TMI Blog2021 (2) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... cising discretion is not sustainable in law, more particularly, when the assessee has explained the reasons for not filling return of wealth for the concerned assessment year within the time limit as per section 14 of the Act and such reasons are bonafide. In this case, although the assessee has not filed return of wealth under the provisions of section 14 of the Act, but subsequently on issue of notice u/s.17 for reopening of assessment, return of wealth disclosing correct taxable wealth has been filed along with payment of taxes. AO has accepted the return of wealth filed by the assessee without any modification. Even though the deeming provision of Explanation 3 to section 18(1)(c) would come into operation in the event the assessee has not complied with the provisions of section 14 or section 17(1) of the Act, but because the assessee has disclosed taxable net wealth in the return filed in response to notice u/s.17(1) of the Act and paid taxes thereon, the authority would have accepted the explanation furnished by the assessee that he has not filed return of wealth for concerned assessment year within the time limit specified u/s.14 of the Act, on the bonafide presumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the true particulars of wealth. 4. For the above reasons and for any other reasons that may be adduced at the time of hearing, it is prayed that the penalty of ₹ 97,623/- levied U/s 18 (1)(c) may kindly be cancelled/deleted. 3. Brief facts of the case are that a search under section 132 of the Income Tax Act, 1961 was carried out on 18.11.2011 in the premises of Barani Group, Erode and assessee being connected with the group was also covered under search. As per records found during the course of search, the assessee had taxable wealth for the year under consideration, but had not filed return of wealth. Therefore, the assessment has been reopened u/s.17 of the Wealth Tax Act, 1957 (hereinafter referred to as the Act ). In response to notice, assessee had filed return of wealth on 19.12.2016 declaring taxable wealth of ₹ 1,27,62,300/-. The case has been subsequently taken up for scrutiny assessment and assessment has been completed u/s.17 r.w.s 16(3) of the Act, on 26.12.2016 accepting the returned wealth. Thereafter, penalty proceedings u/s.18(1)(c) of the Act was initiated and after considering relevant submissions of the assesse, the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in appeal before us. 6. The learned AR for the assessee submitted that the learned CWT(A) has erred in not appreciating the fact that assessee has not consciously and deliberately concealed the particulars of wealth which warrants levy of penalty under deeming provisions of section 18(1)(c) of the Act, more particularly, when the assessee has explained the reasons for not filing the wealth tax return within the prescribed time limit under the Act and such reasons are bonafide. The learned AR further submitted that levy of penalty after completion of reassessment and accepting returned wealth would deserve the exercise of discretion vested with the original authority for not levying the penalty in relation thereto. The pleading for using the discretion for not levying penalty is further fortified by the undisputed fact of payment of taxes collectible in relation to the wealth. Therefore, levy of penalty u/s.18(1)(c) of the Act without exercising the discretion is not sustainable in law. In this regard, he relied on the decision of the Honble Supreme Court in the case of Hindustan Steel Ltd vs. State Of Orissa reported in 83 ITR 26 (SC). 7. The learned DR, on the other hand, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poses 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 either of the periods aforesaid applicable to him in pursuance of a notice u/s.17 of the Act. 9. A plain reading of provisions of section 18(1)(c) makes it very clear that once the assessee has not furnished return of wealth under regular provisions of the Act, then a deeming fiction comes into operation, regarding concealment of particulars of wealth, even though the Assessing Officer has accepted the net wealth declared in the return of income filed for relevant assessment years and accordingly, the lower authorities invoked explanation 3 of section 18(1)( c) to levy of penalty when the assessment has been completed u/s.17 of the Wealth Tax Act. But, fact remains that presumption of automatic levy of penalty is completely unsustainable in law, while such presumption of the department negated the discretion vested with the original authority for levying or not levying of such penalty dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered the fact that surrender of taxable wealth in the reassessment proceedings would not automatically lead to levy of penalty under consideration and the bonafide understanding of the assessee on the non-taxability cannot be ruled out or negated mechanically by imposing penalty in relation thereto.The component of wealth based on the admission of return of wealth after the issuance of notice for reopening could not fall within mischief of explanation 3 of section 18(1)(c) of the Act. We are therefore of the considered opinion that the Assessing Officer and CWT (A) were erred in levying penalty u/s.18(1)(c) of the Act and hence, we direct the Assessing Officer to delete penalty levied under the provisions of section 18(1)(c) of the Act. 9A. In the result, the appeal filed by the assessee is allowed. WTA Nos 14 to 20/Chny/2019: 10. The facts and issues involved in WTA Nos. 14 to 20/Chny/2019 are identical to the facts and issues which we have already considered in WTA No.13/Chny/2019 for the assessment year 2010-11. The reasons given by us in the preceding paragraphs of WTA No.13/Chny/2019 shall mutatis mutandis apply to these appeals as well. Therefore, for the si ..... X X X X Extracts X X X X X X X X Extracts X X X X
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