TMI Blog1982 (6) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... n on 18th May, 1972, declaring a net wealth of Rs. 6,87,726. The WTO completed the assessment on the net wealth of Rs. 6,87,726 as declared in the second revised return. There being a difference to the tune of Rs. 1,05,101 in the first revised return and the second revised return, the WTO initiated penalty proceedings under s. 18(1)(c) of the W.T. Act. The difference of Rs. 2,13,542 between the wealth as declared in the original return and as declared in the first revised return was partly due to the assessee's claim for exemption of the value of its shares in different companies under s. 5(1)(xxiii) (to the extent of Rs. 1,50,000) and partly due to the difference in value of its one-half share in the Modi Card Board Factory (shown at Rs. 1,16,035 in the original return and Rs. 52,493 in the first revised return). The value of Rs. 1,16,035 was being shown by the assessee regularly from the assessment year 1968-69. In the second revised return, the assessee disclosed his wealth at Rs. 6,87,726. The difference of Rs. 1,05,100 between the wealth as declared in the first revised return and the second revised return was mainly due to the following reasons: (1) The assessee, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut any legal authority could not be treated as innocent. He also held the assessee guilty of gross neglect in not disclosing its share in the development rebate reserve account in the card board factory amounting to Rs. 21,725 in the original as well as in the first revised return. He consequently worked out the total concealed wealth as Rs. 49,934 and imposed penalty of Rs. 50,000. On appeal, the Tribunal deleted the entire penalty by giving six reasons: (a) First, that the second revised return was clearly a return filed under s. 15 and as there was no difference between the declared wealth and the assessed wealth, penalty imposable was " nil ". (b) Secondly, that in view of the provisions contained in Expln. 2 to s. 18(1), the assessee could file a revised return before completion of the assessment whether before or after the detection of the inaccuracies in the original return. (c) Thirdly, that the value of interest of an HUF in the firm was not taxable. (d) Fourthly, that though the assessee was guilty of gross neglect in evaluating the shares of M/s. Modi Spinning and Weaving Mills at the last year's rate, yet the valuation of the asset was a matter of estimat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the correct value of the debt or the correct net wealth did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of assets or furnished inaccurate particulars of assets or debts for the purposes of clause (c) of this sub-section. Explanation 2.-For the Purposes of clause (iii) (a) the amount representing the value of any assets in respect of which the particulars have been concealed or any assets in respect of which inaccurate particulars have been furnished, shall be the value of such assets determined for the purposes of this Act as reduced by the value thereof, if any, declared in the return made under section 14 or section 15...." Explanation 1 in essence relates to a rule of evidence. Its plain reading shows that if the value of any assets returned by an assessee is less than the value of such an asset as determined by 75%, then presumption arises that he concealed the particulars of assets or furnished inaccurate particulars of assets but the presumption is rebuttable and can be rebutted by the assessee by proving that the incorrect return was not due to any fraud or any gross or wilful neglect on his part. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and loss account disclosed items like income-tax, wealth-tax, household expenses, etc. These items were not included in his return of total income. The ITO, therefore, initiated penalty proceedings. The Appellate Tribunal took the view that there was inadvertent mistake but no gross negligence or wilful default as the items had been shown in the profit and loss account and deleted the penalty. On reference, the Bench observed as follows (p. 77): "As a matter of fact, about the two additions, namely, wealth-tax and income-tax, even the counsel present in court were ignorant that they are not permissible deductions. If this is the case with the legal profession, how can one expect a different standard from a layman more particularly, when the assessee can only read and write Urdu. In this view of the matter, no fault can be found with the decision of the Tribunal." Adverting to the facts of this case, it is evident that in the original return the assessee gave the value of its assets as Rs. 7,96,167 and in the first and second revised returns Rs. 5,82,625 and Rs. 6,87,726 respectively. According to the second revised return, there is no difference between the declared wealth and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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