2018 (2) TMI 1543 - AT - Wealth-tax

Penalty imposed u/s 18(1)(c) of Wealth Tax Act - furnishing of inaccurate particulars of net wealth - invalid notice - Held that - Though the CWT(A) has issued the show cause notice stating that the assessee was required to explain the reasons for furnishing inaccurate particulars, concealment of wealth, it was not clearly made known for which offence the assessee is required to submit his explanation. The Ld.CWT(A) should have struck off the irrelevant column and made known the assessee by mentioning for which reason the penalty was initiated. Penalty u/s 18(1)(c) of WT Act are parimateria to Income Tax Act 271(1)(c). As per settled case laws non striking the irrelevant column in the notice issued u/s 18(1)(c) renders the notice invalid and consequent penalty required to be cancelled. - Decided in favour of assessee.

Summary

Issues:
Appeal against penalty imposed under section 18(1)(c) of Wealth Tax Act.

Analysis:
The appeals were filed against the penalty imposed under section 18(1)(c) of the Wealth Tax Act. The assessments were completed on the net wealth of the assessee, who had taken a loan for the purchase of an asset from his wife. The Assessing Officer rejected the deduction claimed for the loan, resulting in an enhanced net wealth. The Commissioner upheld the addition made by the AO and imposed a penalty under section 18(1)(c) of the Wealth Tax Act. The appellant argued that the value of the asset was correctly admitted, and the enhancement and penalty were unjustified. The appellant also contended that the penalty notice was defective as it did not specify the exact reason for initiating the penalty. The appellant cited previous judgments to support the argument that non-striking of irrelevant columns in the notice renders it invalid, leading to the cancellation of the penalty.

The Tribunal noted that the penalty notice was issued without specifying the exact reason for initiating the penalty, creating ambiguity regarding the grounds for penalty imposition. Citing previous judgments, the Tribunal emphasized the importance of clearly stating the grounds for penalty initiation to allow the assessee to defend themselves effectively. As the penalty notice was found to be invalid due to non-compliance with the requirement of specifying the grounds, the Tribunal held that the penalty imposed under section 18(1)(c) of the Wealth Tax Act was unsustainable. Therefore, the Tribunal set aside the orders of the lower authorities and canceled the penalty.

Given the invalidity of the penalty notice, the Tribunal deemed it unnecessary to adjudicate the case on its merits. Consequently, the appeals filed by the assessees were allowed, and the penalty imposed under section 18(1)(c) of the Wealth Tax Act was canceled.