1984 (5) TMI 66 - AT - Wealth-tax

Summary

Issues Involved:
1. Levy of penalty for concealment of wealth.
2. Valuation of inherited jewellery.
3. Application of Explanation to section 18(1)(c) of the Wealth-tax Act, 1957.
4. Jurisdiction and procedural objections.
5. Role and responsibility of the guardian in the case of a minor assessee.

Issue-wise Detailed Analysis:

1. Levy of Penalty for Concealment of Wealth:
The primary issue was the levy of penalty for concealment of wealth under section 18(1)(c) of the Wealth-tax Act, 1957, for the assessment years 1974-75, 1975-76, and 1976-77. The Wealth Tax Officer (WTO) initiated penalty proceedings after determining that the value of the jewellery declared by the assessee was significantly lower than its actual value. The WTO imposed maximum penalties, which were based on the wealth concealed in the assessment years 1974-75 and 1975-76, and on the tax evaded in the assessment year 1976-77.

2. Valuation of Inherited Jewellery:
The jewellery in question was inherited by the assessee in 1965 and initially valued at Rs. 50,000. The assessee consistently declared this value in subsequent returns despite the WTO's direction to file a valuation certificate from a registered valuer. The WTO assessed the value at Rs. 2 lakhs for the years under appeal, which the Commissioner (Appeals) confirmed. The Commissioner (Appeals) noted that the value of jewellery had increased due to the appreciation in the value of gold and precious stones, which the assessee ignored.

3. Application of Explanation to Section 18(1)(c):
The Explanation to section 18(1)(c) was crucial in this case. It states that if the value of any asset returned by any person is less than seventy-five percent of the value as determined in an assessment, the onus shifts to the assessee to prove that the failure to return the correct value did not arise from any fraud or gross or willful neglect. The Tribunal found that the assessee failed to rebut this presumption. The conduct of the assessee and his guardian was deemed contumacious and non-cooperative, as they persisted in valuing the jewellery at Rs. 50,000 despite clear indications of its increased value.

4. Jurisdiction and Procedural Objections:
The assessee raised several technical objections regarding the jurisdiction of the WTO and procedural aspects. These objections were rejected by the Commissioner (Appeals), who found that the penalty orders were made after the assessee had become a major and had filed appeals. The death of the assessee's father and natural guardian was deemed immaterial to the issue.

5. Role and Responsibility of the Guardian in the Case of a Minor Assessee:
The assessee contended that the penalty was not justified for the default committed by his father and natural guardian. However, the Commissioner (Appeals) held that the penalty is imposable even on a minor who is assessed through his guardian. The Tribunal concurred, stating that the guardian acted for the benefit of the minor, and any contravention of the law by the guardian would make the minor answerable.

Conclusion:
The Tribunal upheld the levy of penalty under section 18(1)(c) for concealment of wealth, reducing it to the minimum for the assessment years 1974-75 and 1975-76, and directed the WTO to determine the minimum penalty for the assessment year 1976-77 based on the wealth-tax evaded. The appeals were partly allowed, affirming the principle that the assessee, even if a minor, is responsible for the actions of his guardian in matters of wealth declaration and compliance with tax laws.