2013 (8) TMI 976 - AT - Wealth-tax

Summary

Issues Involved:
1. Imposition of penalty u/s 18(1)(c) of the Wealth Tax Act for A.Y. 1995-96 and 1996-97.
2. Imposition of penalty u/s 18(1)(c) of the Wealth Tax Act for A.Y. 1997-98, 1999-00, 2000-01, and 2001-02.

Summary:

Issue 1: Imposition of penalty u/s 18(1)(c) for A.Y. 1995-96 and 1996-97

The assessee filed wealth tax returns up to A.Y. 1995-96 and stopped thereafter, believing his net wealth was below the taxable limit. The AO issued a notice u/s 17 of the Wealth Tax Act, and the assessee filed returns showing taxable wealth below the limit. The AO assessed a higher taxable wealth, leading to a penalty u/s 18(1)(c) for furnishing inaccurate particulars of wealth. The CIT (A) confirmed part of the additions, and the ITAT restored the appeal to the CIT (A), who again confirmed part of the additions. The AO issued a show cause notice for penalty u/s 18(1)(c), which was upheld by the CIT (A).

The ITAT found that the assessee had adopted a bona fide method of valuation using the cost index for capital gains, while the AO used circle rates. The ITAT noted that valuation is an opinion and the assessee's method was bona fide. The ITAT held that variation in valuation does not amount to furnishing inaccurate particulars of wealth and deleted the penalty for A.Y. 1995-96 and 1996-97.

Issue 2: Imposition of penalty u/s 18(1)(c) for A.Y. 1997-98, 1999-00, 2000-01, and 2001-02

For A.Y. 1997-98, the penalty was imposed for a difference in valuation of property, which the assessee claimed was bona fide. The AO rejected the claim of conversion of capital assets into stock-in-trade. The CIT (A) upheld the penalty, and the ITAT found that the assessee had disclosed all assets and the variation was due to a difference in opinion on valuation. The ITAT deleted the penalty for A.Y. 1997-98.

For A.Y. 1999-00, 2000-01, and 2001-02, the penalty was imposed for similar reasons. The ITAT found that the assessee had declared income from the sale of lands as capital gains and claimed exemption u/s 54EC, indicating no conversion to stock-in-trade. The ITAT upheld the penalty for these years, following the decision in the case of Shri Devendra Verma.

Conclusion:

The appeals for A.Y. 1995-96, 1996-97, and 1997-98 were allowed, and the penalties were deleted. The appeals for A.Y. 1999-00, 2000-01, and 2001-02 were allowed in part, and the penalties were upheld. The order was pronounced on 23/8/2013.