Income Tax Appellate Tribunal - Amritsar
Shri Ravinder Aggarwal , Jammu vs Assistant Commissioner Of Wealth ... on 20 September, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH, AMRITSAR (TMC)
BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER
W.T.A. No. 01/Asr/2018
Assessment Year: 2014-15
Sh. Ram Aggarwal, Vs. Asst. Commissioner of Wealth Tax,
116, Jullakha Mohalla, Central Circle, Jammu
Jain Bazar, Jammu.
[PAN: AQZPA 9424H]
(Appellant) (Respondent)
W.T.A. No. 02/Asr/2018
Assessment Year: 2014-15
Sh. Ravinder Aggarwal, Vs. Asst. Commissioner of Wealth Tax,
116, Jullakha Mohalla, Central Circle, Jammu
Jain Bazar, Jammu.
[PAN: AMXPK 7889C]
(Appellant) (Respondent)
W.T.A. No. 03/Asr/2018
Assessment Year: 2014-15
Smt. Meenakshi Devi, Vs. Asst. Commissioner of Wealth Tax,
116, Jullakha Mohalla, Central Circle, Jammu
Jain Bazar, Jammu.
[PAN: AASPA 5255H]
(Appellant) (Respondent)
Appellant by : Sh. Surinder Mahajan (C.A.)
Respondent by: Smt. Parwinder Kaur CIT-D.R.
Date of Hearing: 19.09.2019
Date of Pronouncement: 20.09.2019
2 WTA Nos. 01 to 03/Asr/2018 (AY 2014-15)
Ram Aggarwal & Ors v. Asst. CWT
ORDER
Per Bhavnesh Saini, (Judicial Member) (Third Member):
I have heard the Ld Representative both the parties and perused the material available on record.
2. In this case Ld Judicial Member has allowed all the above three appeals cancelling the penalty levied u/s 18(1)(c) of the Wealth Tax Act. The Ld Accountant Member, however, did not agree with the view of Ld Judicial member and directed that penalty should follow in the aforesaid appeals, resulting in to dismissal of all the appeals of the three assessees. On there being a difference of opinion between the Ld Members of Income Tax Appellate Tribunal, Amritsar Bench, Ld Accountant Member has referred the following questions to the Hon'ble President for making a reference to the Third Member:
'(1) (a) Whether the issue of service of notice/s u/s. 17(1) of the Act is at all relevant, i.e., in the given facts & circumstances of the case?
(b) Whether, in the given facts and circumstances of the case, the material date for the purpose of levy of penalty in the instant case/s is the date of issue of notice u/s. 17(1) and not the date of its' service, i.e., considering that the time for furnishing the return/s suo motu by the assessee/s had since expired?
(2) (a) Whether the service of notice u/s. 17(1) could be in law at all objected to in the instant proceedings, considering that the assessee/s participated in, and raised no objection qua the same during, the assessment 3 WTA Nos. 01 to 03/Asr/2018 (AY 2014-15) Ram Aggarwal & Ors v. Asst. CWT proceedings, culminating in an assessment/s u/s. 16(3) r/w s. 17(1), i.e., in view of section 42 of the Act?
(b) Can, in any case of the matter, the finality of the assessment as framed, i.e., u/s. 16(3) r/w s. 17(1), be agitated or disturbed in the current proceedings?
(3) Whether the return/s, as furnished, including conduct, can be regarded as voluntary, i.e., either in law or on facts?
(4)Whether the assessee/s has, or has not, effectively rebutted the statutory presumption of service of notice u/s. 17(1) of the Act?
(5) (a) Whether the question of service or non-service - a matter of fact, established on the basis of proven facts (on record), or on the basis of an affidavit?
(b) Whether, the affidavit/s, as furnished, can be regarded as an evidence toward proving non-service?
(c) Whether, the affidavit/s, as furnished, satisfies the ingredients of a valid affidavit/s?
(d) Can the affidavit/s, as furnished, making no averment as to service, in any case of the matter, be regarded as an effective discharge of onus on the assessee?
(6)(a) Is the penalty u/s. 18(1)(c) of the Act a civil liability, or a criminal or quasi criminal liability?
(b) Whether the material date for the purpose of levy of penalty is the date of detection of escaped wealth by the Revenue or the date of furnishing the return/s by the assessee/s admitting the escaped wealth, i.e., considering that the time for furnishing the return/s suo motu by the assessee/s had since expired?4 WTA Nos. 01 to 03/Asr/2018 (AY 2014-15)
Ram Aggarwal & Ors v. Asst. CWT
(c) Has the assessee, in the facts and circumstances of the case, made out any case on merits, i.e., apart from claiming the return/s to be voluntary?
(d) Is the decision in Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 (SC) applicable in the given facts and circumstances of the case?
(e) Would it be even otherwise unfair, or not so, for the Tribunal to dismiss the Revenue's case with reference to the said case law, even as no case qua merits, i.e., apart from claiming to have admitted the wealth escaping assessment voluntarily, has been made out at any stage by the assessee, i.e., without hearing the parties'
3. Ld Judicial Member, however, did not agree with these proposed questions framed by Ld Accountant Member as above and has referred the following two questions for opening of Third Member:
'(i) Whether in the above referred cases, under the facts and circumstances wherein the assessees have filed their returns of wealth under the Wealth Tax Act voluntarily, may be belated, the penalties are leviable?
(ii) Whether in the above referred cases, the assessees acted deliberately in defiance of law or are guilty of contumacious conduct or acted in conscious disregard of their obligations and therefore liable for the penalties'
4. The Hon'ble President, Income Tax Appellate Tribunal has nominated me as Third Member to decide the aforesaid questions.
5 WTA Nos. 01 to 03/Asr/2018 (AY 2014-15)
Ram Aggarwal & Ors v. Asst. CWT
5. Considering the facts of the cases and the proposed questions referred to me for decision in accordance with law, I am of the view that all the above questions framed by both the Ld Members of Income Tax Appellate Tribunal, Amritsar Bench necessarily revealed the only question to be answered is, 'whether in the facts and circumstances of the case levy of penalty in three cases u/s 18(1)(c) of the Wealth Tax Act is justified or not?' Ld Judicial Member in his proposed order has noted that as the issues in these appeals are identical and similar, therefore, for the sake of brevity and convenience, Ld counsel for assessee argued WTA No. 02/Asr/2018, i.e., in the case of Sh. Ravinder Aggarwal (supra) and hence, facts in that case have been taken into consideration for the decisions of all the three appeals.
6. The facts noted by the authorities below as well as by the Ld Members of the Tribunal are not in dispute that a search and seizure operation u/s 132 of the I. T. Act was conducted on the residential premises of the assessee at Jammu on 4th September, 2013 and assessment proceedings were completed u/s 143(3) of the I. T. Act. Later on, during the perusal of the assessment record, it was found that assessee was having Rs.41,41,259/- as cash in hand as on 31st March, 2013, i.e., on valuation date relevant to assessment year 2014-15 under appeal which is taxable asset as per the Wealth Tax Act. Since assessee had not then filed the return of wealth for assessment year 2014-15 under appeal, notice u/s. 17(1) of the Wealth 6 WTA Nos. 01 to 03/Asr/2018 (AY 2014-15) Ram Aggarwal & Ors v. Asst. CWT Tax Act for wealth escaping assessment was issued on 30th March, 2016, after recording the reasons and directed the assessee to file return of wealth within 15 days. In response to the show notice, the assessee filed the return of wealth on 25th April, 2016 declaring net wealth amounting to Rs.47,36,496/- consisting of cash in hand of Rs.41,91,258/- and jewellery of Rs.5,45,238/-. The Assessing Officer, thereafter have issued questionaire and after considering explanations of assessee computed the net taxable wealth at Rs.47,36,496/-, i.e., the returned wealth. The Assessing Officer initiated penalty proceedings u/s 18(1)(c) of the Wealth Tax Act for concealment of wealth as the return is filed only after the issue of notice for reassessment u/s 17(1) of the Wealth Tax Act. The Assessing Officer in the penalty order noted that asssessee has admitted having taxable wealth of Rs.47,36,496/- for assessment year under appeal. However, no return of net wealth was filed by the asessee either by the due date even up to the last date, for which, a return of wealth for assessment year under appeal could have been filed, i.e., up to 31st March, 2016. The return of wealth was filed only on 25th April, 2016, i.e., after issue of notice u/s 17(1) of the Wealth Tax Act. Thus no voluntary returns have been filed by the assessees. The assessee has preferred not to file his return of net wealth for assessment year under appeal within the stipulated time available to him u/s 14 and 15 of the Wealth Tax Act, though he was having wealth above the taxable limit. The Assessing Officer therefore held that the assessee has concealed the particulars 7 WTA Nos. 01 to 03/Asr/2018 (AY 2014-15) Ram Aggarwal & Ors v. Asst. CWT of asset and levied the penalty u/s 18(1)(c) of the Wealth Tax Act. The Ld Commissioner of Wealth Tax confirmed the levy of penalty and dismissed the appeal on the same reasoning.
7. Ld counsel for assessee reiterated the submissions made before the tribunal he has submitted that no notice u/s 17(1) of the Wealth Tax Act have been served upon the assessee. The assessee has filed return of wealth voluntary. The affidavit filed by the assessee was not rebutted. The return of wealth filed belatedly was accepted by the AO at the same wealth. The assessee was not aware of the fact that the return of wealth was liable to be filed. Whatever case law has been referred to by the Ld Accountant Member in his proposed order are not applicable to the case and having not been brought to the notice of the assessee. He has submitted that the case law cited by the Ld Accountant Member relates to the imposition of penalty when concealment is detected by the department though assessee has revised return whereas wealth tax return were filed by assessee voluntarily. These cases also relate to the calculation of the limitation. He has further submitted that cash was found during the course of search which were disclosed in the wealth tax return and accepted by the AO, therefore, it would not be a case of levy of the penalty.
8 WTA Nos. 01 to 03/Asr/2018 (AY 2014-15)
Ram Aggarwal & Ors v. Asst. CWT
8. On the other hand Ld DR relied upon orders of the authorities below and submitted that assessee was aware of the fact that wealth is taxable on which tax is payable but the assessee did not file return of wealth deliberately within the period of limitation. Wealth Tax Act provides deemed concealment which is applicable to assessee. Further there is a deemed service of notice because the notice sent through registered post did not return back to the Revenue department. The assessee did not rebut the presumption of service of the notice u/s 17(1) of the Wealth Tax Act. There is no averment of denial of the service of the notice in the affidavit filed by the assessee. There is a legal presumption against assessee u/s 27 of the General Clauses Act that notice sent through registered post have been served upon assessee. The assessee did not file return of wealth on time. The department then taken action against assessee for escapement of wealth therefore return filed belatedly could not be treated as return having been filed voluntarily. The assessee did not explain the bona fide reasons for not filing the return of wealth which was taxable. Assessee did not object to the service of notice u/s 17(1) of the Wealth Tax Act before the AO. The Ld DR strongly supported the proposed order of Ld Accountant Member.
9. I have considered the rival submissions. It is not in dispute that a search was conducted at the residential premises of assessee on 4th September 2013. The assessment u/s 143(3) was completed and on perusal of the assessment record, it 9 WTA Nos. 01 to 03/Asr/2018 (AY 2014-15) Ram Aggarwal & Ors v. Asst. CWT was found that assessee was having cash in hand as on 31st March, 2013, i.e., on valuation date relevant to assessment year under appeal, i.e., 2014-15 which is taxable asset as per Wealth Tax Act. The assesse is an individual and wealth tax provisions are applicable to him. The financial year relevant to assessment year under appeal completed on 31st March, 2014. Thus assessee was having sufficient time to file return of wealth because he was having the taxable wealth as on the valuation date, but, the assessee did not file return of wealth despite search was conducted during the financial year itself. The Assessing Officer finding no alternative issue notice for reassessment of escaped wealth u/s 17(1) of the Wealth Tax Act on 30th March, 2016 after recording the reasons. The assessee in response thereof filed return of wealth on 25th April, 2016 declaring net wealth amounting to Rs.47,36,496/-. The Assessing Officer accepted the returned wealth, in which assessee declared cash in hand and dewellery which assessee was aware of the fact that on 4th September, 2013, i.e., date the search as well as on valuation date, i.e., 31st March, 2013. These facts therefore clearly proved that assessee admitted to have taxable wealth on valuation date, i.e., 31st March, 2013 for assessment year under appeal. However, no return have been filed by assessee for net wealth by due date for filing of the wealth tax return u/s 14 of the Wealth Tax Act or last date extended up to 31st March, 2016 u/s 15 of the Wealth Tax Act, despite assessee was having net wealth above the taxable limit. The return of wealth filed by the 10 WTA Nos. 01 to 03/Asr/2018 (AY 2014-15) Ram Aggarwal & Ors v. Asst. CWT assessee on 25th April, 2016 was thus could not be considered if the return of wealth was filed u/s 14 or 15 of the Wealth Tax Act. There is no other provision for filing of the return of wealth beyond the period of limitation. Thus, the return of wealth filed after 31st March, 2016 was non-est so it could not be considered as return of wealth filed voluntarily. The notice u/s 17(1) of the Wealth Tax Act did not return back which was sent through registered post therefore presumption is that it has served upon assessee in ordinary course of business. The assessee never disputed the service of the notice u/s 17(1) of the Wealth Tax Act before the Assessing Officer. The assessee participated in the Wealth Tax Act assessment proceedings and assessment is completed on 13th December, 2016 u/s 16(3) r.w.s. 17(1) of the Wealth Tax Act without any objection from the side of the assessee. The assessee filed affidavit dated 17th August, 2016 in which also assessee did not dispute that notice u/s 17(1) of the Wealth Tax Act, have not been served upon assessee. Therefore there is no material available on record that notice u/s 17(1) of the Wealth Tax Act have not been served upon the assessee. It is well-settled that the penalty is imposed on account of commission of a wrongful act and plainly it is the law operating on the date on which the wrongful act is committed which determines the penalty. Where penalty is imposed for concealment of particulars of asset, it is the law ruling on the date when the Act of concealment takes place which is relevant. In this case under consideration the concealment of particulars of 11 WTA Nos. 01 to 03/Asr/2018 (AY 2014-15) Ram Aggarwal & Ors v. Asst. CWT asset was effected by the assessee when these assessees were having net assets on valuation date, liable to Wealth Tax Act, but no return of wealth have been filed u/s 14 or 15 of the Wealth Tax Act. Therefore assessee is liable to penalty u/s 18(1)(c) of the Act. I rely upon judgments of Hon'ble Supreme Court in the case of Brij Mohan v. CIT 120 ITR 1, CIT v. Omkar Saran & Sons 195 ITR 1 and B. N. Sharma v. CIT 226 ITR 442. Since the assessee had to disclose their net wealth in the original return to be filed u/s 14 or 15 of the Wealth Tax Act, if they have failed to do so, but concealed the particulars of asset, the offence becomes complete. Thus the offence of concealment is complete and final when the assessee did not disclose the net wealth in their return or wealth tax to be filed up to 31st March, 2016. If the plea of the assessee that since there were no difference in the wealth of return and the assessed asset is accepted, an anomalous result will follow in certain glaring cases of concealment. Let me take the following illustration. The assessee conceals wealth in his original return. He gets aware with it and the original assessment is completed without detecting the concealment. Subsequently a notice is given for assessing escaped wealth. In these proceedings, assessee files a return of wealth including escaped or undisclosed wealth. In this situation the arguments on behalf of the assessee if accepted will result in the conclusion that the Revenue department will be helpless in imposing the penalty in such case. That certainly cannot be effect of the legal provisions. Again the assessee would 12 WTA Nos. 01 to 03/Asr/2018 (AY 2014-15) Ram Aggarwal & Ors v. Asst. CWT completely escape the penalty, if he does not at all file the return in response to notice under the Wealth Tax Act. The expression 'concealed the particulars of assets' have not been defined of the Wealth Tax Act. However, the word 'conceal' would mean 'hide or keep secret'. The word 'conceal' is con + celare which implies to hide. It means to hide or withdraw from observation, to cover or keep from side, to prevent the discovery of, to withhold knowledge of. The offence of concealment is thus a direct attempt to hide an item of income or a portion thereof from the knowledge of the Revenue authorities. In the aforesaid case, it is clear that despite the assessees one aware of the fact that they have taxable asset as per Wealth Tax Act during the financial year itself and particularly on valuation date, i.e., on 31st March, 2013, the assessees were under obligation to file return of wealth within the period of limitation provided under the Act or extended period up to 31st March, 2016. However, the assessee did not do so. Thus the assessee concealed the particulars of an asset within the meaning of section 18(1)(c) of the Wealth Tax Act. Therefore, explanation 2 to section 18(1)(c) of the Wealth Tax Act would also be applicable against the assessees and that deeming provisions would prove that assessees have concealed the particular of asset subject to tax. Therefore filing of an affidavit before Income Tax Authorities would be of no consequence as the assessee did not file any valid return of wealth within the period of limitation. The return of wealth filed by the assessee on 25th April, 2016 13 WTA Nos. 01 to 03/Asr/2018 (AY 2014-15) Ram Aggarwal & Ors v. Asst. CWT was non-est. Therefore assessee could not escape the liability upon them to explain the concealment of particulars of asset. It may also be noted here that in case the Assessing Officer would not have issued notice u/s. 17(1) of the Wealth Tax Act on finding that assessee have a taxable asset on the valuation date on 31st March , 2013, the assessees would not have disclosed the taxable wealth to the Revenue authorities subsequently on 25th April, 2016. In the event, the assessees would have been able to conceal the net wealth from the taxation. Therefore penalty on this reason itself is leviable against all the assessees. I rely upon judgments of Hon'ble Delhi High Court in the case of Zoom Communications 327 ITR 510 I rely upon the judgments of Hon'ble Supreme Court in the case of Dharmendra Textile Processors 306 ITR 277 and Atul Mohan Bindal 317 ITR 1 in which it was held 'penalty is neither criminal nor quasi criminal, it is a civil liability.' In the aforesaid cases, the claim of assessees had been that assessees denied service of notice u/s 17(1) of the Wealth Tax Act and that return of wealth was filed voluntarily. However, such a plea is not acceptable because of the reasons given above that assessees did not file return of wealth voluntarily within the period of limitation. The assessees were aware of having taxable wealth on the date of valuation, i.e., 31st March, 2013 despite that the assessees did not file return of wealth within the period of limitation. Though the return of wealth was not filed voluntarily, but, such plea would not absolve the assessee from the mischief of 14 WTA Nos. 01 to 03/Asr/2018 (AY 2014-15) Ram Aggarwal & Ors v. Asst. CWT penal proceedings. The Hon'ble Supreme Court in the case of Mak Data Pvt. Ltd. v. CIT 358 ITR 593 held as under:
'Voluntary disclosure does not release the assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he has to be absolved from penalty. The Assessing Officer should not be carried away by the plea of the assessee such as "voluntary disclosure", "buy peace", "avoid litigation", "amicable settlement", to explain away its conduct. The question is whether the assessee has offered any explanation for concealment of particulars of income of furnishing inaccurate particulars of income.' It was further held:
'Held, affirming the decision of the High Court, that the assessee had only stated that it had surrendered the additional sum of Rs.40,74,000 to avoid litigation, buy peace and to channelize the energy and resources towards productive work and to make amicable settlement with the Income-tax Department. The statute did not recognize those types of defences under Explanation 1 to section 271(1)(c) of the Act. The surrender of income in this case was not voluntary in the sense that the offer of surrender was made in view of detection by the Assessing Officer in the search conducted in the sister concern of the assessee. The survey was conducted more than 10 months before the assessee filed its return of income. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during the course of the assessment proceedings. Consequently, it was clear that the assessee had no intention to 15 WTA Nos. 01 to 03/Asr/2018 (AY 2014-15) Ram Aggarwal & Ors v. Asst. CWT declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The Assessing Officer had recorded a categorical finding that he was satisfied that the assessee had concealed the true particulars of income and was liable for penalty proceedings under section 271 read with section 274 of the Act. There was no illegality in the Department initiating penalty proceedings.'
10. Considering the above discussion I am of the view that the assessee did not file return of wealth under Wealth Tax Act voluntarily. The assessee did not dispute the service of notice u/s 17(1) of the Wealth Tax Act before the Assessing Officer at assessment proceedings or otherwise. Therefore it is a fit case of levy of penalty u/s 18(1)(c) of the Wealth Tax Act. I therefore agree with the view of the Ld Accountant Member that penalty be imposed against the assessee. In view of the above, I dismiss all the appeals of the assessee. Let the files be put up before the regular bench for passing the consequential order.
Order pronounced in the open court on September 20, 2019 Sd/-
(Bhavnesh Saini)
Amritsar Judicial Member
Date: 20.09.2019
/GP/Sr. Ps.
16 WTA Nos. 01 to 03/Asr/2018 (AY 2014-15)
Ram Aggarwal & Ors v. Asst. CWT
Copy of the order forwarded to:
(1) The Appellant:
(2) The Respondent:
(3) The CIT
(4) The CIT concerned
(5) The Sr. DR, I.T.A.T.
True Copy
By Order