2014 (3) TMI 410 - HC - Wealth-tax

Deletion of penalty U/s. 18(1)(c) of the W.T. Act - Voluntary filing of particulars - Validity of tribunal s order - Held that - The Tribunal has furnished reasons for deletion of the penalty. The Tribunal has noted that the assessee had adopted the cost index prescribed for computation of capital gains whereas the Assessing Authority had adopted the circle rate fixed by the registering authority for stamp duty purposes, in determining the valuation. When the matter travelled to the CIT(A), the valuation of the AO was reduced and the Tribunal further reduced the valuation as confirmed by the CIT(A). In the present case, the Tribunal noted that the assessee had valued his assets in accordance with cost index prescribed by the Rules for computation of capital gains and no fault could be found with that. Though the assessee had not filed the wealth tax return suo moto, he had in fact filed a statement of chargeable wealth along with the income tax return disclosing the assets. In this background, the Tribunal held that the conduct of the assessee was bona fide and just because there was a difference in opinion in the method of valuation and a subsequent variation in valuation, that would not tantamount to furnishing of inaccurate particulars of wealth. The levy of penalty on this ground under Section 18(1)(c) was held to be not warranted - No substantial question of law would arise - Decided against Revenue.

Summary

Issues:
1. Imposition of penalty under Wealth Tax Act for Assessment Years 1995-2002.
2. Deletion of penalty by the Income Tax Appellate Tribunal.
3. Questions of law raised by the revenue.
4. Interpretation of Section 18(1)(c) of the Wealth Tax Act.
5. Application of Explanation 4 to Section 18.
6. Justification for deletion of penalty by the Tribunal.
7. Applicability of principles from Price Waterhouse Coopers (P.) Ltd. Vs. Commissioner of Income Tax, Kolkata-I1.

Analysis:
The judgment by the Allahabad High Court pertains to an appeal by the revenue against the decision of the Income Tax Appellate Tribunal regarding the imposition of a penalty under the Wealth Tax Act for Assessment Years 1995-2002. The Commissioner of Income Tax had penalized the assessee, which was confirmed by the Commissioner of Wealth Tax (Appeals), but the Tribunal later deleted the penalty. The revenue raised questions of law regarding the deletion of the penalty, focusing on the interpretation of Section 18(1)(c) of the Wealth Tax Act and whether the Tribunal erred in deleting the penalty despite the assessee not voluntarily filing particulars.

The Tribunal justified the deletion of the penalty by considering the valuation methods used by the assessee and the Assessing Authority. It noted that the assessee had disclosed assets in the income tax return, even though the wealth tax return was not filed suo moto. The Tribunal found the conduct of the assessee to be bona fide, as the difference in valuation methods did not amount to furnishing inaccurate particulars of wealth under Section 18(1)(c) of the Act. The Tribunal's decision was based on the principle that no concealment or furnishing of wrong particulars occurred in this case.

The judgment delves into the interpretation of Section 18(1)(c) and Explanation 4, which creates a rebuttable presumption when the value of an asset is less than 70% of the assessed value. In this case, the Tribunal concluded that the assessee's valuation method was reasonable, thus displacing the findings of the Commissioner of Wealth Tax (Appeals). The Court agreed with the Tribunal's reasoning, stating that it was a possible view and did not warrant interference. The judgment also referenced the principles established in the Price Waterhouse Coopers case to support the Tribunal's decision.

In conclusion, the High Court dismissed the appeal, stating that no substantial question of law arose. The decision was made based on the Tribunal's sound reasoning and application of legal principles, leading to the rejection of the revenue's appeal without any costs imposed.