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Issues Involved:
1. Imposition of penalty under section 18(1)(c) for assessment years 1971-72 and 1972-73. 2. Whether the amounts credited to American Express (AE) were liabilities or part of the assessee's net wealth. 3. Adequacy of opportunity given to the assessee for defending against the penalty for the assessment year 1971-72. Detailed Analysis: Issue 1: Imposition of penalty under section 18(1)(c) for assessment years 1971-72 and 1972-73. The assessee filed two sets of wealth-tax returns for the years 1971-72 and 1972-73. The net wealth disclosed in the original and revised returns differed, and the assessed net wealth was higher than both. The Wealth-tax Officer (WTO) initiated penalty proceedings under section 18(1)(c) for both years, alleging that the assessee made a fictitious claim of liabilities amounting to Rs. 27,000 and Rs. 19,800, respectively. The penalties imposed were equal to these amounts, which were the minimum penalties under section 18(i)(iii) as amended from April 1, 1969. Issue 2: Whether the amounts credited to American Express (AE) were liabilities or part of the assessee's net wealth. The assessee's husband had a substantial interest in a company, Phelps & Co. (P) Ltd., which owned a building in Connaught Place, New Delhi. The assessee obtained a license to display a hoarding on the building and entered into an agreement with AE to display their sign for five years, receiving an upfront payment of Rs. 36,000. Despite the upfront payment being non-refundable, the assessee accounted for it as a liability in her balance sheet over several years. The WTO disagreed, holding that the amounts should have been included in her net wealth as they were not refundable to AE. This view was upheld by the Tribunal, which noted that the right of AE was only for the advance license fee paid being adjusted against the license fee as and when it became due, and thus, there was no debt owed by the assessee. Issue 3: Adequacy of opportunity given to the assessee for defending against the penalty for the assessment year 1971-72. The assessee argued that the penalty for the assessment year 1971-72 should be canceled due to inadequate opportunity for defense, as the IAC served the show cause notice and imposed the penalty on the same day. The Departmental Representative countered that the matter was pursued simultaneously for both years, and the assessee had made written submissions regarding the penalty, making the plea of inadequate opportunity untenable. Judgment: The Tribunal concluded that no penalty under section 18(1)(c) was exigible for either assessment year. The method of presenting accounts was accepted by the Income-tax Officer for the years 1970-71 to 1974-75. Although the entire amount of Rs. 36,000 received from AE should have been accounted for in the assessee's wealth-tax returns, a misunderstanding led to the amounts being shown as liabilities. This method was previously accepted by the WTO for the assessment year 1970-71. The Tribunal noted that the assessee's continued use of this method might have been influenced by the WTO's earlier acceptance. Additionally, the WTO's acceptance of similar amounts as liabilities in subsequent years indicated potential confusion. Consequently, the penalties for both years were canceled. Conclusion: The appeals were allowed, and the penalties for the assessment years 1971-72 and 1972-73 were canceled.
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