2016 (9) TMI 1536 - AT - Wealth-tax

Levy of penalty under section 18(1)(c) of WT Act - escapement of wealth tax assessment - assessee has stated that the properties are business properties and hence exempt from wealth tax - HELD THAT - It is a fact that in view the amendment to the statute w.e.f. 01.04.1997, commercial building also included in the definition of asset and accordingly, the assessee was taxed as the above Wealth Tax Act and, in fact, there is no difference of opinion. But, to initiate penalty proceedings against the assessee, the Department should have some material evidences that have been concealed or not furnished by the assessee. In this case, the assessee has furnished complete particulars and based on that the assessment was completed. Since, the assessee was under bonafide belief that the house properties, which was stated to have been let out, are not come under the definition of asset as per provisions of section 2(ea)(1) of the WT Act. In the appellate order, the ld. CIT(A) has not given any finding with regard to concealment of particulars that have been detected by the Department to levy penalty against the assessee. Under the above facts and circumstances and in the absence of any material concealed by the assessee, in our considered opinion, levy of penalty is not legally sustainable. Thus, the penalty levied under section 16(1)(c) of the WT Act is deleted

Summary

Issues:
1. Condonation of delay in filing appeals before the Tribunal.
2. Inclusion of properties in net wealth for wealth tax assessment.
3. Levy of penalty under section 18(1)(c) of the Wealth Tax Act.
4. Appeal against the penalty levied by the Assessing Officer.

Issue 1: Condonation of Delay in Filing Appeals:
The appellant filed appeals late by seven days before the Tribunal. The appellant explained the delay due to a lull in business and oversight in handing over the orders. The delay was deemed not wilful, and the Tribunal, after considering the reasons, condoned the delay and admitted the appeals for hearing.

Issue 2: Inclusion of Properties in Net Wealth:
The Assessing Officer included three properties in the net wealth of the assessee for the assessment years 1997-98 and 1998-99. The appellant claimed the properties were business properties exempt from wealth tax as they were let out for commercial purposes. However, the Assessing Officer considered them as assets under the Wealth Tax Act. The CIT(A) upheld the inclusion of properties, stating they did not fall under any exceptions. The Tribunal affirmed the decision, dismissing the appeals.

Issue 3: Levy of Penalty under Section 18(1)(c) of the Wealth Tax Act:
Penalty proceedings were initiated under section 18(1)(c) for both assessment years. The appellant contended no concealment or misrepresentation of facts and requested dropping the penalty. The Assessing Officer imposed the penalty, emphasizing the clear chargeability of wealth tax on the properties. The CIT(A) upheld the penalty considering the amended provisions applicable to the assessment years.

Issue 4: Appeal Against Penalty Levied:
The appellant appealed against the penalty before the Tribunal, arguing that all details were provided, and there was no concealment leading to the penalty. The appellant believed the properties did not qualify as assets under the Act. The Tribunal noted that no material was concealed, and the penalty was not legally sustainable. Consequently, the penalty levied under section 16(1)(c) of the WT Act was deleted for both assessment years, and the appeals were allowed.

In conclusion, the Tribunal allowed the appeals, deleting the penalty imposed under section 18(1)(c) of the Wealth Tax Act for both assessment years, based on the absence of any material concealed by the appellant and the appellant's genuine belief regarding the properties' classification as assets.