2003 (6) TMI 14 - HC - Wealth-tax

Penalty under section 18(1)(c) - Whether the Appellate Tribunal is right in law and on facts in confirming the cancellation of the penalties levied by the Wealth-tax Officer under section 18(1)(c) of the Wealth-tax Act? - we therefore cannot presume that the assessee had a mala fide intention to furnish inaccurate particulars. As mens rea is an essential ingredient of an offence and as both the appellate authorities have arrived at a finding that the assessee had no intention to furnish inaccurate particulars of the asset in question we would not like to come to a different conclusion with regard to the intention of the assessee. - it cannot be said that the Tribunal had committed an error

Summary

Issues:
1. Whether the Tribunal was correct in confirming the cancellation of penalties under section 18(1)(c) of the Wealth-tax Act?
2. Whether the assessee furnished inaccurate particulars of the asset in the original return?
3. Whether the assessee had a mala fide intention to furnish inaccurate particulars?

Analysis:

Issue 1:
The Tribunal confirmed the cancellation of penalties under section 18(1)(c) of the Wealth-tax Act. The Deputy Commissioner of Wealth-tax (Appeals) had deleted the penalty, stating there was no concealment by the assessee. The Tribunal upheld this decision. The Revenue contended that the assessee intended to furnish inaccurate particulars. However, the court found that the Tribunal did not err in confirming the Deputy Commissioner's decision.

Issue 2:
The assessee initially valued the property at Rs. 3,36,485 in the return. The Wealth-tax Officer requested a valuation by an approved valuer, leading to a revised return valuing the property at Rs. 6,87,750. The Officer imposed a penalty under section 18(1)(c) for inaccurate particulars. The court noted that the revised return was filed within the prescribed time limit and before assessment completion, showing the correct valuation. As per Explanation 4 to section 18, the assessee must prove the returned value is correct. Since the revised return was filed promptly and accurately, the penalty was unjustified.

Issue 3:
The court highlighted that penalties require a mala fide intention, a question of fact. Both the Deputy Commissioner and the Tribunal found no intention to furnish inaccurate particulars. As mens rea is crucial, and both authorities concluded no mala fide intention, the court upheld their findings. Without evidence of mala fide intent, the court could not presume otherwise. Thus, the court ruled in favor of the assessee, affirming the Tribunal's decision and rejecting the Revenue's appeal.

In conclusion, the court upheld the Tribunal's decision to cancel the penalties under section 18(1)(c) of the Wealth-tax Act, as the revised return was filed accurately within the prescribed time limit, and there was no evidence of a mala fide intention by the assessee to furnish inaccurate particulars.