2019 (8) TMI 312 - HC - Wealth-tax

Penalty u/s 18(1)(c) of the Wealth Tax Act - alleged that the assessee would have escaped from payment of wealth tax - HELD THAT - CIT(A) proceeded to affirm the orders passed by the AO levying penalty by referring to the amendment to the Statute, which came into force with effect from 01.4.1997. To be noted that the assessments under consideration are for the years 1997-98 and 1998-99 and the assessee's specific case was that they were under the bona fide belief that the house property would not fall within the definition of the term 'asset' as defined u/s 2(ea)(i) of the Act. It is not in dispute that in the case on hand, the assessee did not file the return. In the first instance, notice was issued u/s 17(1) and only thereafter, the return was filed. This, according to the assessee, was because of their bona fide belief that the property would not fall within the definition of the term 'asset' as defined under Section 2(ea)(1). If at all the AO imposes penalty under Section 18(1)(c), by referring to Explanation 3, the AO should have rendered a finding that there was no reasonable cause shown by the assessee so as to invoke the deeming provision. As rightly pointed out by the Tribunal, there was no such finding by the CIT(A). We also find that there was no such specific finding rendered by the Assessing Officer as well. Thus, in the absence of any proof to show that there was an attempt on the part of the assessee to conceal the particulars or to furnish inaccurate particulars, the levy of penalty was not justified. - Decided against the Revenue

Summary

Issues:
1. Whether the Tribunal was correct in deleting the penalty under Section 18(1)(c) of the Wealth Tax Act?
2. Whether the Tribunal overlooked Explanation 3 to Section 18 of the Wealth Tax Act?
3. Whether the Tribunal's decision to delete the penalty was justified considering the circumstances of the case?

Analysis:

Issue 1:
The appeals were filed by the Revenue challenging the order of the Income Tax Appellate Tribunal regarding the penalty under Section 18(1)(c) of the Wealth Tax Act for the assessment years 1997-98 and 1998-99. The Revenue raised substantial questions of law regarding the deletion of the penalty.

Issue 2:
The Tribunal considered the case and noted that there was no search or survey conducted, nor any incriminating materials seized to initiate penalty proceedings. The Tribunal highlighted that the assessee furnished complete particulars and was under a bona fide belief that the properties in question did not fall under the definition of 'asset'. The Tribunal also pointed out that the CIT(A) did not address concealment of particulars, which was necessary to levy the penalty.

Issue 3:
The Tribunal referred to a decision of the Calcutta High Court, emphasizing that even if the property was included in the return, the assessee could still claim the benefit of the law. The Tribunal found that the penalty was not justified as there was no evidence of an attempt to conceal or furnish inaccurate particulars. The decision in another case highlighted that without findings of inaccurate particulars, the penalty could not be imposed.

In conclusion, the High Court dismissed the appeals, upholding the Tribunal's decision to delete the penalty under Section 18(1)(c) of the Wealth Tax Act. The Court found no error in the Tribunal's reasoning and answered the substantial questions of law against the Revenue.