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2015 (6) TMI 256 - ITAT KOLKATA

2015 (6) TMI 256 - ITAT KOLKATA - TMI - Penalty u/s 18(1)(c) of W.T.Act, 1957 - Held that:- The penalty is leviable on the date on which the concealment of wealth is committed i.e. the date of offering the return of wealth. Therefore in the present case it will not be justified to refer to the returned wealth u/s 14(1) of the Act for the initiation of penalty u/s 18(1)(c) of the Act. Therefore when there is no concealment there is no question of penalty u/s 18(1)(c) of the Act. - The concealment .....

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ase, since in the present case the assessee has disclosed gold and diamond in the statement recorded u/s 132(4) of the Act during the search operation itself, in the wealth tax return the Tribunal has approved the findings in quantum with regard to the genuineness of the declaration of gold and diamonds. Accordingly the assessee is not liable to have penalty u/s 271(1)(c) of the Act. - Decided against Revenue. - W.T.A Nos. 02 to 08/Kol/2013 - Dated:- 15-5-2015 - Shri Mahavir Singh, JM And Shri B .....

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ed herein below for A.Yr.2002-03 and in all other A.Yrs. the quantum of penalty u/s 18(1)(c) of Wealth Tax Act, 1957 is different : i) That Ld. CIT(A) erred in facts and circumstances of the case in deleting the penalty imposed on the assessee of ₹ 52,02,070/- u/s 18(1)(c)of the Wealth Tax Act, 1957. (ii) That the appellant craves to add, modify or alter the grounds of appeal during the course of hearing of the case. 3. Now we take the appeal of the revenue for A.yr. 2002-03 in WTA No.2/Ko .....

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ings u/s 153A of the IT Act it was found that assessee had net wealth which is chargeable to tax for A.yr.2002-03 but no return of wealth was filed u/s 14 of the W.T.Act, 1957. Consequently notice u/s 17 of WT Act was issued on 26.03.2009. The assessment was completed u/s 17/16(3) of the WT Act on 31.12.2009 at net wealth of ₹ 16,48,99,500/-. Penalty proceedings u/s 18(1)(c) of WT Act, 1957 was initiated by issuing statutory notices. In the meantime Commissioner of Wealth Tax (A) disposed .....

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of the tax sought to be evaded. It is pertinent to reproduce the order of DCIT,CC-VI, Kolkata in paras 3.1 to 8 of his order at pages 4 to 7 herein below :- A search & seizure operation was conducted in the residential premises of the assessee on 28-02.2008. During the course of search books of accounts, loose documents, electronic devices, cash, silver utensils and jewellery were found and seized by the department. Documents marked as RM/1 & RM/2 were found & seized in course of the .....

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ded u/s 132(4) of I.T.Act, 1961. The further statement of Sri Kathotia was recorded on 14-3-08. The relevant portion of the statement is reproduced below :- Q You sold gold worth ₹ 4.73 crore in the period 18-2-08 to 21-2-08 only one month back but you do not remember name & address of person to whom gold was sold. Does not it prove that there was no actual sale of gold on above two dates and the sum of ₹ 4.73 cr. Represents unaccounted and undisclosed income of your from any oth .....

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d are nothing but receipts from sources other than sale of Diamond . Please explain. Ans. The details as contained in the seized document are correct and were maintained for my own purpose and therefore there was no reason to write anything incorrectly therein. All the transactions were noted as was the true nature of the transaction. Therefore, the notings on account of Diamond were also in account of Diamond only and not any other source as alleged by you. 3.2. The assessee carried the matter .....

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wellery valued at ₹ 1,58,687/-, silver utensils of ₹ 7,020/- and cash in hand exceeding ₹ 50,000/- as on the valuation dated i.e. 31-03-2002. As stated elsewhere in this order that no return of wealth u/s 14, though the assessee had taxable wealth. 3.4. The assessee however, did not make compliance with the notice u/s 16(2) & 16(4) of W.T.Act, 1957 and assessment for the A.Y.2002-03 was completed u/s 17/16(5) of the W.T.Act, 1957 on 31.12.2009 on a net wealth of ₹ 11, .....

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essment for the A.,Y.2002-03 was completed u/s 17/16(5) of the W.T.Act, 1957 on 31-12-2009 on a net wealth of ₹ 11,14,55,318/- which included the value of urban land of ₹ 15,75,000/-, cash in hand of ₹ 2,78,324/- and gold coins valued at ₹ 60,120/- & silver utensils of rs.3,17,374/-. As stated earlier, the assessee preferred appeal against the assessment order of the A.O. before the C.W.T.(A), Central-I, Kolkata. Ld. CWT(A) vide his order dt. 31-5- 2011, confirmed the .....

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s firmed in his contention that the assets, in question, in form of gold & diamonds were acquired prior to the valuation date as on 31-3-2002. The assessee did not hesitate to reduce the same in writing. In fact, the assessee narrated the facts as to how he concealed the particulars of wealth vide his letter dt. 18-2-2010 and it will be relevant to reproduce the submissions of the assessee : In respect of your query as to why no return was filed under section 14 in spite of the fact that I h .....

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sets have only been disclosed by me in my revised Balance Sheet filed after search and thereby in my wealth tax return, since the existence of the said assets was detected in the course of search at my residential premises. All the assets being undisclosed, there was no occasion to file any wealth tax return disclosing the assets in the wealth tax return, more so since the value of the disclosed assts in the original Balance Sheets did not exceed ₹ 15 lakhs. 4. Thus, it can be seen that th .....

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the decision of the Hon ble Tribunal under reference it can be said that the assessee concealed the particulars of wealth chargeable to tax, it is evident that the assessee concealed the particulars of wealth. 5. Now, it is necessary to deal with the assessee s submission regarding the recording of satisfaction of A.O. for initiation of penalty proceedings u/s 18(1)(c) of W.T.Act, 1957. In this context, it is to be mentioned that Hon ble Supreme Court in the case of C.I.T. vs. S.B.Angidi Chettia .....

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words, primary facie satisfaction exists in the order. Now, the issue which is to be decided is whether penalty is to be levied or not in the present case. 5.2. In this context, the relevant explanations of Sec.18(1)© are reproduced for the sake of convenience. Explanation 2 : Where in respect of any facts material to the computation of the net wealth of any person under this Act - (A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer .....

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ub-section, be deemed to represent the value of the assets in respect of which particulars have been concealed. Explanation 3 : Where any person fails, without reasonable cause, to furnish within the period specified in sub-section (1) of section 17A, a return of his net wealth which he is required to furnish under section 14 in respect of any assessment year commencing on or after the 1st day of April, 1989, and until the expiry of the period aforesaid, no notice has been issued to him under cl .....

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urn of his net wealth at any time after the expiry of either of the periods aforesaid applicable to him in pursuance of a notice under section 17. 6. In the instant case, the assessee furnished explanation which fails to substantiate that all facts relating to the net wealth for the A.Y 2002-03 was disclosed. On the contrary, the assessee admitted having concealed the particulars of net wealth chargeable to tax. Therefore, the assessee's explanation has no merit and the sum is accordingly re .....

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a fit case for imposition of penalty u/s. 18(1)© of the I.T. Act, 1961 for concealing the particulars of net wealth deliberately. 7. Now, it is to be decided that the quantum of penalty to be imposed. The provisions of Sec. 18(1)(iii) lay down the quantum of penalty which is as under: Minimum Penalty - 100% of the tax sought to be evaded & Maximum Penalty - 500% of the tax sought to be evaded. From the submissions of the assessee, it is evident that the assessee made a calculated act wh .....

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efore, I impose maximum penalty @ 500% of the tax or for that matter 5 times of the tax sought to be evaded which is calculated as under: Undisclosed net wealth : Rs.10,55,41,430/- Tax there on : Rs.10,40,414/- Tax sought to be evaded : Rs.10,40,414/- 5 times of the tax sought to be evaded Rs.10,40,414 x 5 Rs.52,02,070/- Order u/s 18(1)(c) is passed as above. Issue Demand Notice and copy of the order to the assesee. 5. The ld. DR relied upon the order of the AO. 5.1. Before the ld. CIT(A) the ld .....

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the AO included such assets in the net wealth because the assessee has himself shown the same in the return of wealth. The ld. AR further submitted before the ld. CIT(A) if the value of gold and diamonds are included then the return of wealth will go below the taxable net wealth. Therefore AO was not satisfied that assessee was having any taxable wealth. Accordingly since all the conditions to Explanation 3 are not satisfied therefore Explanation 3 cannot be made applicable. Therefore Explanati .....

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the Tribunal in the case of Industrial Development Bank of India reported in 297 ITR 267 (AT). The ld. CIT(A) accepted the explanations of the assessee and held that no penalty u/s 18(1)(c) of WT Act is leviable on the assessee and accordingly directed the AO to delete the penalty so levied. 6. We have heard the rival contentions and perused the facts of the case. The undisputed facts in the present case are that a search and seizure operation u/s 132 was conducted on 28.02.2008 at the residenti .....

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luer s report. There is no dispute that the value of gold and diamonds so disclosed in the return of wealth was disbelieved by the AO with regard to the existence and ownership by the assessee. Though the AO included these gold and diamonds in the assessed net wealth and as stated the gold as being 24 carat instead of 22 carat and 18 carat declared by the assessee which resulted in further addition as declared by the assessee. The ld. CIT(A) in quantum deleted/partly upheld the additions made by .....

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as per the seized documents marked as RM-1/RM-2 i.e. he disbelieved the existence and ownership of gold and diamonds prior to the valuation date as on 31st March, 2002. The AO invoking Explanation 3 to section 18(1)(c) of the Act imposed maximum penalty @500% of tax sought to be evaded as mentioned herein above. The ld. CWT(A) allowed the relief as mentioned herein above. 6.1. Herein above there is no dispute to the fact that the assessee had acquired gold and diamonds during the earlier year t .....

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the WT Act and the AO is satisfied that the assessee has assessable net wealth for the relevant assessment year. It is also undisputed on one hand that the AO does not believe the existence and ownership of gold and diamonds even the same are disclosed in the seized documents in RM-1 and RM-2 and on the other hand the AO has included such assets in the net wealth showing that assessee has himself declared in the return of wealth. If the value of gold and diamonds is included, the net wealth of t .....

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der :- Explanation 5 - Where in the course of a search under section 37A, the assesee is found to be the owner of any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets represent or form part of his net wealth, - (a)………………….. (b) On any valuation date falling on or after the date of the search, then notwithstanding that such assets are declared .....

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jewellery or other valuable article or thing found in his possession or under his control, forms part of his net wealth which has not been disclosed so far in his return of net wealth to be furnished before the expiry of the time specified in sub-section (1) of section 14 and also specifies in the statement the manner in which such net wealth has been acquired and pays the taxes, together with interest, if any, in respect of such net wealth. [emphasis supplied] 6.2. It is also not disputed that .....

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m penalty @500% of the tax sought to be evaded. 6.3. The penalty is leviable on the date on which the concealment of wealth is committed i.e. the date of offering the return of wealth. Therefore in the present case it will not be justified to refer to the returned wealth u/s 14(1) of the Act for the initiation of penalty u/s 18(1)(c) of the Act. Therefore when there is no concealment there is no question of penalty u/s 18(1)(c) of the Act. Accordingly the ld. Counsel for the assessee relied upon .....

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gard to the return of income in response to notice u/s 153A of the Act. Therefore in the present circumstances and facts of the case once the returned wealth is accepted by the AO u/s 153A of the Act then there cannot be a case of concealment of income or furnishing inaccurate particulars of income. In the circumstances and facts of the case the decision in the case of Prem Arora vs DCIT (supra) is squarely applicable in the present case, since in the present case the assessee has disclosed gold .....

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