1983 (9) TMI 101 - AT - Wealth-tax

Summary

Issues:
1. Justification of penalty orders made by the WTO for assessment years 1972-73 to 1974-75.
2. Interpretation of Section 18B(5) of the Wealth-tax Act, 1957.
3. Whether the AAC was justified in confirming the penalties levied by the WTO.

Analysis:
1. The appeals were filed by the assessee against the order of the AAC confirming penalty orders made by the WTO for the assessment years 1972-73 to 1974-75. The primary issue was whether the penalties were justified. The assessee had filed the returns for these years after significant delays, leading to penalty imposition by the WTO. The assessee approached the Commissioner under section 18B(1) of the Wealth-tax Act, seeking a reduction in penalties. The Commissioner reduced the penalties, but the AAC upheld the penalties. The main argument was whether the penalties were rightly sustained by the AAC.

2. The interpretation of Section 18B(5) of the Wealth-tax Act was crucial in this case. Section 18B(5) states that the orders made under this section shall be final and not subject to challenge by any court or authority. The assessee's submission was that even after approaching the Commissioner under section 18B(1), the right to appeal before the AAC or Commissioner of Income-tax (Appeals) remained. On the contrary, the departmental representative argued that by approaching the Commissioner, the assessee accepted guilt, and the element of mens rea was established, justifying the penalties. The Tribunal analyzed the scheme of Section 18B and concluded that approaching the Commissioner under this section implied an admission of guilt, making the assessee liable for penalties.

3. The Tribunal considered the assessee's explanation for the delayed filing of returns and the claim of entitlement to exemption under section 5(1)(xxxii) of the Act. The assessee's argument that if the exemption was granted, the net wealth would be below the taxable limit and hence, no penalty should be levied was scrutinized. The Tribunal found the assessee's explanations unreliable, noting inconsistencies in the story presented. The Tribunal observed that the assessee's conduct in approaching the Commissioner and the story presented before the AAC did not appear credible. Ultimately, the Tribunal held that the assessee was liable for penalties, despite the reduction granted by the Commissioner.

In conclusion, the Tribunal dismissed the appeals, upholding the penalties imposed by the WTO and confirmed by the AAC. The Tribunal emphasized the significance of approaching the Commissioner under section 18B(1) as an admission of guilt, leading to the assessee's liability for penalties.