9911796707
TMI Blog1992 (3) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... ovember 14, 1968, without declaring the aforesaid plot of land or the value thereof as part of her assessable wealth. Assessment was finalised on February 28, 1969. Subsequently, a notice under section 17 of the Wealth-tax Act (hereinafter called "the Act") was issued to the assessee and on October 14, 1970, the assessee filed a fresh return disclosing the purchase of the aforesaid plot, as on March 31, 1968, fixing its value at Rs. 50,000. The assessment was finalised and subsequently penalty proceedings were initiated against the assessee for concealment of the item of wealth aforesaid. The Inspecting Assistant Commissioner imposed penalty under section 18(1)(c) of the Act to the tune of Rs. 50,000, vide order dated August 29, 1973. Some other items were also assessed with which we are not concerned in this reference. Against the order of the Inspecting Assistant Commissioner, the assessee filed an appeal before the Tribunal. The order of the Inspecting Assistant Commissioner imposing a penalty of Rs. 50,000 was maintained. According to the assessee's application filed under section 25 of the Act, the return of net wealth for the assessment year 1968-69 was filed on November 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of land at Rs. 50,000. For the assessment year 1966-67, the purchase of the plot was not shown. Again, for the assessment year 1967-68, the same was not shown. On appeal, the Appellate Tribunal, in its order dated May 31, 1975, with respect to the aforesaid item, held as under in paragraphs 5, 6 and 7: " An addition of Rs. 50,000 had been made at the stage of reassessment under section 17(1) of the Wealth-tax Act as being the value of plot purchased by the assessee on March 4, 1966, located in Greater Kailash, New Delhi. The original return was filed in the instant case on November 14, 1968. The assessment was completed on February 28, 1969, in respect of a net wealth of Rs. 6,82,904 as against the returned net wealth of Rs. 6,80,093. Notice under section 17(1) of the Wealth-tax Act had been served on the assessee on August 12, 1970, and the revised wealth-tax return in compliance with the said notice was filed on October 14, 1970. The said revised return did include the Greater Kailash plot. The assessee's explanation for her failure to include the said asset in her original return dated October 14, 1968, is that she made the omission inadvertently and that she had disclosed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts of 12 months from March 31, 1967, backwards to find out whether there had been any outgoings from the capital account and for the rest he adopted the wealth-tax return for the assessment year 1967-68 and that the said mistake of omission of the plot in question came to be repeated in the return filed for the assessment year 1968-69. The story put forward before us does have a ring of plausibility. There is, however, no material on record to show firstly as to the succession of accountant, Shri B. D. Sharma, by accountant, Shri K. L. Suri, as aforesaid, secondly as to the omission by Shri K. L. Suri to look into the assessee's capital account for the period from January 1, 1967, to March 31, 1967. What is significant in this regard is that the assessee had furnished on August 8, 1973, a written explanation during the penalty proceedings before the learned Inspecting Assistant Commissioner and the explanation as put forward before us has not been spelt out in the letter dated August 8, 1973, addressed to the Inspecting Assistant Commissioner. When specifically questioned on the aspect, the assessee's authorised representative admitted that the explanation before the Inspec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of any assets or debts ; he or it may, by order in writing, direct that such person shall pay by way of penalty - . . . (iii) in the cases referred to in clause (c), in addition to any wealth-tax payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount representing the value of any assets in respect of which the particulars have been concealed or any assets or debts in respect of which inaccurate particulars have been furnished. Explanation 1. - Where (i) the value of any asset returned by any person is less than seventy-five per cent. of the value of such asset as determined in an assessment under section 16 or section 17 (the value so assessed being referred to hereafter in this Explanation as the correct value of the asset), or (ii) the value of any debt returned by any person exceeds the value of such debt as determined in an assessment under section 16 or section 17 by more than twenty-five per cent. of the value so assessed (the value so assessed being referred to hereafter in this Explanation as the correct value of the debt), or (iii) the net wealth returned by any person is less than seventy-five per cent. of the net wea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no evidence on the record except the explanation given by the assessee, which explanation has been found to be false, it does not follow that the receipt constitutes his taxable income. It would be perfectly legitimate to say that the mere fact that the explanation of the assessee is false does not necessarily give rise to the inference that the disputed amount represents income. It cannot be said that the finding given in the assessment proceedings for determining or computing the tax is conclusive. However, it is good evidence. Before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars." It was further held: ".... that, in the absence of cogent material evidence, apart from the falsity of the respondent's explanation from which it could be inferred that the respondent had concealed the particulars of his income or had deliberately furnished inaccurate particulars in respect of the source and that the disputed amount was a revenue receipt, the penalty could not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson wilfully fails to furnish in due time the return of income, what is imposed is a criminal sentence. There can be no dispute that having regard to the provisions of section 276C, which speaks of wilful failure on the part of the defaulter and taking into consideration the nature of the penalty, which is punitive, no sentence can be imposed under that provision unless the element of mens rea is established. In most cases of criminal liability, the intention of the Legislature is that the penalty should serve as a deterrent. The creation of an offence by statute proceeds on the assumption that society suffers injury by the act or omission of the defaulter and that a deterrent must be imposed to discourage the repetition of the offence. The decision of the Kerala High Court in CIT v. Gujarat Travancore Agency [1976] 103 ITR 149 [FB], was affirmed by the Supreme Court (see [1989] 177 ITR 455). The matter was considered by the Full Bench of this court in Vishwakarma Industries v. CIT [1982] 135 ITR 652. The amended provision was taken into consideration and with respect to omission of 80 per cent. of the wealth, the burden was held to be on the assessee to explain, otherwise a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... straightaway raises three legal presumptions, viz. : (i) that the amount of the assessed income is the correct income and it is in fact the income of the assessee himself ; (ii) that the failure of the assessee to return the correct assessed income was due to fraud ; or (iii) that the failure of the assessee to return the correct assessed income was due to gross or wilful neglect on his part. " In view of the Full Bench decision referred to above, it is not considered appropriate to refer to other decisions of this court rendered prior to the same. Learned counsel for the petitioner, the assessee, also referred to some decisions of other High Courts which may briefly be noticed. The Bombay High Court in D. M. Dahanukar v. CIT [1967] 65 ITR 280, observed that mere omission will not amount to concealment or deliberate furnishing of inaccurate particulars unless such an omission was intentional or made by the assessee with a desire to hide or conceal the income to avoid imposition of tax. The Madras High Court in M. Hussain Ali and Sons v. CIT [1965] 58 ITR 787, held that omission per se was not sufficient to impose penalty unless it was deliberate or wilfully false. The pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount. (ii) The provision in the Explanation to section 18(1) prior to its amendment under which the onus of proof in penalty proceedings for concealment or understatement of wealth shifted from the Revenue to the taxpayer where the net wealth declared in the return fell short of the net wealth assessed by more than 20 per cent. of the assessed wealth has been substituted by a new provision. Under the new provision, the onus of proof in penalty proceedings for concealment or understatement of wealth lies on the taxpayer where : (a) the value of any asset as declared by him in the return falls short of the value determined on assessment by more than 25 per cent. of the assessed amount ; or (b) the value of any debt declared in the return exceeds the value of the debt as determined on assessment by more than 25 percent of the assessed income ; or (c) the amount of the net wealth declared in the return falls short of the net wealth determined on assessment by more than 25 per cent. of the assessed amount (as against more than 20 per cent. of the assessed amount under the provision prior to the amendment). In the above-mentioned cases, the taxpayer will be liable to impositi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord to show that there was mens rea on the part of the assessee so far as the nondisclosure of the aforesaid 1/15th part in the Hindu undivided family's property was concerned or that there was any conscious concealment by her of the particulars of the said asset when she filed the original return. We find accordingly. " The Tribunal, however, was conscious of the legal position that mens rea on the part of the assessee was to be established before imposing penalty. This was so stated while dealing with the disputed item of Rs. 50,000 in paragraph 4 as already reproduced above. However, subsequently, there being no evidence produced by the Revenue and rejecting the evidence produced by the assessee, the Tribunal held that the assessee had failed to include the said plot in her return which called for imposition of penalty for concealment of particulars. A reading of the order gives an impression that the Tribunal thought that it was for the assessee to establish that there was no mala fide intention on her part to conceal the aforesaid wealth and the assessee had failed to prove the same. This approach is not correct in view of the rule of law laid down by the Supreme Court in A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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