 3 shall not apply to writ matters and Direct tax matters other than Income tax and filing of appeals in such cases shall continue to be governed by relevant provisions of statute and rules. 2. There is no charge under Wealth Tax Act, 1957 w.e.f 1st April, 2016. Therefore, as step towards litigation management, it has been decided by Board that monetary limits for filing of appeals in Income tax case as prescribed in Para 3 of Circular shall also apply to Wealth Tax appeals through extension of Circular to http://www.judis.nic.in Page 3 of 8 T.C.A.Nos.622 to 624 of 2018 Wealth tax matters in mutatis mutandis manner and with modifications as prescribed hereunder: 3. For purpose of Wealth Tax appeals: A.Para 4 of Circular shall be read as follows: "For this purpose, 'tax effect' means difference between tax on Net Wealth assessed and tax that would have been chargeable had such Net Wealth been reduced by amount of wealth in respect of issues against which appeals is intended to be filed. However, tax will not include any interest thereon, except where chargeability of interest itself is in dispute. In case chargeability of interest is issue under dispute, amount of interest shall be tax effect. In case of penalty orders, tax effect will mean quantum of penalty deleted or reduced in order to be appealed against" B. Para 11 of circular shall read as follows: "The monetary limits specified in para 3 shall not apply to writ matters." 4. said extension of Circular to wealth tax appeals shall come into effect from date of issue of this circular. 5. same may be brought to notice of all concerned. 6. Hindi version will follow.' 5. In view of above circular, threshold limit fixed by CBDT for revenue to pursue appeals has been made applicable to Wealth Tax Appeals also with effect from 05.02.2019. In light of above circular, substantial questions of law Nos.1 and 2 are answered against revenue. http://www.judis.nic.in Page 4 of 8 T.C.A.Nos.622 to 624 of 2018 6. Mr.J.Narayanasamy, learned counsel appearing for appellant / revenue contended that Tribunal erred in dismissing appeals on ground of law tax effect without taking note of fact that revenue audit objection is there in assessee's case and therefore, cases would come within exemption culled out in circular. 7. It is not clear what is revenue audit objection in instant matter. Nevertheless, we have heard learned counsel for parties on merits of matter. issue pertains to valuation of property in Neelankarai village. assessee contended that property falls within high tide zone and in terms of coastal zone regulations, property cannot be put to use for purpose of constructing any building there on and even if application is made to local planning authority / local body, same will be rejected, as planning authorities have no jurisdiction to deal with any application for grant of planning permission on land, which falls within CRZ limits. 8. assessing officer did not agree with same, however, Commissioner of Income Tax [Appeals] - 15 Chennai, [for brevity, 'CITA'] agreed with assessee by taking note of fact that property falls within CRZ III Category and agreement of sale, http://www.judis.nic.in Page 5 of 8 T.C.A.Nos.622 to 624 of 2018 which was entered into by assessee was cancelled on 04.06.2005 since at time of entering into agreement, parties were not aware that no construction can be put up on land. 9. CITA has recorded factual finding that land, which is unbuiltable under any law for time being in force, is not urban land and as such, is not asset within meaning of Section 2(e) (a) of Wealth Tax Act. CITA also referred to decision in case of Prabhakar Keshav Kunde Vs. CIT reported in (2010) 194 Taxman 306 (Bom). Thus, considering that factually, CITA on verification found that land falls within prohibited zone CRZ III category. 10. We find no question of law arises for consideration in instant cases and therefore, we are not inclined to entertain appeals filed by revenue. As mentioned above, substantial question of law no.3 raised by revenue is, stating that Tribunal ought not to have rejected revenue's appeal on ground of low tax effect, without noting revenue audit objection. Since we have decided in favour of assessee on merits, substantial question of law no.3 does not arise for consideration. http://www.judis.nic.in Page 6 of 8 T.C.A.Nos.622 to 624 of 2018 11. For above reasons, appeals filed by revenue are dismissed against revenue and substantial question of law nos.1 and 2 are answered against revenue and substantial question of law no.3 is held to be unnecessary in facts and circumstances. Consequently, connected miscellaneous petitions are closed. No Costs. [T.S.S., J.] [V.B.S., J.] 30.09.2020 Index : Yes/No Internet : Yes Speaking/Non-speaking Judgment ssd http://www.judis.nic.in Page 7 of 8 T.C.A.Nos.622 to 624 of 2018 T.S.SIVAGNANAM, J. AND V.BHAVANI SUBBAROYAN, J. ssd Tax Case Appeal Nos.622 to 624 of 2018 and C.M.P. Nos. 12728 and 12729 of 2018 30.09.2020 http://www.judis.nic.in Page 8 of 8 Commissioner of Income-tax, Chennai v. Sushila Devi Kejriwal
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