2007 (9) TMI 236 - HC - Wealth-tax

Penalty on account of concealment in value of property higher value shown in return - since assessee has shown value of property in returns on basis of report of approved valuer of income-tax department, and then assessee cannot be held guilty of concealing any particular in relation to value of the property penalty set aside

Summary

Issues:
1. Interpretation of Explanation 4 to section 18(1)(c) of the Wealth-tax Act, 1957.
2. Burden of proof on the assessee to rebut presumption of concealing particulars of asset value.

Analysis:
1. The case involved an appeal under section 27A of the Wealth-tax Act, 1957, against the order passed by the Income-tax Appellate Tribunal for the assessment year 1989-90. The issue was whether Explanation 4 to section 18(1)(c) applied, considering discrepancies in the declared value of an immovable property. The Assessing Officer valued the property at Rs. 37,14,000, while the assessee declared it at Rs. 82,500. Penalty proceedings were initiated under section 18(1)(c) due to the difference in values.

2. The Commissioner of Income-tax (Appeals) canceled the penalty, noting that the assessee had disclosed all relevant facts and materials regarding the property value. The Income-tax Appellate Tribunal upheld this decision, stating that the explanation provided by the assessee was sufficient to rebut the presumption of concealing particulars. The Tribunal found that neither Explanation 2 nor Explanation 4 could be applied in this case, as the assessee had acted in good faith and there was no evidence of deliberate concealment or furnishing inaccurate particulars.

3. The Department argued that the Tribunal erred in canceling the penalty imposed under section 18(1)(c) without considering Explanation 4. The Department relied on case law to support its position. However, the Tribunal, after examining all evidence, concluded that the assessee had successfully discharged the burden of proof under Explanation 4. The Tribunal emphasized that the burden of proof shifts to the assessee in such cases, and in this instance, the assessee had provided a valid explanation for the valuation difference.

4. The Tribunal's decision was supported by legal precedents and the interpretation of similar provisions in the Income-tax Act, as highlighted in relevant case law. The Tribunal found that the assessee's disclosure was based on a valuation report by an approved valuer and that discrepancies in valuation reports were common. The Tribunal's detailed analysis led to the dismissal of the Department's appeal, as it was determined that the assessee had not concealed any particulars or furnished inaccurate information regarding the asset value. The judgment favored the assessee, and the appeal was dismissed.