1983 (8) TMI 89 - AT - Wealth-tax

Issues Involved:
1. Applicability of Explanation 4 to Section 18(1)(c) of the Wealth-tax Act, 1957.
2. Determination of whether the assessee concealed wealth or furnished inaccurate particulars.
3. Relevance of the dates of filing returns in relation to the law applicable at those times.
4. Burden of proof on the assessee to establish the correctness of asset valuation.
5. Consideration of fraud or gross/wilful neglect in the filing of returns.

Issue-wise Detailed Analysis:

1. Applicability of Explanation 4 to Section 18(1)(c) of the Wealth-tax Act, 1957:
The primary issue revolves around whether the case falls within the ambit of Explanation 4 to Section 18(1)(c) of the Wealth-tax Act, 1957. The revenue argued that the difference between the declared and assessed values of the assets indicated deemed concealment as per Explanation 4, which states, "Where the value of any asset returned by any person is less than seventy per cent of the value of such asset as determined in an assessment under section 16 or section 17, such person shall be deemed to have furnished inaccurate particulars of such asset within the meaning of clause (c) of this sub-section, unless he proves that the value of the asset as returned by him is the correct value."

2. Determination of whether the assessee concealed wealth or furnished inaccurate particulars:
The Commissioner (Appeals) found that the assessee did not conceal any particulars of wealth nor furnished inaccurate particulars. The assessee had disclosed the value of her share in Harilela House at cost and the flat in Anita Apartments as per a registered valuer's assessment. The Commissioner (Appeals) concluded that there was no fraud or wilful neglect, and the difference in valuation arose from a bona fide difference of opinion.

3. Relevance of the dates of filing returns in relation to the law applicable at those times:
The learned counsel for the assessee argued that the law applicable for the levy of penalty should be the one prevailing on the dates the returns were filed. The returns were filed between 1969 and 1974, prior to the amendment of Section 18 by the Taxation Laws (Amendment) Act, 1975, which introduced Explanation 4 effective from 1-4-1976. Therefore, the law as it stood before this amendment should apply, which required proving fraud or gross/wilful neglect for penalty imposition.

4. Burden of proof on the assessee to establish the correctness of asset valuation:
The revenue contended that the burden lay on the assessee to prove that the value returned was correct. However, the assessee demonstrated that the valuations were made in good faith based on cost and a registered valuer's assessment. The Commissioner (Appeals) accepted that the assessee had discharged this burden by showing no fraud or wilful neglect.

5. Consideration of fraud or gross/wilful neglect in the filing of returns:
The Commissioner (Appeals) and the Tribunal found no evidence of fraud or gross/wilful neglect. The assessee had engaged a senior chartered accountant to handle her wealth-tax affairs and declared asset values based on cost and professional valuation. The Tribunal noted that the revenue failed to establish any fraudulent or negligent behavior by the assessee.

Conclusion:
The Tribunal upheld the Commissioner (Appeals)'s decision, rejecting the revenue's appeals. The Tribunal concluded that the law applicable at the time of filing the returns did not include Explanation 4, and the assessee had not committed fraud or gross/wilful neglect. Therefore, the penalties under Section 18(1)(c) were not justified, and the orders canceling the penalties were affirmed.

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