2016 (1) TMI 257 - AT - Wealth-tax

Levy of penalty for concealment of wealth - Assessee responded that notice u/s 17 of the Act was merely issued due to change in opinion from the assessment records and does not attract the penalty provisions. - It was his submission that in the situation that prevailed as on the due date for filing the return of income the assessee was under bona fide belief that there was no requirement for filing wealth tax return and therefore no adverse inference of concealment of wealth can be drawn against the assessee. - Held that - in the given facts and circumstances of the case it cannot be said that the Assessee concealed particulars of wealth as is the charge sought to be made out by the Revenue. - no penalty ought to have been levied on the Assessee u/s.18(1)( c) of the Act. - Decided in favor of assessee.

Summary

Issues:
1. Imposition of penalty under section 18(1)(c) of the Wealth Tax Act, 1952 by the Assessing Officer.
2. Confirmation of penalty by the Commissioner of Wealth Tax (Appeals).
3. Appeal against the penalty imposition by the assessee before the Appellate Tribunal ITAT Kolkata.

Issue 1: Imposition of Penalty under Section 18(1)(c)
The appeal arose from the order of the Commissioner of Wealth Tax (Appeals) confirming the penalty of Rs. 35,386 imposed by the Assessing Officer under section 18(1)(c) of the Wealth Tax Act, 1952. The Assessing Officer found the assessee liable for wealth tax due to jewelry and cash-in-hand exceeding the specified limits under the Act. The assessee argued that the penalty was unjustified as the notice under section 17 of the Act was issued due to a change in opinion, not concealment of wealth. However, the Assessing Officer disregarded this claim and imposed the penalty equal to 100% of the tax sought to be evaded.

Issue 2: Confirmation of Penalty by Commissioner of Wealth Tax (Appeals)
The Commissioner of Wealth Tax (Appeals) upheld the Assessing Officer's action, stating that the appellant had taxable wealth for the assessment year but did not file the wealth tax return voluntarily. The Commissioner noted that the appellant's disclosure of jewelry and cash in the balance sheet was not sufficient for wealth tax proceedings. The Commissioner emphasized that the provisions of section 2(ea) of the Wealth Tax Act clearly defined assets to be included for wealth tax purposes. The Commissioner concluded that the Assessing Officer was justified in imposing the penalty under section 18(1)(c) of the Act, dismissing the appellant's arguments.

Issue 3: Appeal before Appellate Tribunal ITAT Kolkata
The assessee appealed the Commissioner's order before the Appellate Tribunal ITAT Kolkata, arguing against the imposition of the penalty. The authorized representative contended that the jewelry and cash-in-hand were not fully taxable wealth as per the interpretation of the Act. The representative highlighted the bona fide belief of the assessee regarding the exclusion of certain assets from taxable wealth based on previous assessments and judicial precedents. The Tribunal carefully considered the submissions and factual background presented by the assessee, ultimately ruling in favor of the assessee. The Tribunal held that no concealment of wealth was evident, and thus, the penalty under section 18(1)(c) was canceled, allowing the appeal of the assessee.

This comprehensive analysis of the legal judgment outlines the progression of the case from the imposition of the penalty by the Assessing Officer to the final decision by the Appellate Tribunal ITAT Kolkata, providing a detailed examination of each issue involved.