1995 (3) TMI 147 - AT - Income Tax

Summary

Issues:
Reassessment of net wealth for multiple assessment years, levy of penalty under section 18(1)(c) of the Wealth Tax Act.

Analysis:
1. The appeals were filed by the assessee regarding reassessments for the assessment years 1972-73, 1973-74, 1974-75, and 1976-77, as well as the levy of penalties. The reassessments were initiated to include the value of gifts as cross-gifts in the net wealth of the assessee. The AO reopened the assessments based on the belief that the assessee had not disclosed all material facts necessary for the assessment of net wealth.

2. The assessee argued that the gifts were known to the Revenue and were assessed to gift tax previously. The reassessments were challenged on the grounds that there was no failure to disclose material facts, and the reassessments were triggered by a change of opinion. The assessee also availed the Amnesty Scheme, declaring additional wealth for certain years. The CIT(A) partly allowed the appeals, and the assessee further appealed.

3. The Chartered Accountant contended that the reassessments were based on a change of opinion and were time-barred. He argued that the assessee had the right to file returns under the Amnesty Scheme even for completed assessments. The Departmental Representative highlighted a search conducted at the assessee's premises.

4. After hearing both parties, the Tribunal found that the AO had jurisdiction over the assessee in both income tax and wealth tax matters. The gifts were not included in the net wealth previously, possibly due to differing interpretations of cross-gifts. The Tribunal held that there was no failure on the part of the assessee to disclose material facts, and the reassessments were based on a change of opinion, thus not sustainable under the Wealth Tax Act.

5. The Tribunal directed the AO to complete the assessments based on the Amnesty Scheme returns filed by the assessee for the relevant years. The value of shares and fictitious deposits were to be determined according to Supreme Court decisions. The Tribunal partly allowed the appeals based on these findings.

6. Regarding the levy of penalties under section 18(1)(c) of the Wealth Tax Act, the Tribunal found that the reassessments were invalid and time-barred. Consequently, the penalties imposed during the reassessment proceedings were deleted. The Tribunal also addressed complaints of lack of natural justice raised by the assessee's representative.

7. Ultimately, the Tribunal partly allowed the quantum appeals and entirely allowed the appeals against the levy of penalties, given the invalidity of the reassessments and penalties imposed.

This comprehensive analysis covers the issues of reassessment of net wealth and the levy of penalties under the Wealth Tax Act, detailing the arguments presented by both sides and the Tribunal's findings and directions in each aspect of the judgment.