2018 (6) TMI 1203 - AT - Wealth-tax

Penalty u/s. 18(1)(c) - reopening u/s. 17 - deliberately concealed the particulars of wealth - Held that - As seen from the satisfaction recorded and the order of the AO, there is no information with AO about the wealth of assessee. It was only when AO made roving enquiries about assets held, assessee disclosed the jewellery received on gift at the time of her marriage (20-05-2003). The explanation given was that she is not aware about the wealth tax liability on that jewellery to be accepted as bonafide, as she has no other assets either immovable or movable, as can be seen from the computations filed. Even though the proceedings were initiated and finalized u/s. 17 in AY. 2005-06 and AY. 2006-07, no penalty u/s. 18(1)(c) was levied by the AO. Thus, the reopening u/s. 17 has no relevance for levy of penalty. As the explanation was bonafide, this being first year of wealth tax in her case, we are of the opinion that the facts do not warrant penalty u/s. 18(1)(c) of the Wealth Tax Act. - Decided in favour of assessee

Summary

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

Analysis:
The appeal was filed against the penalty imposed under section 18(1)(c) of the Wealth Tax Act. The case involved an assessee, a close relative of an individual, who had not initially disclosed certain wealth in her return for the assessment year 2004-05. The Assessing Officer (AO) initiated assessment proceedings under section 17 of the Wealth Tax Act, and the assessee later admitted to undisclosed jewelry worth a significant amount. The AO then imposed a penalty under section 18(1)(c) of the Act, which was confirmed by the Commissioner of Income Tax (Appeals) (CIT(A)).

The main contention raised by the assessee was that the assessment was reopened due to the Satyam scam, and the wealth in question was not previously known to the AO. The assessee argued that the undisclosed jewelry was received as gifts during her marriage and that she was unaware of the wealth tax liability associated with it. The assessee emphasized her lack of other assets and the bonafide nature of her explanation. It was also highlighted that in subsequent assessment years, no penalty was imposed despite similar proceedings under section 17.

The Departmental Representative (DR) contended that the non-disclosure of wealth in the original return and subsequent revisions did not absolve the assessee of the penalty. The DR relied on a Supreme Court decision to support this argument.

Upon considering the arguments and evidence, the Tribunal noted that the AO had no prior information about the undisclosed wealth of the assessee. The Tribunal found the assessee's explanation regarding the jewelry to be bonafide, especially considering it was her first year under the Wealth Tax Act. The Tribunal distinguished the current case from the precedent cited by the DR, emphasizing the lack of evidence of undisclosed wealth in this instance. Consequently, the Tribunal held that the facts did not justify the penalty under section 18(1)(c) of the Wealth Tax Act.

In conclusion, the Tribunal canceled the penalty imposed and allowed the appeal of the assessee. The judgment was pronounced on 22nd June 2018 by the Appellate Tribunal ITAT Hyderabad, with detailed reasoning provided by the members presiding over the case.