TMI Blog2009 (6) TMI 690X X X X Extracts X X X X X X X X Extracts X X X X ..... ing salary more than Rs. 5.00 lakhs Rs. 6,73,48,122 3. Value of Bhandup land Rs. 81,00,000 4. Motor Cars Rs. 2,85,26,250 Total Wealth Rs. 10,92,79,836 Less : Basic Exemption Rs. 15,00,000 Taxable Wealth Rs. 10,77,79,836 Rounded off to Rs. 10,77,79,800 While making the assessment the Assessing Officer also initiated penalty proceeding under section 18(1)( c ) of the Act. Against the additions made by the Assessing Officer the assessee preferred an appeal before the ld. CIT(A). However, the ld. CIT(A) confirmed the addition made by the Assessing Officer vide order dated 5-10-2005. The Assessing Officer issued fresh notice to show cause as to why penalty under section 18(1)( c ) should not be imposed. The Assessing Officer after considering the assessee s explanation observed that the assessee has deliberately excluded the value of residential flats of landmark property and guest house and thereby suppressed its wealth, hence, the assessee has furnished inaccurate particulars in this regard and thereby concealed its wealth. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not made the elaborate disclosure to the department in this regard. In the note attached to the Wealth Tax return (copy enclosed) all such details were submitted. Therefore, department s allegation is factually incorrect." The reliance was also placed on the order of CIT(A) and the following decisions : 1. Radhakrishna v. CWT [1980] 121 ITR 722 (Kar.) 2. Hira Singh v. CWT [1982] 134 ITR 438 (Punj. Har.) 3. CIT v. K.R. Chinni Krishna Chelty [2000] 246 ITR 121 (Mad.) 4. Hindustan Steel Ltd. v. State of Orissa 1978 (2) ELT 159 (SC) 5. Akbar Badruddin Jiwani v. Collector of Customs 1990 (47) ELT 161 (SC) 6. Kalakrithi v. ITO [2002] 125 Taxman 97 (Mad.) 7. Shirish R. Shah v. Asstt. CIT [2001] 114 Taxman 33 (Mum.) (Mag.) 6. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that there is no dispute that the Assessing Officer has imposed penalty on the following items of asset not included by the assessee in return of wealth. Particulars Amount (Rs.) Value of Guest Houses 53,05,464 Value of residential flats allotted to employees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2, the Hon ble Tribunal in assessee s own case had accepted the Company s contention that the residential flats treated as guest house can be excluded from the purview of net wealth if the same has been used by the Company s employees, Auditors, Bankers and other law enforcing authorities. Since the issue as to whether the guest houses were used by entities associated with the assessee were not examined by the lower authorities, the Tribunal restored the issue to the file of Assessing Officer to grant exemption to the assessee after verification. During the course of order giving effect to the order of WTAT, the guest house register could not be produced since the issue pertained to a period of more than 7-8 years. Since the guest house register could not be produced the Assessing Officer did not grant exemption. Had the guest house register been produced the entire value of guest houses would have been excluded from the purview of net wealth of the assessee. ( g )Merely because the guest house register was not traceable and the details could not be produced, it does not go to prove that the assessee has concealed particulars of assets/liabilities coming within the purview of n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce these have been used by the assessee for the purpose of business carried on by the assessee. ( f )Aforesaid claim of the assessee that residential flats/properties allotted to employees are assets used for the business of the assessee is supported by various legal decisions : - CIT v. Modi Industries Limited (1994) (210 ITR l1) (Delhi) - CIT v. Vazir Sultan Tobacco Co. Ltd. (1988) ( 173 ITR 290) (AP) - CIT v. Rabindranath Bhoi (1995) ( 211 ITR 799) (Ori.) - CIT v. New Maritime Agencies (P.) Ltd. (1994) (207 ITR 312) - CIT v. Delhi Cloth General Mills Co. Ltd. (1966) ( 59 ITR 152 ) (P H) ( g )The issue as to whether value of residential flats allotted to employees drawing salary of more than Rs. 5.00 lakhs p.a. qualifies for exemption under section 2( ea )( i )(3) arose in the assessee s own case in assessment year 1997-98 to assessment year 2001-02. the Tribunal decided the issue against the assessee by relying on the Mumbai Tribunal s decision as reported in the case of Floatglass India Ltd. v. ACWT ( 89 ITD 542), which was decided after the return for assessment year 2002-03 was filed." 9. From the fair reading of the above we find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer or director who is in whole time employment having a gross annual salary of less than Rs. 5.00 lakhs, the same is exempt from Wealth tax. In the present case the assessee being fully aware about the above exclusions, while claiming exemption in respect of residential premises allotted by the assessee company to its employees having gross annual salary of less than Rs. 5.00 lakhs, per annum has not included the value of residential flats allotted to employees drawing salary more than Rs. 5.00 lakhs per annum. There is no material on record to show as to why the said provision of section 2( ea )(1) is not applicable to the assessee s case whose employees are drawing salary more than Rs. 5.00 lakhs per annum. Merely because the assessee has claimed exemption under section 2( ea )( i )(3) of the Act and as per auditors note ignoring the substantive provision of law on this issue is not sufficient to hold that the assessee is not liable to penalty. It is not the case of the assessee that there was a difference of opinion or bona fide belief and good faith or two views are possible when the law is very clear on the issue that the assessee is liable to disclose the value of house ..... X X X X Extracts X X X X X X X X Extracts X X X X
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