2013 (8) TMI 644 - AT - Wealth-tax

Penalty u/s 18(1)(c) - Claiming exemption from wealth tax - concealment of wealth or inaccurate furnishing of particulars of such wealth. - Held that - It can easily be said that the assesse had not only filed inaccurate particulars of wealth but the verification of return was also not based on true facts - The assessment and penalty proceedings were different - It had not furnished any explanation that could rebut the stand taken by the AO - he was justified in invoking provisions of explanation 2 to section 18(1)(c) - assesse had not included the value of the assets in its return without any basis and thus deprived the Sovereign of its due share of tax - It deserves to be treated differently from other tax-payers where they show the value of the assets in their returns and question the taxability of such assets. A return was not an ordinary piece of paper - it was a document that had to be verified by authorized persons only - In the verification column assesses were supposed to make a declaration about correctness of the details mentioned in the return - If the assesse chooses to ignore these important factors while filing return of wealth, he cannot escape from the ensuing results. Non-inclusion of taxable asset was a prima facie proof of furnishing of inaccurate particulars resulting in concealing the particulars of wealth - Assesse was at liberty to rebut said presumption - Explanation filed by the assesse was the deciding factor to arrive at final conclusion - During penal proceedings assesse was issued a notice asking him why penalty should not be levied - After considering the explanation filed by the assesse, AO reached at the conclusion that assesse had not included the taxable wealth in the return - As per the established principles of taxation jurisprudence non- inclusion of taxable wealth resulting in loss to Revenue had to be dealt with as per the provisions of the section 18(1)(c)of the Act. Assesse had claimed that it was under the impression that the assets in question were exempt as per the provisions of the Act. For claiming an exemption assesse had to include the asset in the return - Without including the same in the return filed it cannot claim exemption - Claims of exemption/deduction/rebate were not to be decided by the assesses - it was the job of the AO to entertain or rejects such claim as per the provisions of the Act - Twin factors essential for levying penalty u/s.18(1)(c) of the Act very much exists in the case Appeal Rejected.

Issues Involved:

1. Levying of penalty under Section 18(1)(c) of the Wealth Tax Act, 1957.
2. Alleged concealment of wealth and furnishing of inaccurate particulars.
3. Interpretation and application of Section 2(ae)(3) of the Wealth Tax Act.
4. Bona fide belief and its relevance in penalty proceedings.
5. Comparison of the case with precedents and judgments.

Detailed Analysis:

1. Levying of Penalty under Section 18(1)(c) of the Wealth Tax Act, 1957:

The primary issue revolves around the imposition of a penalty of Rs. 2,18,260/- under Section 18(1)(c) of the Wealth Tax Act, 1957. The Assessing Officer (AO) found that the assessee had not included certain commercial properties in its taxable wealth, which were valued as per Rule 3 of Part B of Schedule III to the Act. The AO issued a notice under Section 17 of the Act and subsequently levied the penalty for concealment of wealth and furnishing inaccurate particulars.

2. Alleged Concealment of Wealth and Furnishing of Inaccurate Particulars:

The AO discovered that the assessee had let out a building to sister concerns and received rent of Rs. 42.62 lacs, which was not disclosed in the return of wealth. The AO computed the net taxable wealth at Rs. 20.15 Crores and initiated penalty proceedings. The FAA upheld the AO's decision, noting that the assessee did not disclose the asset and had furnished inaccurate particulars, thereby justifying the penalty under Section 18(1)(c).

3. Interpretation and Application of Section 2(ae)(3) of the Wealth Tax Act:

The assessee argued that the property was held for business purposes and fell within the exception clause mentioned in Section 2(ae)(3) of the Act. However, the tribunal found that the property was taxable under the provisions of the Act, and the assessee's interpretation was not bona fide. The tribunal emphasized that the statutory liability to pay wealth tax is a strict liability, and the rule of mens rea does not apply in penalty-related matters.

4. Bona Fide Belief and Its Relevance in Penalty Proceedings:

The assessee claimed a bona fide belief that the properties let out to group companies were not includible in the net wealth. However, the tribunal held that bona fide belief has a limited role in deciding the issue of penalty under Section 18(1)(c). The tribunal cited various judgments, including Mussadilal Rambharose, K.R. Sadyappan, and V.G. Paaneerdas, to establish that non-disclosure of taxable wealth and filing inaccurate particulars are prima facie evidence of concealment.

5. Comparison of the Case with Precedents and Judgments:

The tribunal distinguished the present case from the judgments in Reliance Petro Products Pvt. Ltd., Shankar Narayana Industries & Plantations Pvt. Ltd., and Cement India Ltd. In Reliance Petro Products, the issue was about making an incorrect claim, whereas, in the present case, the assessee did not disclose the value of taxable assets. In Shankar Narayana Industries, the court dealt with the exemption of commercial property, which was not relevant to the present case. In Cement India Ltd., the Supreme Court emphasized the necessity of deliberateness in false returns, which supported the FAA's decision in the present case.

Conclusion:

The tribunal upheld the AO's and FAA's decisions to impose a penalty under Section 18(1)(c) of the Wealth Tax Act, 1957. The assessee's failure to disclose taxable wealth and furnishing of inaccurate particulars justified the penalty. The tribunal dismissed the appeal, emphasizing the strict liability nature of wealth tax and the limited role of bona fide belief in penalty proceedings. The order pronounced on 14th August 2013, dismissed the appeal filed by the assessee.

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