1979 (11) TMI 140 - AT - Income Tax

Summary

Issues:
- Appeal against cancellation of penalties under section 18(1)(c) of the Wealth Tax Act, 1957.
- Whether the omission to include the value of silverware in the original returns was deliberate concealment.

Analysis:
The case involves appeals by the Revenue against the orders of the AAC canceling penalties imposed under section 18(1)(c) of the Wealth Tax Act, 1957. The assessees, individuals for the assessment years 1972-73 and 1973-74, initially filed returns of wealth without including the value of household utensils made of silver. Subsequently, during an inspection, it was discovered that such silver articles existed, leading to revised returns being filed. The WTO initiated penalty proceedings, alleging concealment, and imposed penalties under section 18(1)(c) of the Act. The AAC accepted the assessees' contention that they were unaware of an amendment restricting the exemption for silver articles and canceled the penalties, finding no deliberate concealment.

The main argument presented by the Revenue was that the discovery of silverware during an inspection indicated deliberate concealment in the original returns, warranting the restoration of penalties. Conversely, the assessees argued that they were unaware of the amendment revoking the exemption for silverware, leading to unintentional omissions in the original returns. The ITAT, after considering the submissions, upheld the AAC's decision. It noted that the omission to include silverware in the original returns was not deliberate, as there had been a change in the law regarding the taxability of silverware. The exemption for silverware was withdrawn only from 1st April, 1972, and the assessees were not required to show the value of silverware in earlier assessment years. The ITAT found that the assessees' lack of awareness of the amended provisions, as evidenced by their disclosure of jewelry values in revised returns, supported the conclusion that the omission was unintentional.

Ultimately, the ITAT agreed with the AAC that there was no deliberate concealment warranting penalties. It emphasized that the assessees were not fully conscious of the amended provisions and had filed returns based on previous years' practices. The unintentional nature of the omission, coupled with the lack of awareness regarding the amendment, led to the conclusion that penalties were not justified. As a result, the appeals by the Revenue were dismissed, and the cancellation of penalties was upheld.