1976 (3) TMI 84 - AT - Wealth-tax

Summary

Issues Involved:
1. Reopening of wealth-tax assessments for the years 1965-66 to 1973-74.
2. Alleged concealment of wealth by the respondent.
3. Imposition of penalties for the alleged concealment.
4. Respondent's explanation for the omission of certain assets.
5. Decision of the Appellate Assistant Commissioner (AAC) to quash the penalties.

Issue-wise Detailed Analysis:

1. Reopening of Wealth-Tax Assessments:
The WTO noticed during the assessment for the year 1973-74 that the respondent had not admitted all the vacant sites owned in Chilakaluripet in the original wealth-tax returns. Consequently, the wealth-tax assessments for the years 1965-66 to 1972-73 were reopened and recomputed.

2. Alleged Concealment of Wealth:
The WTO observed that the respondent had sold 5.58 cents of vacant site for Rs. 1,000, which was credited to his capital account. Upon verification, it was found that the respondent had not disclosed all the items of wealth, leading to the conclusion that there was an omission to disclose all the vacant sites in Chilakaluripet.

3. Imposition of Penalties:
The WTO issued notices of penalty for all relevant assessment years and levied penalties equal to the wealth alleged to have been suppressed by the respondent for the last six years (1968-69 to 1973-74). The penalties were based on the view that there was a clear concealment of wealth by the respondent.

4. Respondent's Explanation for the Omission:
The respondent contended that the omission was due to sheer oversight and inadvertence. The respondent believed that the other sites, which were not leased out, were agricultural lands for the purpose of wealth-tax. This explanation was rejected by the WTO, who argued that the respondent could not be under the bona fide impression that the lands were agricultural, as he had taken steps to convert them into house sites.

5. Decision of the AAC:
The AAC quashed the orders of penalty, concluding that the omission was without any guilty intention. The AAC noted that the respondent had been showing a wealth of nearly Rs. 4 lakhs every year, making it unthinkable that he would conceal small sites valued at Rs. 15,000. The AAC found that the omission was due to inadvertence or a wrong impression entertained from the beginning.

Final Judgment:
The appeals filed by the Department were dismissed. The Tribunal upheld the AAC's orders, agreeing that the Department had not made out a prima facie case for imposing severe penalties. The Tribunal found that the respondent's omission was due to inadvertence or a wrong impression and not a deliberate act of suppressing wealth. The Tribunal concluded that it was unlikely that the respondent would risk severe penalties to avoid a small sum of wealth tax.