1991 (3) TMI 188 - AT - Wealth-tax

Summary

Issues Involved:
1. Deletion of penalty under Section 18(1)(c) for the assessment year 1981-82.
2. Confirmation of penalty under Section 18(1)(a) for the assessment year 1982-83.
3. Confirmation of penalty under Section 18(1)(c) for the assessment years 1982-83 and 1983-84.

Detailed Analysis:

1. Deletion of Penalty under Section 18(1)(c) for the Assessment Year 1981-82:
The assessee, engaged in the business of gold and gold ornaments, filed a return of net wealth on 22nd Nov., 1981, showing net wealth of Rs. 11,68,881. The assessment was completed under Section 16(3) on 31st Oct., 1985, with an addition of Rs. 16,63,434 for under-valuation of closing stock. Subsequently, a further addition of Rs. 27,66,660 was made under Section 35, totaling Rs. 44,20,094. A show cause notice under Section 18(2) read with Section 18(1)(c) was issued. The WTO invoked Explanation 4 to Section 18(1)(iii) and imposed a penalty of Rs. 1,98,239, as the declared value was less than 70% of the assessed value.

The CIT(A) deleted the penalty, accepting the assessee's argument that the valuation method used was consistent with previous years and accepted by the Department until the assessment year 1978-79. The assessee could not be accused of furnishing inaccurate particulars as the Supreme Court's decision in Juggilal Kamlapat Bankers vs. WTO (1984) was not known at the time of filing the return.

The Department appealed, arguing that the Supreme Court had affirmed the Allahabad High Court's decision, which was the law when the return was filed. The Department cited the Bombay High Court's decision in CWT vs. Gammon India Pvt. Ltd (1981) to support the correct market value method.

The Tribunal found the CIT(A)'s order cryptic and lacking consideration of the legal principles laid down in various judgments. It set aside the CIT(A)'s order and directed a reconsideration of whether the assessee satisfactorily rebutted the presumptions against him, given the substantial additions to the valuation of assets.

2. Confirmation of Penalty under Section 18(1)(a) for the Assessment Year 1982-83:
The assessee furnished the return on 11th April, 1985, delayed by 33 months from the due date of 30th June, 1982. The explanation was that books of account were seized by IT authorities during proceedings under Section 132 and not released until the specified date. The WTO rejected this explanation, noting that the assessee could have obtained extracts or xerox copies to file the return on time. The CWT(A) condoned the delay only up to 20th Nov., 1984, the date on which the income-tax return was filed.

The Tribunal agreed with the CWT(A), noting that the assessee had obtained the requisite details for filing the income-tax return and could have done the same for the wealth-tax return earlier. The CWT(A) was deemed reasonable in handling the issue, and the Tribunal found no reason to interfere.

3. Confirmation of Penalty under Section 18(1)(c) for the Assessment Years 1982-83 and 1983-84:
For the assessment year 1982-83, the assessee argued that there could be no concealment since the books were in the Department's custody. The CWT(A) rejected this, noting that the Supreme Court's decision in Juggilal Kamlapat Banker & Ors. vs. WTO was known when the return was filed, yet the assessee adopted an incorrect valuation method. The Tribunal upheld the CWT(A)'s decision, stating that the presumption of concealment was not adequately rebutted.

For the assessment year 1983-84, the return was filed on 11th April, 1985, with an addition of Rs. 51,49,468 for under-valuation of stock. The WTO levied a penalty of Rs. 2,76,400, confirmed by the CWT(A). The Tribunal found the arguments and circumstances similar to the previous year and upheld the CWT(A)'s order.

Conclusion:
The Departmental appeal for the assessment year 1981-82 was allowed for statistical purposes, requiring a reconsideration of the evidence. The assessee's appeals for the assessment years 1982-83 and 1983-84 were dismissed, confirming the penalties under Sections 18(1)(a) and 18(1)(c).