ILLUSTRATION :-

Mr. Samarathmal Tanted assests and

liabilities are as under as on 31st March 2009 :

1.) House properties :

(a) Self-residential house at Ujjain Rs. 9,50,000

(b) Rental house at Indore Rs. 5,50,000. The house in let

out to a bank.

Outstanding loan Rs. 1,62,000.

(c) House at village Rs. 80,000, Let out for residential

purpose for through

out the year.

2.) Household goods ( Furniture and utensils ) Rs. 70,000

3.) Ornaments of gold and silver Rs. 9,45,000

4.) Agricultural land- In India Rs. 85,000 , In foreign Rs. 75,000.

5.) Fixed deposit in Bank of Maharastra ( 1st June, 2003 ) Rs.

85,000.

6.) Shares in Indian Companies ( Purchased on 1st Jan 2005 ) Rs

40,000.

These shares were sold by him on 15.03.09 for Rs.2,60,000

and cash payment received on 31.3.09 . The same was
deposited by him in fixed deposit with a bank on next day i.e.
1.4.09.

7.) Animals Rs. 35,000.

8.) Mortgage Loan on Agriculture Land Rs 80,000; other loan Rs.

40,000; Foreign loan on Agriculture land Rs.60,000.

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9.) Motor Car for personal use Rs. 1,60,000. The motor Car is
purchased from bank loan and Rs. 70,000 was outstanding.

Compute Net wealth for the assessment year 2009-10.

SOLUTION :-

Computation of Net wealth of Mr. Samarathmal

For the assessment year 2009-10

Self residential house at Ujjain [ exempted u/s Nil

5(vi) ]
3,88,000
House at Indore let out to bank ( 5,50,000 –
1,62,000 ) Nil

House at village, Let out for residential use [ not Nil

asset u/s 2(ea)]
9,45,000
House hold goods ( not asset )
Nil
Ornaments ( asset u/s 2 (ea)]
Nil
Agricultural land ( not asset )
2,10,000
Bank deposit ( not asset )
Nil
Cash in hand ( 2,60,000 – 50,000 )

Animals ( not asset )

90,000
Motor Car [ asset u/s 2(ea) ]
1,60,000
16,33,000
Less : Loan outstanding
70,000

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 Net Wealth

Wealth Tax Payable – 1% on above Rs. 15 lacks =

Rs. 1,330

8. Collection and
Recovery of Tax
Whenever assessment of tax is
completed of an assessee, then wealth tax officer
issues notices to deposit tax or penalty or interest.
(1) Time-Period of tax payment – Assessee
has to deposit the amount mentioned in notice
within 30 days of receiving such notice. This amount
should be deposited to mentioned person at
mentioned place. Assessment officer can decrease
or increase the time period if he thinks that it
doesn’t causes any harm to state revenue.
(2) Payment of interest – If an assessee
doesn’t make the payment of the amount as
mentioned in the notice of demand within the
specified period, he will also have to pay the
interest @ 1% for every month.
(3) Canciliation or Reducing the Interest –
On confirmation of the following, the amount of
interest may be reduced or cancelled by the chief
commissioner or the commissioner :
I. When the assessee is finding it difficult to
make the payment of the
interest.

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 II. Due to the reason beyond the control of
the assessee.
III. The assessee has given due co-operation
in the assessment and its collection.
(4) Default in payment – If the assessee has
not paid the said amount in time he will be a
defaulter and has to pay penalty in the following
way :
I. Penalty on default.
II. Increase in penalty after continuous
default.
III. If there is a genuine reason for default,
assessment officer may cancel the
penalty.
(5) Types of collection – Collection of tax,
interest, penalty or any other amount is done in the
following way :
I. By sending Certificate to the tax-Recovery
officer.
II. Collection by state government.
III. Collection under foreign government.
IV. Collection by suing in court.
Tax should be collected within 3 years of
financial year in which tax is demanded.

Recovery of Tax
According to sec. 22, if assessee is unable to pay
tax, then wealth tax officer issues a certificate duly
signed by him mentioning the amount of tax to the
tax-collection officer. That officer can collect tax in
the following way :
(a) By selling movable or immovable assets of
assessee.

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 (b) By appointing a receiver to manage the assets
of assessee.
(c) By arresting the assessee and sentencing
them.
Tax-assessement officer can himself, even
after sending certificate to the collection officer, can
collect tax in the following way-
I. By sending a notice to the employer of the
tax payer.
II. By sending a notice to the persons who
have the amount of tax payer.
III. By applying in the court.
IV. By selling movable assets to the tax payer.
V. By state government.
VI. By giving the facility to pay the amount of
tax in installments.
VII. By making the assessee pay tax in case the
assessee appeals in high court or
Supreme Court.
VIII. He can postpone the payment of tax if the
assessee has appealed against his
assessment to commissioner. (Appeals)

Refund of Tax
If the assessee has to be refunded money due to
appeal or other procedure then assessment officer
without any application will refund the said amount.
Right to stop the Refund- When assessee gets
the right to receive the refund u/s 16 (1) but in the
opinion of assessment officer :
I. Assessee is issued a notice u/s 16 (2) or
there is a possibility of issuing such notice,
and

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 II. If any appeal is going through order of
refund.
III. Any proceding is left under this Act and tax
assessment officer thinks that is case of
refund, state Revenue may be harmed ,
then in such case by permission from
commissioner can stop the refund.

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 9. Assessment
Procedure
Wealth tax is imposed on the net wealth
of an assessee. Which assessee has to pay how
much tax is decided as under :

(1)Submitting the Return of Wealth Tax [Sec.

14 (1)] – The person whose net wealth exceeds the
exemptions limit i.e. 15 Lakhs as on the valuation
date or March 31 has to submit the return of his
wealth, on the prescribed form ‘A’ in prescribed
manner and duly verified by him. If the assessee is
a business man, he has also to submit the copy of
his balance sheet or trial balance. If a person is
liable to pay tax on the net wealth of some other
person he should also submit the return. Various
dates submitting return are :
(a) Is assessee is a Company
st
31 , October
(b) Assessee other than company whose
account are audited according to law
st
31 ,October
(c) Other Assessees
st
31 , July

(2) Notice for submitting the Return [Sec. 14

(2)]- When the Wealth Tax Officer is convinced that
some person possesses wealth more than the
minimum taxable limit as prescribed, and still he
has not filed the return of wealth tax, he may issue

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 notice to such person to submit the return of wealth
tax.
(3) Submitting revised Return [Sec. 15] – After
submitting the return of net wealth , if an assessee
feels that there has so signed some mistake in the
return, or some facts have left or omitted, he may,
before the assessment, submit the revised return.
(4) Signatures on the Return
(a) In case of an Individual :
I. The individual should himself sign it.
II. If the individual has gone out of the country,
the signature of the person authorized by him
must be there.
III. If the person is of unsound mind in that case,
it must be signed by his guardian or by some
such person who is just Competent to work on
his behalf.
IV. If for any reason, it is impossible for that
person to sign, in that case, the person
compotent to work on his behalf, may sign.
(b) In case of HUF :
I. The Karta of the family will sign.
II. If the Karta has gone out of India, or is of
unsound mind, any other adult member of the
family will have to sign.
(c) In case of a Company :
I. The managing director, or
II. If there is no managing director, any other
director may sign the return.

Kinds of Assessment
When the wealth tax officer receives the return
of net wealth of the assessee, he commences with

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 the work of assessment. U/s 16, the regular
assessment is done in the following manner :
(i) On the basis of the Return Submitted – If
the assessment officer is satisfied with the return of
wealth submitted by the assessee, without asking
for any proofs or evidence or without requiring him
to be present, he will assess on the basis of this
return, the net wealth and the wealth tax payable
by the assessee and the interest or the amount of
the refund of wealth tax.
(ii) On the basis of proofs finished – When the
assessment officer is not satisfied with the return
filed by the assessee, he will issue a notice to the
assessee, requiring him to be present in his office,
or sereve the notice for submitting necessary proofs
for justifying and established the correctness of the
return so submitted. The wealth tax officer, after
examining all the evidence as submitted by the
assessee, will issue an order in writing regarding the
assessment of taxable net assets and the net
wealth tax payable or the amount refunded to him.
(iii) Best Judgement assessment – If the
assessee has not submitted return of the net wealth
even after being serve with a notice of being
required to submit such return, or has violated the
notice issued by the assessment officer for
presenting himself or for presenting the evidence or
the account books the assessment officer u/s 16(5),
on the basis of his best judgement, shall assess the
net wealth and the wealth tax payable , keeping in
view the information’s available.

Forwarding to the Valuation Officer – If the

wealth tax officer feels that the assessee has, in his

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 return of net wealth under valued any property as
compared to the market value, or the certified
values has undervalued the property, he may
forward to the valuation officer, such matter
pertaining to the valuation. The valuation officer
shall serve upon the assessees a notice to send on a
particular date necessary accounts and the
documents etc. pertaining to the property. If the
valuation officer so feels that the assessee has
correctly show, the value of property, he will issue
an order whose one copy will be sent to the
assessee and the other to the assessment officer.
When the valuation officer inhances the
valuation of the property, he will inform the
assessee as to how much has he increased the
valuation and will provide or opportunity to the
assessee to express his views.

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 10. Appeal and Revision
To give justice to the assessee, a
proper process of appeals and revision is mentioned
in the Wealth-Tax Act.
Appeal under Wealth-Tax Act - When Wealth
Tax assessment of an assessee is done by the
wealth tax officer and if the assessee is not satisfied
with the decision, he has the right to appeal against
such order or decision. Appeal can be done to the
following officials under W.T. Act :
(I) Appeal before the commissioner (Appeals)
If an assessee is not satisfied with the
assessment of Wealth tax authority, he can appeal
to the Commissioner (Appeals). This appeal can be
filed within 30 days of the order received regarding
tax assessment. Even after 30 days, in presence of
genuine reason, appeal can be done.
(1) Cases before Commissioner (Appeals) – The
following are the circumstances under which the
appeal might be filed before the commissioner
(Appeals) :
I. Regarding amount of net wealth.
II. Regarding amount of Wealth Tax payable.
III. Non-acceptability of the assessment.
IV. Regarding the fine or penalty imposed.
V. Not recognizing the division of HUF.
VI. Due to the increase in the amount of tax
resulting from correction of mistake or
reducing the amount of refund.

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 VII.Regarding Penalty imposed u/s 37(2) for non-
accepting summon.
VIII. Regarding accepting the agent for the non-
resident Indians.
IX. Regarding the orders of the valuing officer, as
a result of which the value of any property
increases.
In any of the above cases, appeal can be filled
before Commissioner (Appeals) within prescribed
period.

(2) Procedure for Appeal before Commissioner

(Appeals) –
I. The appeal must be filed within 30 days of the
order received regarding the assessment.
II. Appeal should be made on the prescribed
Proforma ‘E’ and duly certified in a prescribed
manner.
III. When the assessee has submitted the return
of wealth tax the appeal may be filed only
after the payment of the wealth tax on the
basis of this statement.
IV. After the filing of appeal, the Commissioner
shall fix the date and place of hearing.

(3) Rights of the commissioner (Appeal) –

I. During the hearing, he may also allow the
appellant to mention such matters which have
not mentioned in the appeal.
II. He can make enquiries as deemed necessary,
before deciding the appeal.
III. He has right to give proper or reasonable
judgement regarding the appeals. He is also
authorized to inhance the amount of wealth

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 tax payable or the fines. But before issuing
such orders, he will have to grant an
opportunity to the assessee to present his
views.

(II) Appeals before the Appellate Tribunal

The right of filling appeal before the Appellate
Tribunal is available to both the assessee and the
assessing authority.

Cases for which the Appeal may be filed

I. Regarding the judgement given u/s 23.
II. Regarding the penalties imposed u/s 18
and 18 (a).
III. Regarding the enhanced liability of tax, as
increased by the Commissioner.
IV. Regarding the penalty imposed u/s 37 (2).

Procedure for Appeal before Appellate

Tribunal

If the assessee is not satisfied with the decision

I.
of Commissioner (Appeals) he can file an
appealbefore the Appellate Tribunal within 60
days of decision.
II. If the commissioner is not satisfied with the
decision of DEPUTY-Commissioner (Appeal),
he may direct the assessing officer to appeal
against such order.
III. Appeal must be submitted on a prescribed
form- F certified in a prescribed manner.
IV. If the appeal is done by the assessee, he has
to deposit a fees of Rs. 200/-.

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 Revision by Commissioner
The revision may be taken up by the commissioner,
in the following two cases

I. In the interest of the assessee and

II. In the interest of the state revenue.
(I) Revision in the Interest of the Assessee -
When the assessee is not satisfied with the
judgement of the assessing officer or of the
commissioner (Apeeals), he may apply to the
commissioner for revision.

Rules for accepting the revision

I. Along with the application, a fee of Rs. 25/- has
to be compulsorily deposited.
II. This application must be made within a year of
order issued.
III. Such case should not be in hearing under
appeal.
IV. If no time of appeal is left or assessee has left
the right to appeal.
On receiving the application, the commissioner will
issue his judgement after due consideration, but it
can not increase the assesse’s tax liability.
(II) Revision in the Interest of State Revenue
– If the Commissioner so feels that any order issued
by the assessment officer is wrong and not in the
interest of State Revenues, he may revise it. While
revising, the commissioner will either himself
conduct enquiry or will get the enquiry conducted.
After giving proper opportunity to assessee, he will
issue order within 2 years of the financial year.
This revision may increasing the amount or
may issue a fresh assessment of Wealth-tax.

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 11. Penalties and
Prosecutions
If any assessee does not observe the
provisons of W.T. Act or does not clear the payment
of Wealth Tax in time or commits any offence, in
such cases provision has been made or the
penalties and prosecutions in the following way –
(I) Provisions relating to penalties in Wealth
Tax Act
Under the W.T. Act, the following provisions
have been made for imposing of the penalties :-
(1) Default in furnishing the Return – If the
assessee does not present or after order of tax-
assessment officer does not submit the return,
penalty of 1% on tax payable is imposed.
(2) Not attending – If after serving of a notice, the
assessee does not present himself or does not
submit the books of accounts and other documents,
then a minimum of Rs. 1,000 and maximum of Rs.
25,000 can be imposed as penalty.
(3) Concealing the details of the Property – If
the Wealth tax authorities believe that any assessee
has concealed some particulars of any property or
has deliberately and knowingly submitted wrong
statement, in such case, an amount equivalent to
the tax so saved and upto a maximum of 5times of
such evaded amount may be imposed as penalty.
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 (4) Not depositing tax on Self-assessment – If
the assesee after self assessment of tax and before
furnishing the return, is unable to pay tax, then he
can be subjected to penalty to the extent of tax
payable.
(5) Not responding to the quarries or refusing
to sign the statement – It is important for tax
assessment that the assessee furnish correct
details. If the assessee refuses to answer the
quarries by the officer or refuses to sign the
statement, he may be imposed a penalty of
minimum Rs. 500 and maximum of Rs. 10,000.
(6) Not furnishing the Information or
Statement Demanded – If any assessee, without
any reasonable or genuine cause, doesn’t submit to
the assessment officer any such informative
statement within the specified time, for furnishing
which he is bound by section 38, he may be
punished with a penalty of Rs. 100 to 200 per day.
(7) Default in the Payment of Tax – If the
assessee, on being served with the notice of
demand, doesn’t clear the tax, in such case
whatever amount the assessing officer thinks
proper, may impose as penalty upon the assessee
but the same must not exceed the amount as due
against him.
(8) Default in the presentation of books of
accounts – If a summon has been issued to any
assessee for giving evidence and presenting the
books of accounts and that person doesn’t present
himself willfully, he may be imposed penalty
between Rs. 5,000 to 10,000.

(II) Prosecution and Sentences

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 In some cases under W.T. Act, assessee may
be charged or prsecuted and even can be
sentenced. The cases regarding prosecution are as
follows :
(1) Attempt to Evade the Tax deliberately – If
an assessee delebrately makes an attempt to evade
the wealth tax, penalty or interest, he may be
prosecuted as under :
I. If he has tried to evade an amount more than
Rs. 1 Lakh, may be sentenced with a rigorous
imprisonment of minimum 6 months, which
may be extended upto 7 years and penalty
may be imposed.
II. In other cases, a minimum of 3 months and
upto a maximum of 3 years rigorous
imprisonment and fines may be imposed.
(2) Not furnishing the Return on Net Wealth –
If any person delebrately avoids to submit the
return of wealth within the specified time, he may
be sentenced in the following way :
I. If he is not detected and evades a tax of more
than Rs. 1 Lakh, he may be sentenced for a
minimum of 6 months, and maximum of 7
years of rigorous imprisonment and may also
be penalized.
II. In any other case, he may be sentenced for a
minimum of three months but not exceeding
three years imprisonment as well as he may be
fined.
(3) Not submitting the Books of Accounts – If
any assessee even after being served with notice,
doesn’t submit knowingly or wilfully, the books of
accounts or documents within a specified time, he
may be sentenced to one year’s rigorous

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 imprisonment or and may be fined at a minimum of
Rs. 4/- or Rs. 10/- per day, till the default continues.
(4) Verifying the false Statements – If any
assessee verifies the false statement, or submits
false accounts or statement, he amy be punished as
follows :
I. If his accounts were treated in correct and he
would have evaded tax more than Rs. 1Lakh,
he may be sentenced upto a minimum of 6
months and maximum of 7 years imprisonment
and also be fined.
II. In any other case, he may be imprisoned for a
period from 3 months to 3 years and will also
be fined.
(5) Verification of the false statements by
certified Values – If the valuer verifies the false or
wrong statements, and regarding which he was
confident that it is wrong or false, in that case, he
may be sentenced upto six months simple
imprisonment, or shall be fined or both the
punishments might be imposed.
(6) Encouragement for false statements – If
any person, knowingly or willfully, encourages
another person for submitting false statements
regarding the net wealth, he may be penalized as :
I. On evading tax more than Rs. 1 Lakh,
imprisonment of minimum of 6 months and
maximum of 7 years with fine.
II. In other cases, sentence may be 3 months to 3
years, as well as fines.

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