Income Tax Appellate Tribunal - Chennai
R.Tamilarasan, Erode vs Acwt, Erode on 20 January, 2021
आयकर अपील य अ धकरण,'सी' यायपीठ, चे नई IN THE INCOME TAX APPELLATE TRIBUNAL , 'C' BENCH, CHENNAI ी यायाधीश पी.पी. भ , अ य एवं ी जी. मंजुनाथ, लेखा सद$य के सम BEFORE SHRI JUSTICE P.P. BHATT, PRESIDENT AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER W.T.A.No.13 & 14/Chny/2019 ( नधारणवष / Assessm ent Year: 201 0-11 & 2011-12) Mr. R.Tamilarasan Vs The Assistant Commissioner of 36, Water Tank Road, Wealth Tax, Gandhi Nagar Colony, 1st Street, Circle-1, Erode. Erode-638 098.
PAN: ADJPT 0699N
(अपीलाथ /Appellant) ( यथ /Respondent)
W.T. A.No.15, 16 & 17/Chny/2019
( नधारणवष / Assessm ent Year: 201 0-11, 20 11-12& 2012-13) Mr. R.Ravanan Vs The Assistant Commissioner of 38/3, Santhan Kadu Street Wealth Tax, Veerappanchatram Circle-1, Erode.
Erode-638 004.
PAN: AGGPR 6530G
(अपीलाथ /Appellant) ( यथ /Respondent)
&
W.T. A.No.18,19 &20/Chny/2019
( नधारणवष / Assessm ent Year: 201 0-11, 20 11-12 & 2012-13) Mr. R.Ellalan Vs The Assistant Commissioner of 38/5, Santhan Kadu Street Wealth Tax, Veerappanchatram Circle-1, Erode.
Erode-638 004
PAN: AAFPE9379M
(अपीलाथ /Appellant) ( यथ /Respondent)
अपीलाथ क ओर से/ Appellant by : Mr. S.Sridhar, Advocate
यथ क ओर से/Respondentby : Mr. G.Johnson, Addl.CIT
सुनवाईक तार ख/Da t e of V i rtu a l h ear i ng : 09.12.2020 घोषणाक तार ख /D at e of Pr on o unc e m en t : 20.01.2021 आदे श / O R D E R PER BENCH:
This bunch of eight appeals filed by three different assessee's are directed against separate, but identical orders of learned 2 WTA Nos 13 to 20/Chny/2019 Commissioner of Wealth Tax (Appeals)-3, Coimbatore, all dated 27.11.2018 and pertain to assessment years 2010-11, 2011-12 & 2012-13. Since, the facts are identical and issues are common, for the sake of convenience, these appeals were heard together and are being disposed off, by this consolidated order.
2. The assessee's have more or less filed common grounds of appeal in their respective memorandum of appeal for the relevant assessment years, therefore, for the sake of brevity, grounds of appeal filed in WTA No.13/Chny/2019 for assessment year 2010-11 are reproduced as under:-
"1. The order of the Commissioner of Wealth Tax ((Appeals)-3, Coimbatore dated 27.11.2018 in l.T.A.No 105/17-18 for the above assessment year is contrary to law facts and in the circumstances of the case.
2. The Commissioner of Wealth Tax (Appeals)-3, Coimbatore erred in sustaining the penalty of Rs.97,623/- u/s.18(1)(c).
3. The Commissioner of Wealth Tax (Appeals)-3, Coimbatore erred in not appreciating the fact that the appellant has not consciously and deliberately concealed 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 Rs. 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 3 WTA Nos 13 to 20/Chny/2019 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 Rs.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 has levied penalty under Explanation 3 to section 18(1)(c) on the ground that assessee has concealed particulars of assets and hence levied 100% penalty of the tax sought to be evaded.
4. Being aggrieved by the penalty order, the assessee preferred an appeal before the learned CWT(A). Before the learned CWT(A), the assessee submitted that the Assessing Officer has failed to appreciate the fact that there was no concealment of wealth on the 4 WTA Nos 13 to 20/Chny/2019 part of the assesse, because even though the assessee has not filed wealth tax return u/s.14 in respect of any assessment year, but when notice was issued u/s.17(1) of the Act, return of wealth declaring taxable wealth has been filed along with payment of consequent taxes and hence, mere non-filing of return under regular provisions of the Act cannot be construed as deliberate attempt made to evade payment of tax for levy of penalty under Explanation 3 to section 18(1) (c) of the Act.
5. The learned CWT(A), after considering relevant submissions of the assessee observed that there is default on the part of the assessee in not declaring wealth, even though he had taxable wealth for the relevant assessment year, and hence, it is a clear case of concealment of particulars of net wealth, which attracts provisions of section 18(1)(c) of the Act and accordingly, although the Assessing Officer has accepted return of wealth filed by the assessee without any modification, because of specific deeming provision provided under the Act, assessee shall be deemed to have concealed particulars of assets or furnished inaccurate particulars of asset in respect of such assessment year, notwithstanding that such person furnishes a return of his net wealth 5 WTA Nos 13 to 20/Chny/2019 at any time after the expiry of either of the periods aforesaid applicable to him in pursuance of a notice under section 17 of the Act. The learned CWT(A) further observed that, but for search action u/s.132 at the premises of the Barani Group, Erode, details of assets owned by the assessee would not have come to the notice of the department. Therefore, explanation of the assessee that there was no intention on the part of the assessee to conceal the wealth is devoid of merit and accordingly, opined that the Assessing Officer has rightly levied the penalty for concealment of particulars of wealth under section 18(1)(c) of the Act. Aggrieved by the learned CWT(A) order, the assessee is 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 6 WTA Nos 13 to 20/Chny/2019 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, supporting the order of the learned CWT(A) submitted that it is a clear case of concealment of particulars of wealth, which is evident from the facts brought out by the authorities that had the search action would not have taken place, details of assets owned by the assessee could not have come to the notice of the department and further the returns filed by the assessee in response to the notice issued u/s.17 after the Assessing Officer identified wealth has escaped assessment is clearly established the fact of concealment of particulars of net wealth. Therefore, the arguments of learned AR for the assessee that assessee was under bonafide belief not filed wealth tax return 7 WTA Nos 13 to 20/Chny/2019 on the ground that there was no taxable wealth for the impugned assessment year is devoid of merit and not sustainable in law.
8. We have heard both the parties, perused the material available on record and gone through the orders of authorities below. The Assessing Officer has levied penalty u/s 18(1)( c) for the impugned assessment years under consideration in consequent to completion of reassessment order in accepting return of wealth filed by the assesse. It is an admitted fact that assessee has not filed return of wealth under the provisions of section 14 of the Act. However, when the assessment was reopened u/s.17 of the Act, the assessee has filed wealth tax returns admitting taxable wealth and paid taxes thereon. The Assessing Officer had invoked the provisions of Explanation 3 to section 18(1)(c) of the Act, to levy penalty for concealment of particulars of wealth. The provisions of Explanation 3 to section 18(1)(c) of the Act, shall have deeming fiction, as per which, if an assessee fails to furnish return of wealth within the period specified in sub-section (1) of section 17A, which he is required to furnish under section 14 in respect of any assessment year commencing on or after, to furnish within the period specified in 8 WTA Nos 13 to 20/Chny/2019 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 until the expiry of the period aforesaid, no notice has been issued to him under clause (i) of sub-section (4) of section 16 or sub-section (1) of section 17 and the Assessing Officer 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 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 9 WTA Nos 13 to 20/Chny/2019 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 depending upon the facts and circumstances of the case. Further, the deemed concealment of wealth or furnishing of inaccurate particulars of wealth as per Explanation 3 should be subject to the discretion vested with the authority in the matter of levying or not levying of penalty. Therefore, in our considered opinion, levy of penalty u/s.18(1)(c) of the Act, after completion of reassessment in accepting return of wealth would deserves exercise of discretion vested with the authority for not levying penalty. Therefore, levy of penalty u/s.18(1)(c) of the Act without exercising 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. This view is supported by the decision of the Hon'ble Supreme Court in the case of Hindustan 10 WTA Nos 13 to 20/Chny/2019 Steel Ltd vs State Of Orissa 83 ITR 26 (SC), where the Hon'ble Court observed that where penalty should be imposed for failure of statutory obligation is a matter of discretion of the authority to be exercised judicially and on consideration of all the relevant circumstances. 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. The Assessing Officer has accepted the return of wealth filed by the assessee without any modification. Therefore, we are of the considered view that 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 that there is no taxable wealth for the 11 WTA Nos 13 to 20/Chny/2019 relevant assessment years on the disputed land, jewellery and cash on hand. We, further, are of the opinion that Assessing Officer would also have considered 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 12 WTA Nos 13 to 20/Chny/2019 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 similar reasons, we direct the Assessing Officer to delete penalty levied in these appeals also under the provisions of section 18(1)(c) of the Act.
11. In the result, appeals filed by the assessee for all the assessment years are allowed.
Order pronounced in the open court on 20th January, 2021
Sd/- Sd/-
( यायाधीश पी.पी. भ ) (जी. मंजुनाथ)
(Justice P.P.Bhatt) (G. Manjunatha )
अ य / President लेखा सद"य / Accountant Member
चे$नई/Chennai,
%दनांक/Dated 20th January, 2021
DS
आदे श क त)ल*प अ+े*षत/Copy to:
1. Appellant 2. Respondent 3. आयकर आयु,त (अपील)/CIT(A)
4. आयकर आय,
ु त/CIT 5. *वभागीय त न1ध/DR 6. गाड फाईल/GF.