1992 (3) TMI 44 - HC - Wealth-tax

Issues Involved:
1. Legality of sustaining the penalty of Rs. 50,000 under section 18(1)(c) of the Wealth-tax Act, 1957.
2. Interpretation and application of section 18 of the Wealth-tax Act, 1957, particularly concerning the concealment of assets.
3. Burden of proof and existence of mens rea in penalty proceedings under section 18(1)(c) of the Wealth-tax Act, 1957.
4. Relevance of precedents and interpretation of legal principles related to penalty provisions under the Income-tax Act and Wealth-tax Act.

Detailed Analysis:

1. Legality of sustaining the penalty of Rs. 50,000 under section 18(1)(c) of the Wealth-tax Act, 1957:

The court examined whether the Income-tax Appellate Tribunal was right in law in sustaining the penalty of Rs. 50,000 imposed on the assessee for not declaring a plot of land in her wealth return. The plot was purchased on March 4, 1966, but was not declared in the return filed on November 14, 1968. The penalty was imposed under section 18(1)(c) of the Wealth-tax Act, which deals with the concealment of assets or furnishing inaccurate particulars. The court scrutinized the facts and found that the omission of the plot was not intentional but due to an oversight.

2. Interpretation and application of section 18 of the Wealth-tax Act, 1957, particularly concerning the concealment of assets:

Section 18 of the Wealth-tax Act, 1957, as amended by the Finance Act, 1968, was pivotal in this case. The amended provision, effective from April 1, 1969, removed the word "deliberately" from sub-clause (c) of sub-section (1) of section 18, thereby altering the burden of proof. The court noted that for the assessment year 1968-69, the amended provision applied, meaning the onus was on the Revenue to prove that the concealment was conscious and deliberate.

3. Burden of proof and existence of mens rea in penalty proceedings under section 18(1)(c) of the Wealth-tax Act, 1957:

The court emphasized that the burden of proving mens rea (guilty mind) lies with the Revenue, as established in CIT v. Anwar Ali [1970] 76 ITR 696 (SC). The Tribunal had erred by assuming that the assessee needed to prove the absence of mala fide intention. The court reiterated that the Revenue must provide cogent evidence of conscious concealment to sustain a penalty under section 18(1)(c).

4. Relevance of precedents and interpretation of legal principles related to penalty provisions under the Income-tax Act and Wealth-tax Act:

The court referred to several precedents, including CIT v. Anwar Ali [1970] 76 ITR 696 (SC), Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 (SC), and Vishwakarma Industries v. CIT [1982] 135 ITR 652 (FB), to interpret the legal principles governing penalty provisions. The Full Bench decision in Vishwakarma Industries highlighted that the omission of the word "deliberately" shifted the burden of proof to the Revenue in cases where the understatement exceeded 25% of the assessed wealth.

Conclusion:

The court concluded that the Tribunal had misapplied the law by placing the burden of proof on the assessee. The Revenue failed to provide evidence of conscious concealment, and the mere fact that the assessee filed a revised return did not constitute proof of concealment. Therefore, the Tribunal's decision to sustain the penalty was incorrect. The reference was answered in favor of the assessee, stating that the Income-tax Appellate Tribunal was not right in law in sustaining the penalty of Rs. 50,000. No costs were awarded.

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