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TMI Blog1982 (12) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... ard, the WTO actually relied on the finding arrived at by the ITO in the present assessee's income-tax assessment relating to the assessment year 1973-74. That income-tax assessment was also completed as per order dated23-10-1974. In the return of net wealth filed by the assessee, he had, in view of his claim as to status as non-resident, made a specific statement. 'The assessee is having bank balance with a London bank, which is exempt under section 6(i) being a non-resident'. Thus in the return of net wealth, the assessee had not disclosed at all any deposits lying in any London bank. Actually, the assessee had two deposits in two differentLondonbanks as on the valuation date, namely,31-3-1973. One deposit was of Rs. 72,724 lying in National City Bank,Londonin the sum of pound 4040.24 and the other deposit was of pound 1088.32 as aforesaid in the Standard Bank Ltd.,London. Shri N.K. Sharma was the ITO as well as the WTO for Distt. III (25)New Delhi. It appears that during the course of wealth-tax assessment under consideration, the WTO (Shri N.K. Sharma) in view of the progress made in the assessee's income-tax case for the assessment year 1973-74 having made up his mind regardin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57, whereas the initial assessment had been completed at net wealth of Rs. 1,69,633. Thus, in the net result, an amount of Rs. 72,724 came to be added being Indian rupee equivalent of the assessee's deposit in National City Bank,Londonas aforesaid. On completion of the said reassessment order, the WTO initiated against the assessee proceedings for penalty for concealment of particulars of net wealth. Ultimately, penalty of Rs. 72,724 was levied by the WTO as per order dated24-3-1980under section 18(1)(c) of the Act. 7. The assessee, in his reply dated15-2-1979, submitted that as the revised return had been filed by him suo moto there was no question of any concealment. The WTO relying on N.A. Malbary Bros. v. CIT [1964] 51 ITR 295 (SC) and CIT v. Gopal Krishna Singhania [1973] 89 ITR 27 (All.) took the view that concealment penalty was straightway imposable, when there was a difference between the net wealth determined as per the initial assessment and the net wealth determined as per reassessment. 8. The assessee went in appeal to the Commissioner (Appeals). The learned Commissioner allowed the appeal and cancelled the penalty. On strength of Brij Mohan v. CIT [1979] 120 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom1-4-1976. However, it may be noted that until31-3-1965furnishing of inaccurate particulars of assets had to be deliberate for constituting the fault. The word 'deliberate' was dropped from clause (c), effective from1-4-1965. 14. Section 18(1)(iii) provided for the quantum of punishment leviable in cases where the aforesaid fault stood established. There was no change in the said provisions effective from1-4-1976. 15. The Explanation below section 18(1)(iii) contained a rule of evidence as to the proof of the guilt or fault mentioned in section 18(1)(c). There was no change in the said provision also effective from1-4-1976. 16. Section 18(3) as until31-3-1965stated that no prosecution for an offence was to be instituted in respect of the same facts in relation to which a penalty had been imposed under section 18. 17. Effective from 1-4-1965, section 18(3) provided that if in a case falling under section 18(1)(c), the minimum penalty imposable exceeded a sum of Rs. 1,000 the WTO was to refer the case to the IAC, who, in turn, exercised all the powers relating to imposition of penalty. Effective from 1-4-1971, section 18(3) provided that if in a case falling under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case under consideration, there is no controversy as to the law relating to the quantum of penalty. Ruling in the case of Brij Mohan, therefore, have no hearing. 23. In the case of Ram Achal again relied on by the learned Appellate Commissioner, the controversy before the lower authorities seem to relate as regards the applicability of the rule of evidence as contained in the statutory Explanation below section 18(1)(iii). However, when the matter went to the High Court, the dispute was settled on the basis of the law relating to the ingredients of the fault involving dropping of the word 'deliberately' from section 18(1)(c) as aforesaid. Thus, in the said case of Ram Achal also the controversy was not about the law relating to jurisdiction. 24. So far as the law relating to jurisdiction is concerned, Jain Bros. v. Union of India [1970] 77 ITR 107 (SC) throws light. In that case, it was delay penalty that was involved and the question arose whether question of jurisdiction had to be determined with reference to the provisions of the Indian Income-tax Act, 1922 or the provisions of the Income-tax Act, 1961. The Supreme Court laid down : ". . .It is obvious that for the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time during the period after receipt of the assessee's initial return of net wealth and before completion of the initial assessment dated 23-10-1974), the assessee misinformed the WTO about the assets lying outside India, in the sense that the assessee disclosed only the deposit of pound 1088.32 in the Standard Bank, London, and not the deposit of pound 4040 and odd in National City Bank, London, that the assessee was under legal obligation to disclose correctly both the said assets despite and irrespective of his claim as to the residential status when the WTO made specific query from the assessee ; and that the aspect that the assessee disclosed information about the deposit with National City Bank on 6-11-1975 is of no avail in view of Durga Timber Works v. CIT [1971] 79 ITR 63 (Delhi). 27. As against this, it was submitted on the assessee's side by way of reply that the WTO had during the course of the initial assessment proceedings, made no specific query from the assessee at all as to the detail of the assets lying outside India and that thus, there was no occasion for the assessee to conceal one of the two deposits lying abroad. It was emphasised on the assessee's side t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here are two reasons for this view. When during the course of initial wealth-tax assessment for the assessment year 1973-74, the WTO became of the mind that the assessee's status was that of resident, it was in view of the assessee's note 'about the bank balance in the London Bank' in his statement of wealth, it was natural for the WTO to enquire from the assessee himself as to the detail of such foreign deposits, instead of just banking on any information that might have been possibly gathered by him from income-tax assessment record without referring to the assessee himself. 30. Secondly, there is no material on record to suggest that on the record of income-tax assessment, the assessee had disclosed either only one foreign deposit of pound equivalent of Rs. 19,597 or that the disclosure of other foreign deposit in the income-tax assessment record of the assessee was in an obscurer form, so as to miss the WTO's eye and to lead the WTO to notice one foreign deposit and not the other. 31. The aspect that in the statement of wealth, the assessee did not choose to disclose the details as to the amounts or the banks as regards the foreign deposits is understandable in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iced by the assessee subsequent to his verbal communication to the WTO regarding one foreign deposit during the initial wealth-tax assessment proceedings for the assessment year 1973-74) could arise when the assessee prepared and filed net wealth return for the assessment year 1974-75 on 16-7-1974, i.e., before the completion of initial wealth-tax assessment itself for the assessment year 1973-74. The assessee obviously did not intimate the WTO (seized of assessment for an assessment year 1973-74) regarding the discrepancy reconciled by him in July 1974 or so when net wealth return for 1974-75 was filed. If going along with the assessee, we accept his version that he preferred to wait for the decision of the AAC in appeal against the income-tax assessment for the assessment year 1973-74 before he brought the factum of non-disclosure of second foreign deposit to the notice of the WTO concerned even then the said second foreign deposit should have been intimated right on receipt of copy of the AAC's order dated 31-3-1975, if the assessee were acting bona fide. Such, however, was also not the case. The assessee brought the second foreign deposit to the notice of the WTO only in Novemb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation to the ITO about his balance with the London bank only. The assessment under the Wealth-tax Act also was made by the WTO on the same day on which be completed the income-tax assessment. The assessee had gone in appeal against the adoption of the status of resident by the department but he did not succeed there. 38. For the assessment year 1974-75 the assessee had become resident because he had returned toIndiaand he himself filed the return for that year in the status of a resident. For this year he included the balances belonging to him and lying with two banks inEngland. The assessment for that year was made accordingly. In the meantime the assessee had lost his matter before the appellate authority regarding his claim of status. It was explained before us that when the assessee compared the net wealth returned for the year 1974-75 with the net wealth assessed in 1973-74 (in which year he had claimed the status of non-resident) he found that there was a certain difference. A closer scrutiny revealed that that was on account of the assessee's another deposit of pound 4040.24 in the National City Bank,London. The assessee explained that he wanted to clear his conscience a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fference of opinion amongst us the matter is referred to the President under section 255(4) of the 1961 Act, in respect of the following : "Whether, on the facts and in the circumstances of the case, a penalty of Rs. 72,724 is exigible on the assessee under section 18(1)(c) of the Wealth-tax Act, 1957 for the assessment year 1973-74 ?" THIRD MEMBER Per Shri Bishan Lal, Accountant Member-- On a difference of opinion between the learned members of Delhi Bench 'B' the following point of difference has been referred to me by the learned President, Tribunal, under section 24(11) of the Wealth-tax Act, 1957 ('the Act') read with section 255(4) of the Income-tax Act, 1961 : "Whether, on the facts and in the circumstances of the case, a penalty of Rs. 72,724 is exigible on the assessee under section 18(1)(c) of the Wealth-tax Act, 1957 for the assessment year 1973-74 ?" 2. The assessee was appointed as Chief Accountant of the Mercantile Bank Nigeria Ltd. under the conditions applicable to the United Nations Technical Assistants personnel by theSouthEasternStateofNigeriawith effect from24-8-1971. For the previous years ending31-3-1972and31-3-1973relevant to the assessment years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that of a resident. 4. Even before the wealth-tax assessment for the year 1973-74 came to be made on 23-10-1974 the assessee had filed his wealth-tax return for the valuation date 31-3-1974, relevant to the assessment year 1974-75 on 16-7-1974 declaring net wealth of Rs. 2,51,230. The difference between the net wealth shown as on31-3-1973and31-3-1974was Rs. 1,02,470 (Rs. 2,51,230--Rs. 1,48,760). The wealth-tax assessment for that year was completed on15-11-1975and the net wealth determined was Rs. 2,52,910. 5. The assessee wrote a letter dated6-11-1975to the WTO, which reads as under : "Dear Sir, Your honour had assessed the abovementioned case vide order dated23-10-1974on net assessable wealth of Rs. 19,633. For this year the return was filed declaring net wealth of Rs. 1,48,760 on the status of non-resident. But as per your findings in the income-tax proceedings the status was taken as Resident and the assessee held abroad were included in the net assessable wealth. On reconciliation of the wealth of the assessment year 1973-74 with that of 1974-75 it has been observed that the bank balance held in any other bank almost amounting to Rs. 72,724 was omitted to be included ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as returned. There is no concealment of wealth as such the proceedings initiated which were infructuous are requested to be dropped." The WTO did not accept the assessee's submission. He was of the opinion that the WTO had to impose penalty if there was difference between the wealth determined in the reassessment and wealth assessed in the original assessment. The WTO relied on the judgments in N.A. Malbary Bros. and Gopal Krishna Singhania and imposed penalty of Rs. 72,724 under section 18(1)(c) of the Wealth-tax Act with the approval of the IAC concerned. 7. The assessee filed an appeal to the Commissioner (Appeals). For the following reasons, inter alia, the Commissioner (Appeals) cancelled the penalty levied by the WTO : "6. Besides, this, I am also satisfied that the appellant revised his return because his omission to declare the bank balance in the return filed on 30-10-1973 was based on an honest belief that he was a non-resident and hence was not liable to be taxed on his foreign assets. As soon as this belief was unsettled by the decision of the AAC in the income-tax proceedings the appellant filed a revised return on6-11-1975without waiting for a notice under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicial Member did observe "we agree with the assessee that there is no material on record to show that prior to6-11-1975, the WTO had detected the existence of the second foreign deposit in question." He, however, went on to observe that : "It could not be ruled out that the assessee chose to intimate the existence of the second foreign deposit in November, 1975 under the apprehension that the second foreign deposit might emerge and come to surface during the income-tax or wealth-tax proceedings still pending in November, 1975." According to the learned Judicial Member, the assessee's case came within the ratio of the judgment in Moolchand Maheshchand v. CIT. The learned Judicial Member expressed the opinion that the assessee had committed the fault of concealment and, therefore, penalty was exigible. He was of the opinion that the revenue's appeal should be allowed. 9. The learned Accountant Member was of the opinion that the appeal of the revenue should be dismissed because in the original return the foreign bank balances were not shown as the assessee claimed the status of non-resident and even then the assessee had made a statement that he had bank balance with London Bank, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no material on record as to when the information regarding the sum of Rs. 19,597 come to be noted by the WTO and from what sources. On16-7-1974, the assessee had filed his income-tax return for the assessment year 1974-75 showing total income of Rs. 18,520, wherein salary from the Government of Nigeria amounting to Rs. 17,900 was claimed to be exempt. A revised return was filed on6-11-1975, wherein salary from Government of Nigeria was included in the revised return. On16-7-1974, the wealth-tax return for the assessment year 1973-74 had not been made. The wealth-tax return filed on30-10-1973disclosed net wealth of Rs. 1,48,760 for the assessment year 1973-74. If the salary of Rs. 18,520 shown in the return for the assessment year 1974-75, is added, the net wealth would be Rs. 1,67,280, against which the net wealth shown in the return filed on 16-7-1974 (same date when income-tax return was filed) was Rs. 2,51,230. The difference between Rs. 2,51,230 and Rs. 1,67,280 would be Rs. 83,950. The total of the salary received inNigeriafor the assessment years 1972-73 and 1973-74 would be Rs. 77,490 (Rs. 30,240--Rs. 47,250) and Rs. 83,950 appears to be including these two amounts which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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