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2021 (2) TMI 2 - AT - Wealth-taxConcealment of wealth - assessee has not filed wealth tax return u/s.14 - penalty proceedings u/s.18(1)(c) of the Act was initiated - when notice was issued u/s.17(1) of the Act, return of wealth declaring taxable wealth has been filed along with payment of consequent taxes - HELD THAT:- Presumption of automatic levy of penalty is completely unsustainable in law, while such presumption of the department negated the discretion vested with the original authority for levying or not levying of such penalty depending upon the facts and circumstances of the case. Further, the deemed concealment of wealth or furnishing of inaccurate particulars of wealth as per Explanation 3 should be subject to the discretion vested with the authority in the matter of levying or not levying of penalty. Levy of penalty u/s.18(1)(c) of the Act, after completion of reassessment in accepting return of wealth would deserves exercise of discretion vested with the authority for not levying penalty - levy of penalty u/s.18(1)(c) of the Act without exercising discretion is not sustainable in law, more particularly, when the assessee has explained the reasons for not filling return of wealth for the concerned assessment year within the time limit as per section 14 of the Act and such reasons are bonafide. In this case, although the assessee has not filed return of wealth under the provisions of section 14 of the Act, but subsequently on issue of notice u/s.17 for reopening of assessment, return of wealth disclosing correct taxable wealth has been filed along with payment of taxes. AO has accepted the return of wealth filed by the assessee without any modification. Even though the deeming provision of Explanation 3 to section 18(1)(c) would come into operation in the event the assessee has not complied with the provisions of section 14 or section 17(1) of the Act, but because the assessee has disclosed taxable net wealth in the return filed in response to notice u/s.17(1) of the Act and paid taxes thereon, the authority would have accepted the explanation furnished by the assessee that he has not filed return of wealth for concerned assessment year within the time limit specified u/s.14 of the Act, on the bonafide presumption that there is no taxable wealth for the relevant assessment years on the disputed land, jewellery and cash on hand. We, further, are of the opinion that Assessing Officer would also have considered the fact that surrender of taxable wealth in the reassessment proceedings would not automatically lead to levy of penalty under consideration and the bonafide understanding of the assessee on the non-taxability cannot be ruled out or negated mechanically by imposing penalty in relation thereto. The component of wealth based on the admission of return of wealth after the issuance of notice for reopening could not fall within mischief of explanation 3 of section 18(1)(c) of the Act. We are therefore of the considered opinion that the Assessing Officer and CWT (A) were erred in levying penalty u/s.18(1)(c) - Decided in favour of assessee.
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