Assessees, co-sharers of properties, filed their tax returns. AO revalued some properties by adopting a higher value and enhancing value of some properties by 25%. AO opined that there was a difference of wealth, and initiated the proceedings u/s 25(2). CWT set aside the assessment to be completed afresh. ITAT set aside the proceedings u/s 25(2) as the valuation was erronoeusly done, and agricultural lands had been excluded.
1 Assessees were co-sharers of properties and filed their wealth tax returns. In assessment orders passed u/s 16(3) r.w.s. 17 of the Wealth Tax Act. The Assessing Officer (AO) assessed the net wealth at Rs. 4,23,62,347/- as against Rs. 3,84,710/- declared by Shri Chamakura Bhadra Reddy. Like-wise, wealth tax assessment was concluded at Rs. 3,68,14,611/- in case of Chamakura Mahender Reddy as against Rs. 12,24,378/- declared by assessee. Like-wise, for AY. 2009-10, the wealth was determined at Rs. 5,51,53,435/- as against the net wealth declared at Rs. 12,18,278/-.While completing the wealth tax assessments, AO revalued some properties by adopting a highervalue and many other properties were revalued by enhancing the value by 25% of declared value. Assessee preferred appeals on the action of AO to Ld.CIT(A) and were stated to be pending. In the meantime Ld. Pr. CWT on examination of the record noticed that assessee owned three more properties with adjacent survey numbers in the same village of Gundla Pochampally village. Part of the properties in the same village which were under agreement of sale were re-valued by AO at Rs. 9,38,355/- per gunta in the wealth tax orders passed from AYs. 2007-08 to 2009-10. For this AO obtained the valuation of land from Sub-Registry Office which showed that the land-in-question was valued at Rs. 25 Lakhs per acre. He increased the valuation by his own reasons given in the orders at Rs. 7,775 per sq.yd and enhanced the valuation. However, Ld. Pr. CWT was of the opinion that the lands in the adjacent survey numbers in the same village should have been valued at the same price instead of increasing by 25%. Therefore, an opinion was formed that there was a difference of wealth to an extent of Rs. 9,67,76,738/- in the case of Shri Chamakura Mahender Reddy and to an extent of Rs. 14,32,85,101/- in the case of Shri Chamakura Bhadra Reddy and accordingly, she initiated the proceedings u/s. 25(2).
2 CWT set aside the assessment to be completed afresh.
3 On appeal, the ITAT held as under:
“As seen from the order in AY. 2007-08, particular property at Gundla Pochampally village was on an agreement of sale and instead of adopting land value at Rs. 25 Lakhs (517 per sq. yd), AO enhanced the valuation to 7,755 per sq. yd., thereby determining per gunta value Rs. 9,38,355/-. This is the rate in the order for AY. 2007-08 that Ld. CWT has taken for revising the order in this year. In fact, that valuation in AY. 2007- 08 was also not upheld by Ld. CIT(A), but determined the valuation at 517 per sq. yd. As seen from the appeals in those years Revenue has not contested this issue in the orders of Ld. CIT(A) in their appeals and therefore considering valuation Rs. 9,38,355/- per gunta itself is erroneous on the part of Ld. Pr. CWT in these orders. The impugned lands are also being agricultural lands, they have been excluded from the wealth tax by the Ld. CIT(A) in earlier years. In view of this, we do not find any justification in invoking the provisions of Section 25(2) and setting aside the orders of AO. Consequently, we are of the opinion that the orders of AO are neither erroneous nor prejudicial to the interest of Revenue. Accordingly, the orders of Pr. CWT u/s. 25(2) in these appeals are set aside and the orders of AO are restored.”
Case Reference-BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER bAND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER Bhadra Reddy v DCWT
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "A", HYDERABAD