TMI Blog2016 (1) TMI 1018X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfaction in the assessment order for levying the penalty but just initiated penalty proceedings. - the orders imposing penalty in all the assessment years have to be held as invalid and consequently penalty imposed is cancelled. - Decided in favor of assessee. - WTA No. 27-30/Kol /2014 - - - Dated:- 20-1-2016 - Shri N.V. Vasudevan, Judicial Member And Shri Waseem Ahmed, Accountant Member For the Petitioner : Shri Anil Kumar A.C.A. For the Respondent : Shri Udoy Kr. Sarkar, JCIT-DR ORDER Per Waseem Ahmed, Accountant Member :- These four appeals filed by the assessee against the common orders Commissioner of Wealth Tax (Appeals) Central-III, Kolkata dated 20.02.2014. Assessments were framed by ACIT, Central Circle-XXV, Kolkata u/s 17/17/16(3) of the Wealth Tax Act, 1957 (hereinafter referred to as the Act ) vide his orders dated 08.05.2012 for assessment years 2007-08 to 2010-11 respectively. 2. All these appeals filed by a single assessee against the penalty order under section 18(1)(c) of the Act. Since all the issues relate to the common grounds of appeals so we are hearing them together and passing a common order for the sake of convenience. Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome settled after the payment of taxes and interest in his personal balance sheet. The assessee declared the cash / bank balance and receivables in the balance sheet after capitalization of additional income as discussed above. Accordingly the assessee has deposited a sum of ₹ 19,34,10,000/- in bank and shown a sum of ₹ 15,65,90,000/- as receivable in the balance sheet without considering the same as cash in hand. 4. The assessee for the year under consideration filed return of wealth tax in pursuance of notice issued u/s 17 of the Act on 30.12.2009. The return was filed on dated 12.2.2010 declaring a net wealth of ₹ 2,28,88,300/- and same return of wealth tax was accepted and assessed after giving basic exemption limit of ₹ 15 lacs under section 16(3) of the Act. The penalty proceedings were initiated under section 18(1)(c) of the Act and confirmed @ 200% of the tax sought to be evaded. 5. The assessee case was selected for scrutiny under section 143(3) of the Income tax Act for the A/y 2009-10. During assessment proceedings the AO sought the clarification about the amount of ₹ 15,65,90,000/- shown as receivable in the balance sheet. Then it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereon, the 1std penalty order is Cancelled on the basis of Explanation 3 to the section 18(1) . Thus the 1st penalty component amount at ₹ 4,27,766/- is Deleted. As regards the balance Penalty this pertains to the Cash in Hand [Receivables] discussed at Para 5.2. The imposition of the Penalty is confirmed. Explanation 3 to this portion of the Penalty is not available, as the 2nd notice u/s. 17 was issued on 02.02.2012. The appellant has also not raised this aspect in the grounds of appeal. However, giving due consideration to the co-operation of the appellant by filing Revised Computation and having Paid the Tax + interest, and not litigating on the assessment, and also that the Assessing Officer on the same issue in the subsequent AYs had imposed the penalty quantum @ the minimum 100% of the tax sought to be evaded, thus I consider that it will be fair to reduce the quantum of the Penalty to the minimum 100% of the tax sought to be evaded. Further, on this issue of quantum, I observe that the Assessing Officer while imposing the Penalty in both the 1st as well as 2nd Penalty Orders, had erroneously not given the basic exemption limit of ₹ 15,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be reasonable. 9. For the second order of penalty the ld. AR submitted that the amount shown as receivable in the balance sheet is not exactly cash-in-hand as it with friends, relatives, well-wishers of the assessee. But to buy peace and to avoid litigation, assessee declared a net wealth us. 2(ea) of the Act paid additional tax including legitimate interest voluntarily. The AR explained that the term Receivable appeared in the balance sheet on 31st March is the correct form of the cash belonged to the assessee because the cash is with his closed friends, relatives and well-wishers and it is not actually in hand. If somebody do not return back to the assessee in that case the assessee would have to incur loss even after paying taxes on disclosure of ₹ 105 crores before ITSC Kolkata. Thus, the term Receivable should not mix with cash-in-hand and should not be covered by the definition of net wealth u/s. 2(ea) of the Act. Therefore, imposition of any penalty for declaring Receivable as cash-inhand (with custodians) voluntarily will damage the faith and confidence. Finally the ld. AR made request to drop the penalty proceeding u/s 18(1) of the Act in respect of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly specify that the penalty is being imposed for concealment of wealth or furnishing inaccurate particulars of wealth. Following the same analogy as described in the income tax matters, we rely on the following judgment of the Hon ble Karnataka High Court in the case of CIT Anr. v. Manjunatha Cotton and Ginning Factory, 359 ITR 565 (Karn), has held that notice u/s. 274 of the Act should specifically state as to whether penalty is being proposed to be imposed for concealment of particulars of income or for furnishing inaccurate particulars of income. The Hon ble Karnataka High court has further laid down that certain printed form where all the grounds given in section 271 are given would not satisfy the requirement of law. The Court has also held that initiating penalty proceedings on one limb and find the assessee guilty in another limb is bad in law. It was submitted that in the present case, the aforesaid decision will squarely apply and all the orders imposing penalty have to be held as bad in law and liable to be quashed. 9.3 The Hon ble Karnataka High Court in the case of CIT Anr. v. Manjunatha Cotton and Ginning Factory (supra) has laid down the following principles t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r offence or finding him guilty for either the one or the other cannot be sustained in law. It is needless to point out satisfaction of the existence of the grounds mentioned in Section 271(1)(c) when it is a sine qua non for initiation or proceedings, the penalty proceedings should be confined only to those grounds and the said grounds have to be specifically stated so that the assessee would have the opportunity to meet those grounds. After, he places his version and tries to substantiate his claim, if at all, penalty is to be imposed, it should be imposed only on the grounds on which he is called upon to answer. It is not open to the authority, at the time of imposing penalty to impose penalty on the grounds other than what assessee was called upon to meet. Otherwise though the initiation of penalty proceedings may be valid and legal, the final order imposing penalty would offend principles of natural justice and cannot be sustained. Thus once the proceedings are initiated on one ground, the penalty should also be imposed on the same ground. Where the basis of the initiation of penalty proceedings is not identical with the ground on which the penalty was imposed, the imposition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. f) Even if there is no specific finding regarding the existence of the conditions mentioned in Section 271(1)(c), at least the facts set out in Explanation 1(A) (B) it should be discernible from the said order which would by a legal fiction constitute concealment because of deeming provision. g) Even if these conditions do not exist in the assessment order passed, at least, a direction to initiate proceedings under Section 271(l)(c) is a sine qua non for the Assessment Officer to initiate the proceedings because of the deeming provision contained in Section 1(B). h) The said deeming provisions are not applicable to the orders passed by the Commissioner of Appeals and the Commissioner. i) The imposition of penalty is not automatic. j) Imposition of penalty even if the tax liability is admitted is not automatic. k) Even if the assessee has not challenged the order of assessment levying tax and interest and has paid tax and interest that by itself would not be sufficient for the authorities either to initiate penalty proceedings or impose penalty, unless it is discernible from the assessment order that, it is on account of such unearthing or e ..... 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