1986 (9) TMI 113 - AT - Wealth-tax

Summary

Issues Involved:
1. Cancellation of penalty under section 18(1)(c) of the Wealth-tax Act, 1957.
2. Valuation discrepancies of properties.
3. Application of Circular No. 4P (LXXVI-65) dated 7-6-1968 issued by the Central Board of Direct Taxes.
4. Burden of proof regarding the correctness of asset valuation.

Detailed Analysis:

1. Cancellation of Penalty under Section 18(1)(c) of the Wealth-tax Act, 1957:
The primary issue in this appeal is the cancellation of a penalty amounting to Rs. 1,40,800 by the Commissioner of Wealth-tax (Appeals). The penalty was initially levied by the Wealth-tax Officer (WTO) under section 18(1)(c) of the Wealth-tax Act, 1957 for the assessment year 1971-72. The WTO had determined that the assessee had concealed wealth by undervaluing properties. However, the Commissioner of Wealth-tax (Appeals) canceled the penalty, stating that the assessee had acted in good faith based on an approved valuer's certificate.

2. Valuation Discrepancies of Properties:
The assessee initially declared the value of her wealth at Rs. 94,269, later revised to Rs. 1,04,394, due to the omission of a debt owed by Shri A.C. Chopra. The declared values of two properties were Rs. 68,700 for the Metcalf Road House and Rs. 73,500 for a 50% share in a factory land & building at Mathura Road, Faridabad. The WTO assessed these properties at Rs. 1,83,000 and Rs. 95,000, respectively, based on a valuation by the department's valuation cell and past assessment patterns. The assessee contended that her valuations were based on a Government-approved valuer's certificate from 1969, which had been accepted in previous assessment years.

3. Application of Circular No. 4P (LXXVI-65) dated 7-6-1968:
The assessee's advocate relied heavily on Circular No. 4P (LXXVI-65) dated 7-6-1968, particularly paragraph 15, which states that penalties for understatement of asset values are not applicable if the understatement does not arise from fraud or gross or willful neglect. The circular emphasizes that if the taxpayer has provided relevant particulars correctly and the valuation is based on an approved valuer's report, no penalty should be imposed merely because the assessed value is higher.

4. Burden of Proof Regarding the Correctness of Asset Valuation:
The WTO held that the assessee had concealed wealth by undervaluing her properties, resulting in a penalty. However, the Commissioner of Wealth-tax (Appeals) found that the assessee had relied on an approved valuer's certificate and had acted with due care and caution. The Commissioner noted that the WTO had not sufficiently demonstrated that the assessee had attempted to conceal her wealth. The Tribunal agreed, emphasizing that the burden of proof shifts to the assessee only if there is a significant discrepancy between the returned and assessed values, which was not conclusively proven in this case.

In conclusion, the Tribunal upheld the Commissioner of Wealth-tax (Appeals)'s decision to cancel the penalty, stating that the assessee had acted in good faith based on an approved valuer's report and had not deliberately furnished inaccurate particulars. The appeal by the revenue was dismissed.