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2016 (1) TMI 1068 - AT - Wealth-taxLevy of penalty - concealment of wealth - delayed filing of wealth tax return beyond all times allowed - non-filing of wealth tax return in time - no addition whatsoever has been made to the wealth returned by the assessee - Held that - the return filed by the assessee was voluntary. After receipt of the return, notice under section 17 has been issued to regularize the said return. There is no material on record to show that any action under section Wealth Tax Act was contemplated against the assessee prior to filing of the return by the assessee, The returns filed by the assessees have been accepted without making any addition. Considering these facts and circumstances of the case, we are of the opinion that Ld. CIT(A) has committed an error in confirming levy of concealment penalty which according to the facts of the case cannot be held to be justified. Levy of penalty deleted - Decided in favor of assessee.
Issues Involved:
1. Legality of the penalty imposed under Section 18(1)(c) of the Wealth Tax Act. 2. Whether the penalty was justified given the voluntary filing of wealth tax returns before the issuance of notice under Section 17. 3. Applicability of Explanation 3 to Section 18(1)(c) of the Wealth Tax Act. Detailed Analysis: 1. Legality of the Penalty Imposed Under Section 18(1)(c) of the Wealth Tax Act: The appellants contested the penalty imposed by the Assessing Officer (AO) under Section 18(1)(c) of the Wealth Tax Act. The AO had levied penalties on the grounds that the assessees had not filed their wealth tax returns within the stipulated time and had concealed particulars of their assets. The penalties were confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)], who noted that ignorance of the law could not be an excuse and relied on the Supreme Court judgment in Dharmendra Textile Processors Ltd., which stated that the AO does not need to prove mens rea for imposing penalties under Section 271(1)(c) of the Income Tax Act, a provision similar to Section 18(1)(c) of the Wealth Tax Act. 2. Justification of Penalty Given Voluntary Filing of Wealth Tax Returns: The appellants argued that they had voluntarily filed their wealth tax returns on 19/1/2011, before the issuance of any notice under Section 17 by the AO on 15/3/2011. They contended that their returns were accepted without any additions, and hence, they did not conceal any wealth. The Tribunal examined the facts and noted that the returns were filed voluntarily and that there was no evidence to suggest that the Department had contemplated any action against the assessees before the returns were filed. The Tribunal also referenced the Supreme Court's decision in Dilip N. Shroff, which emphasized that the imposition of penalty is not automatic and must consider all relevant factors. 3. Applicability of Explanation 3 to Section 18(1)(c) of the Wealth Tax Act: The AO invoked Explanation 3 to Section 18(1)(c), which deems that if a person fails to furnish a return within the specified period without reasonable cause, they are considered to have concealed particulars of their assets. However, the Tribunal pointed out that Explanation 3 applies strictly to cases where returns are filed in response to a notice under Section 17. Since the appellants filed their returns voluntarily before any notice was issued, Explanation 3 was not applicable. The Tribunal emphasized that the returns were filed voluntarily and were later regularized by the issuance of a notice under Section 17, which does not equate to filing in response to such a notice. Conclusion: The Tribunal concluded that the penalties imposed under Section 18(1)(c) were not justified. The assessees had filed their returns voluntarily, without any prior action or notice from the Department, and their returns were accepted without any additions. The Tribunal held that the CIT(A) erred in confirming the penalties and that the facts did not support the application of Explanation 3 to Section 18(1)(c). Consequently, the penalties were deleted, and the appeals filed by the assessees were allowed. Order: All the appeals were allowed, and the penalties imposed were deleted. The order was pronounced in the open court on 20/05/2015.
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