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2016 (6) TMI 448 - ITAT KOLKATA

2016 (6) TMI 448 - ITAT KOLKATA - TMI - Penalty imposed u/s 18(1)(c) of the W.T Act - concealment of wealth for not filing the W.T return voluntarily - Held that:- In the present case, The AO must have found that that the assessee concealed his particulars of any asset or furnished any inaccurate particulars of assets or debts as prescribed in clause ( c) of section 18 of the W.T Act 1957 and AO has not given any cogent reason for imposition of penalty. As discussed above mere non-furnishing of .....

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) of the W.T Act 1957, we are of the considered opinion that the penalty imposed u/s. 18(1)( c) of the W.T Act 1957 and confirmed by the CIT(A) is not sustainable in law. The same is, therefore quashed, accordingly grounds raised by the assessee are allowed. - Decided in favour of assessee - W. T. A No. 44/Kol/2013 - Dated:- 8-6-2016 - Shri Waseem Ahmed, Accountant Member And Shri S.S. Viswanethra Ravi, Judicial Member For the Appellant : Shri S.K. Tulsiyan, Advocate, Ld.AR For the Respondent : .....

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nd circumstances of the case the Ld. CWT(A) was wholly wrong and unjustified in confirming the penalty of ₹ 55,009/- arbitrarily imposed u/s 18(1)(c) of the W.T Act for the A.Y 2006-07 @ 100% of the W.Tax sought to be evaded for alleged concealment of wealth for not filing the W.T return voluntarily, without considering the facts that all the assets ( which were declared in the W.T return filed u/s 17 and assessed by the A.O u/s 16(3)/17 at the same value as was declared in the said return .....

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in the case of K. P. Madhusudanan Vs. CIT [2001 ] 251 ITR 99 (S.C) which are not applicable in the case. 3. For that in view of the facts and circumstances of the case the Ld. CWT(A) was wholly wrong and unjustified in confirming the said penalty u/s 18(1 )( c) only for non-filing of the W.T return voluntarily despite the facts satisfactorily explained during the assessment as well as the appellate proceedings that there was neither any concealment of the particulars of any assets nor inaccurate .....

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B in the W. Tax assessment completed u/s 16(3)/17 of the W.T Act on 07.12.2009 for late filing of the W.T return. 5. For that your petitioner craves the right to put additional grounds and/or to alter / amend / modify the present grounds of appeal before or at the time of hearing. 3. Brief facts of the case are that the assessee is an individual and being taxed under wealth tax and no wealth tax return for the assessment year under consideration was filed. Notice u/s. 17 of the W.T Act 1957 was .....

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)( c) of the W.T Act to show cause why penalty should not be imposed for concealment of net wealth for not furnishing the wealth tax return voluntarily in time. In response to which, the assessee submitted to drop the penalty proceeding relying on some judicial decisions. After considering the same, the AO was of the view that the assessee has not filed the wealth tax return voluntarily in time and it is a fit case for imposition of penalty u/s. 18(1)( c) of the W.T Act 1957, accordingly, the AO .....

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rewal, A/R of the assessee, appeared with a written submission. He contended that no penalty should be imposed as the returned wealth was fully accepted by the A.O. On perusal of the assessment record it is seen that the assessee filed its W T return on 28.03.2009 in response to notice u/s 17 of the WT Act 1957 The assessee was liable to file the return of wealth voluntarily as the net wealth as per Balance Sheet as on 31.03.06 exceeds the limit for filing W T return but no such return was filed .....

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T Act 1957 and the entire net wealth assessed u/s 16(3) is treated as concealed wealth as per W T Act. Hence the penalty u/s 18(1)( c) is imposed as under. Tax on net wealth of ₹ 7000900/- sought to be evaded = ₹ 55,009/- Penalty imposed u/s 18(1)(c) @ 100% of above i.e.Rs.55,009/-. This order is being passed with prior approval of JCIT, Range - 56, Kolkata. 4. As aggrieved by such order of penalty by the AO, the assessee filed appeal before the CWT(A) and contended that the AO acce .....

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ot file the wealth tax return on his own in time, but for the notice initiated by the AO. 5. The CWT(A) found that the asessee filed his return only in response to notice issued u/s.17 of the WT Act 1957, Otherwise, he would not have filed return resulting to avoid the payment of tax on the net value of wealth. Before the CWT(A) the assessee has relied on various case laws in support of his contentions. After considering the various submission of the assessee, the CWT(A) confirmed the penalty or .....

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All.), cited by the appellant, supports the A.O's case, as the precise reason for which the relief was granted was that the Explanation 3 to section 18(1 )( c) was not attracted in that case, as the period for filing of return was prior to 01.04.89. Hon'ble Allahabad H.C. has held "The assessee was assessed to wealth tax up to the assessment year 1976- 77. Thereafter he had not filed any return. The notice under section 17 was issued to him but no return was filed. Notices under sec .....

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r of the Commissioner (appeals). Applying the strict construction of penalty provisions, contained in clause© of sub-section (1) of section 18, it is clear that prior to the amendment in Explanation 3 by the direct Tax Laws(Amendment) Act, 1987, with effect from 1.4.1989, in a case where the person, who has previously been assessed under the Act, does not file any return in response to the notice or even where time for filing the return has expired, has not filed any return, there cannot be .....

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as issued. In response to the notice, appellant filed the wealth tax return. The wealth tax return was not filed voluntarily. Had the A.O. not noticed the above fact and issued notice, no filing of wealth tax return and consequent tax payment would have taken place. Therefore, the provision of Explanation 3 to section 18(1) ( c ) is clearly attracted in his case. As has been held by Hon'ble S.C in the case of K.P. Madhusudhanan(2001) 251 ITR 99, the onus was on the appellant to furnish the e .....

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ime. He also submits that the assessee is a senior citizen of 72 years old and he is dependent on others. He further submits that Mr. K.V. Singh who is the Authorised Representative of the assessee was ill during the period in which period the assessee was due for filing the return under the W.T Act. However, his return under the Income Tax Act 1961 was filed in time and it was assessed u/s. 143(3) of the Act without any adverse remarks. He could not file the W.T Return in time but for the reaso .....

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( c) of the W.T Act. In absence of which, initiation and imposition of penalty against the assessee u/s. 18(1) ( c) of the W.T Act is bad in law. 7. The Ld. Counsel for the assessee argued that in order to impose the impugned penalty the AO has to record satisfaction any of the conditions as contemplated in clause ( c) of sub section (1) of section 18 of the W.T Act 1957. The AO could not find anything adverse against the assessee that he concealed his particulars of any asset or furnished any .....

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gular wealth tax assessee, and d. Explanation filed in response to penalty notice on 09-01-2010. 8. In support of its contention, he relied on case law relating to Explanation 3 of section 18(1) of the W.T Act and prayed that the penalty imposed by the AO and confirmed by the CIT(A) be cancelled. 9. In reply, the Ld. DR has relied on the order of the CIT(A) and prayed to dismiss the appeal of the assessee. 10. Heard the rival submissions and perused the material available on record. We find that .....

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that the return for the A.Y under consideration was completed u/s.16(3)/17 of the W.T Act, which was accepted by the AO without any adverse finding by the AO. The only issue is for our consideration as to whether the penalty imposed u/s. 18(1) ( c) of the W.T Act 1957 is justified in the facts and circumstances of the case in view of Explanation-3 of Section 18(1) ( c) of the W.T Act 1957. Therefore, it is relevant to reproduce the Explanation-3 of section 18(1) of the W.T Act 1957 for better un .....

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Officer or the Deputy Commissioner (Appeals) or the Commissioner (Appeals) is satisfied that in respect of such assessment year such person has assessable net wealth, then, such person shall, for the purposes of clause (c) of this sub-section, be deemed to have concealed the particulars of his assets or furnished inaccurate particulars of any assets or debts in respect of such assessment year, notwithstanding that such person furnishes a return of his net wealth at any time after the expiry of e .....

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as also accepted the return filed by the assessee without therebeing any cogent reason for initiation of proceedings u/s. 18(1) ( c) of the W.T Act. We find that the AO initiated penalty proceedings against the assessee only on the ground that the assessee has not filed the return for the assessment year under consideration in time voluntarily. On perusal of the documents available on record before us, shows that the assessee is a senior citizen. Medical Certificate/Discharge Certificate goes to .....

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urn for the A.Y 2005-06 which proves to show that the assessee is a regular wealth tax assessee. 12. The case law as relied on by the assessee passed by the Hon ble Gujarat High Court in the case of Chhaganlal S Uteriya Vs. ITO & Anr reported in (2011) 337 ITR 350 (Guj.). The Hon ble High Court was pleased to decide an issue on the applicability of Explanation-3 to Section 271(1) (c) and held is cumulative and each of the conditions has to be established for the purpose of invoking the said .....

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ircumstances, the contention raised on behalf of the Revenue that non-fulfillment of the return of income per se amounts to concealment within the meaning of section 271(1)(c) of the Act, being contrary to the settled legal position, does not merit acceptance. 12. But the introduction of Explanation 3 to section 271(1) with effect from April 1, 1976, has changed the law on the point in certain cases. Explanation 3 provides that if a person, who has not hitherto been assessed to tax under the Inc .....

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sessed (that is, a new assessee) ; secondly, he should have failed without reasonable cause, to furnish his return of income for the assessment year 1989-90 or any year subsequent thereto within two years from end of the assessment year concerned ; thirdly, that no notice should have been issued to him under section 142(1) or section 148 of the Act till the expiry of the two-year period; and, lastly, the concerned officer is satisfied that in respect of such assessment year, such person had taxa .....

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ntended on behalf of the respondents that in the present case Explanation 3 has not been applied, as noticed earlier mere non-furnishing of a return per se is not tantamount to concealment within the meaning of section 271(1)(c) of the Act. The only eventuality under which nonfurnishing of return of income amounts to concealment is as provided under Explanation 3 to sub-section (1) of section 271 of the Act. Hence, unless Explanation 3 of section 271(1) of the Act is attracted, there can be no c .....

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be applicable. 14. In the present case, admittedly, the petitioner had not been previously assessed under the provisions of the Act, hence, the first requirement of Explanation 3 is duly satisfied. The petitioner had not filed his return of income within the period specified under sub-section (1) of section 153 of the Act and as such, the second condition is also satisfied. However, as noted earlier, in the present case a notice had been issued to the petitioner-under section 148 of the Act on M .....

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invoking the said provision. In the present case, all the conditions are not cumulatively satisfied. The failure on the part of the petitioner to furnish return of income within the specified period, therefore, cannot be deemed to be concealment within the meaning of Explanation 3 to section 271(1) of the Act. Page No : 0358 15. In the light of the aforesaid, it is apparent that the case of the petitioner does not fall within the ambit of Explanation 3 to section 271(1) of the Act and as such, .....

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