9911796707
TMI Blog1996 (4) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... s under section 17 of the Wealth-tax Act were issued and served on the assessee on 25-2-1988. The assessee in response to the notices so issued filed wealth-tax returns on 31-3-1990 declaring the net wealth as under :--- 1984-85 Rs. 15,78,952 1985-86 Rs. 24,78,874 1986-87 Rs. 39,35,996 The Assessing Officer (A.O.) completed the assessments for the years under consideration under section 16(3) of the Wealth-tax Act on 22-2-1991 determining the wealth as under :--- 1984-85 Rs. 16,95,897 1985-86 Rs. 25,16,575 1986-87 Rs. 39,86,574 While completing the assessments the Assessing Officer initiated penalty proceedings under section 18(1)(c) of the Wealth-tax Act. In compliance to the show-cause notice issued it was explained before the Assessing Officer that the assessee has not concealed any particulars of wealth and hence no penalty is leviable. According to the Assessing Officer the wealth declared was much above the taxable limit but the assessee failed to file the returns of wealth as per provisions of section 14(1) of the Wealth-tax Act and in the process the assessee evaded the payment of wealth-tax. The assessee filed the return only after the concealment of weal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y proceedings have been rightly initiated by the Assessing Officer. Regarding the second contention that the penalty imposed is more than 5 times of tax sought to be evaded is not correct and justified, because the appellant has also taken into account the penalty imposed under section 18(1)(a) which is not correct. Regarding the third contention that the DCIT is not competent to impose penalty under section 18(1)(c), it is pointed out that as per the provisions of section 2(ca), the Assessing Officer includes the DCIT who is directed under clause (b) of sub-section (4) of section 20 of Income-tax Act to exercise or perform ; all or any of the powers and functions conferred on or assigned to the Assessing Officer under the Act. Therefore, keeping in view the facts and circumstances of the case, in my opinion, the Assessing Officer was fully justified in initiating penalty proceedings under section 18(1)(c) of the Wealth-tax Act. Therefore, the penalty orders passed by the Assessing Officer for all the three years under consideration are confirmed. " The assessee is now in appeal before us against the finding so given by the first appellate authority. 5. The learned counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he words 'money, bullion, jewellery' would not include in its ambit immovable properties as the same could not be seized. This judgment of the single judge was affirmed by the division Bench of the Kerala High Court in their judgment in CIT v. M.K. Gabriel Babu [1991] 188 ITR 464. A similar view has also been held by the Hon'ble Allahabad High Court in the case of Nand Kishore Mangharani v. Director [1994] 210 ITR 1071/77 Taxman 295. He has further submitted that search and seizure go together. Where an asset is known being in existence there is no need to search for and seize the asset. For such a proposition he has placed reliance on the decision of the Supreme Court in the case of CIT v. Tarsem Kumar [1986] 161 ITR 505/27 Taxman 305. The learned counsel has therefore pleaded that the facts of the present case do not attract the Explanation 5 of section 18(1)(c) and accordingly penalty levied is neither justified nor valid. 6. The learned D.R. on the other hand has made a submission that the assessee owned substantial amount of wealth both movable and immovable but failed to file the wealth tax return. It was during the course of search that the said assets came to light and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome within the scope of seizure under section 132 of the Income-tax Act. The facts and situation in the matter of levy of penalty under section 18(1)(c) cannot be treated as identical situation and hence the interpretation assigned or conclusion arrived at in the aforecited cases are not at all applicable to the facts of the present case. He has further argued that it is a settled proposition of law that no word or finding from a judgment can be read in isolation and treated as the full judgment as has been held by the Hon'ble Supreme Courtin the case of CIT v. Sun Engg. Works (P.) Ltd. [1992] 198 ITR 297 -- 320/64 Taxman 442. Arguing further he submitted that it is a well established and accepted canon of interpretation that the words occurring in the statute are to be so interpreted as to advance the object of the statute so as not to allow the tax evader go scot free without paying penalty for concealing of assets which is an admitted fact in the present case. He has also invited attention to the Board's circular No. 469 dated 23-9-1986 wherein scope of Explanation (5) to section 271(1)(c) has been discussed. He has also pointed out that the provisions of Explanation (5) to sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd served upon the assessee on 25-2-1988 for the years under consideration and in response the assessee filed the returns of wealth on 31-3-1990 for all the years declaring net wealth as given above. The Assessing Officer completed the assessments under section 16(3) of the Wealth-tax Act on 22-2-1991 at a wealth little higher than that disclosed. The difference between the net wealth declared and net wealth assessed is on account of the fact that while valuing the properties on rent capitalisation method the Assessing Officer did not allow 6% collection charges from the gross rent for working out the net maintainable rent for each year. It would thus be seen from the facts given above that the assessee neither concealed the particulars of any asset nor furnished inaccurate particulars of any assets or debts in the wealth-tax returns filed for the years under consideration and accordingly no case could be made out for concealment of any assets in the returns filed. From the details of the assets declared in the return filed for the assessment year 1986-87 we find that the assessee owned 7 chawls, residential house, dwelling units at Panchkalyani, a part from jewellery, cash, debts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s represent or form part of his net wealth on any valuation date falling before the date of search. 3. The return in respect of said net wealth as on such valuation date has not been furnished before the date of search. On satisfaction of such conditions the assessee is deemed to have concealed the particulars of such assets or furnished inaccurate particulars of such assets within the meaning of section 18(1)(c) even if the assets are declared by him in any return of wealth furnished on or after the date of search. It has to be seen in the present case whether the immovable property disclosed fall within the ambit of term " other valuable article or thing " and whether the assessee was found to be the owner of such immovable property only during the course of search and not earlier. We would examine first whether the term used in Explanation (5) " other valuable article or thing " cover immovable property. Since this term has been used in section 37A of the Wealth-tax Act it has to be seen whether it is used in that section in the context of movable property or immovable property. As per section 37A(1)(c) where the competent authority in consequence of information in his poss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll settled principle of law that a word or phrase in a statute must be construed taking into account the context in which it is used. It becomes clear from the reading of section 132(1) of Income-tax Act and 37A of the Wealth-tax Act that the words 'other valuable article or thing' bring into its ambit only the movable assets and not the immovable assets. These words 'other valuable article or thing' used in Explanation (5) to section 18(1)(c) of Wealth-tax Act which is consequential to section 37A cannot be construed differently to include immovable assets. It rather also means only movable assets. In this view of the matter and having regard to the facts and ratio of the decisions cited we hold that the immovable property declared by the assessee is not covered by the term ' other valuable article or thing ' as used in Explanation (5) to section 18(1)(c) of the Wealth-tax Act. 9. The other question that arises is whether the assessee was found to be the owner of the said immovable assets only during the course of search. We find from the details of the wealth declared that the said chawls and dwelling units in Panchkalyani had been constructed/acquired by the assessee in earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision has been found to operate even in cases where the assessee has no intention to fabricate any evidence and he includes in his return the income out of which such assets have been acquired." The provisions of Explanation 5to section 271(1)(c) are pari materia to that of Explanation (5) to section 18(1)(c) of Wealth-tax Act as mentioned above. We also note that the provisions of Explanation (5) to both of these sections 18(1)(c) of Wealth-tax Act and 271(1)(c) of Income-tax Act were brought on the statute book simultaneously with effect from 1-10-1984 by Taxation Laws Amendment Act 1984 to overcome the problem faced in levy of concealment penalty where unaccounted assets were found and detected during search but the same were disclosed in the returns filed subsequently. The aforecited Board's circular would also apply mutatis mutandis to the cases under Wealth-tax Act and as per the circular Explanation (5) would be invoked in the cases of movable assets if the same are found unaccounted during the course of search. As the movable assets disclosed were not found unaccounted on search Explanation (5) of section 18(1)(c) of Wealth-tax Act would not apply to movable assets as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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