Income Tax Appellate Tribunal - Delhi
Sri Jagrit Khaitan Through L/H Smt Mukta ... vs Assessee on 30 April, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: 'D' NEW DELHI
BEFORE SMT DIVA SINGH, JUDICIAL MEMBER
AND
SH. INTURI RAMA RAO, ACCOUNTANT MEMBER
W.T.A .Nos.-36 to 39/Del/2013
(ASSESSMENT YEARs-2004-05, 2006-07 to 2008-09)
Late Sri Jagrit Khaitan through L/H vs ACWT,
Smt. Mukta Khaitan, Smt. Mukta Central Circle-12,
Khaitan, H-36, 1st Floor, Kailash Colony, New Delhi.
New Delhi.
PAN-AARPK2054K (RESPONDENT)
(APPELLANT)
Appellant by None
Respondent by Sh.Gaurav Dudeja, Sr. DR
Date of Hearing 27.04.2015
Date of Pronouncement 30.04.2015
ORDER
PER DIVA SINGH, JM
By these four appeals, the assessee assails the correctness of the separate orders dated 25.10.2013 of the Commissioner Wealth tax (Appeals) [hereinafter referred to as "CWT(A)"] in confirming the penalty imposed by the Wealth Tax Officer (hereinafter referred to as "WTO") in 2004-05, 2006- 07 to 2008-09 assessment years.
2. No one was present on behalf of the assessee however on a perusal of the material available on record and after considering the submissions of the Ld. Sr. DR, it was considered appropriate to proceed with the present appeal ex-parte qua the assessee's appeals on merit.
3. Since identical grounds have been raised in each of these appeals and the arguments on facts are identical the grounds in WTA No.-36/Del/2013 are being reproduced hereunder:-
1. "That the learned C.W.T.(Appeals) has grossly erred in law and on peculiar facts of the instant case, in upholding the levy of penalty of Rs.3,35,913/-; the penalty has been imposed of (Rs.73,000/-; 70,000/-; and 70,000/- respectively) in 2006-07; 2007-08 and 2008-09 Assessment years u/s W.T.A .Nos.-36 to 39/Del/2013 18(1)(c) of the W.T. Act, 1957 for alleged concealment of wealth, failing to appreciate that the penal provisions were wholly inapplicable because the legal heir had neither concealed nor had furnished inaccurate particulars of wealth left by her deceased husband.
2. That the learned C.W.T.(Appeals) has failed to appreciate that provisions of section 18 of the W.T. Act do not come within the ambit of the provisions of section 19 of the W.T. Act and as such the legal heir cannot be visited with a penalty u/s 18( 1)( c) of the Act for concealment of wealth or furnishing of inaccurate particulars of wealth.
3. That the finding of the Id CWT(Appeals) that on a combine reading of provisions of Ss.14, 16(4) & 17 of the W.T. Act, penalty is imposable u/s 18(1)(c) and such sections do not also mention in section 19(3), is wholly incorrect and unsustainable as the same is based on misreading of the relevant provisions.
4. That the further finding of the Id CWT(Appeals) that it is a case of 'false claim' on the part of the assessee as per the provisions of section 18(1)(c), is wholly incorrect without any basis and thus unsustainable.
5. That the Id CWT(Appeals) has failed to appreciate that the appellant, the legal heir of the deceased, did not have any knowledge, particular or details of income or wealth of the deceased and as such no return u/s 14 of the W.T. Act had been filed and the return in response to notice u/s 17 could only be filed only on the basis of photocopy of the balance sheet obtained by the legal heir from the assessment record of the deceased.
Further, due to paucity of funds, lack of evidence and no wish to enter into prolonged litigation, the legal heir did not challenge the assessment made under the l.T. Act as well as under the W.T. Act, which cannot be a valid ground to upheld the penalty. The finding that the assessee has not advanced any cogent reason for not filing appeal in quantum proceeding is wholly incorrect and unsustainable.
6. That various case laws cited by the Id CWT(Appeals) are distinguishable and thus wholly inapplicable on the facts of the instant case.
It is, therefore, prayed that the penalty as imposed by the AO and confirmed by the Id C.W.T.(Appeals) be cancelled and the appeal be allowed. "
4. The relevant facts of the case as recorded in 2004-05 assessment year, which are stated to be identical in the remaining years except for the difference in amounts show that penalty proceedings u/s 18(1)(c) was initiated on account of the fact that :- (a) the assessee did not file its return of wealth u/s 14(1) of Wealth tax Act, 1957 and it was filed only in response to notice u/s 17 by the legal heir; (b) the return declaring an income of Rs.95,39,862/- was varied to the disadvantage of the assessee by the order 2 W.T.A .Nos.-36 to 39/Del/2013 u/s 17 r. w. 16(3) of the Wealth Tax Act, 1957 on 23/11/2011 at the total wealth of Rs.3,35,91,293/-; and (c) the said order was not challenged by the assessee.
5. The assessee is found to have made the following pleadings on facts vide letter dated 11.05.2012 in response to the show cause notice issued by the AO. The said reply extracted in the penalty order is reproduced hereunder for ready-reference:-
"1. That late Sh. Jagrit Khaitan was facing a lot of litigation and financial problems, which badly affected his health and aggravated the multiple diseases he was sufferings from. He was a known case of Diabetes Mellitus, Hypertension and Ischemic Heart Disease resulting in his ultimate demise on 17/01/2010.
2. In compliance to your notice, the assessee filed his Wealth Tax Return as legal heir of the deceased under protest vide letter dated 17/11/2011 stating inter-alia as under:
3. That all the business establishments of the deceased assessee were losed 2-3 years before his death.
4. That the legal heir does not have any other assets, papers documents etc. and is unable to solemnly declare, to the best of her knowledge and belief, the information given in Wealth Tax Return and the annexures and statements accompanying to Wealth Tax Return is correct and complete, and that the net wealth and other particulars shown therein are truly stated and in accordance with the provisions of the Wealth Tax Act, 1957 in respect of net wealth as on the valuation dated 31/03/2004.
5. That to cooperate with the Income Tax Department, on the basis of photocopies of Schedule of Fixed Assets, Schedule of Secured Loan, one page balance sheet of two concerns (a) Jagannath Dudadhar, New Delhi (b) Dass Transport Company, New Delhi the wealth of the deceased with regards to Vehicle (Cars) as on 31/03/2004 is computed as under.
6. That the legal heir of the deceased is filing Wealth Tax Return of the deceased Under Protest and not to be held liable for payment of Wealth Tax, interest, penalty prosecution and any other legal consequences either panel or otherwise.
7. The assessment was completed on total wealth of Rs.3,35,91,293/-. In this connection, the assessee humbly submits that she has not inherited asset/wealth of Late Sh. Jagrit Khaitan to discharge his liabilities in respect of either income tax, wealth tax or penalty. She is also finding it difficult to maintain herself.
8. It is further stated that penalty under section 18 cannot be imposed on the legal representative as section 19(3) does not cover section 18, kindly refer to the discussion of the Hon'ble High Court of Delhi in the matter of Commissioner of Wealth Tax Vs H.S. Chauhan (2000) 245ITR 704 (Del) ... "
(emphasis provided) 3 W.T.A .Nos.-36 to 39/Del/2013
6. Not accepting the explanation offered, penalty of the aforesaid amount @ 100% of tax sought to be evaded was imposed.
7. The assessee appealed against the penalty order re-iterating the submissions made in the penalty proceedings which find mention in para 2.4 and para 4 of the impugned order. It was pleaded that the AO failed to appreciate that the legal representative did not have any document whatsoever other than the documents provided to her by the department; and no appeal against the assessment order was filed as the legal representative did not have any means to meet the litigation costs. The CIT(A) in para 2 of his order summed the asssessee's version of facts in his order in the following manner:-
2. "Statement of facts (Appellant's Version):
2.1. The assessee, namely, Late Sh.Jagrit Khaitan, who was suffering from multiple diseases and was facing acture financial problems and litigation, expired on 17.01.2010 leaving behind his widow Smt. Mukta Khaitan as his legal heir. That all the business establishment of the deceased assessee were lost 2-3 years before his death; That the legal heir does not have any other assets, paper documents etc and is unable to solemnly declare, to the best of her knowledge and belief, the information given in Wealth Tax Return and the annexure and statements accompanying the Wealth Tax Return to be correct and complete, and that the net wealth and other particulars shown therein are truly stated and in accordance with the provisions of the Wealth Tax Act, 1957 in respect of net wealth, as on the valuation dated 31.03.2004.
2.2. That Late Shri Jagrit Khaitan was facing numerous civil litigations for recovery of huge demand from the creditors. Few instances which have come to the knowledge of the assessee are given below:
a) The Hon'ble High Court of Delhi, in Suit No. CS(OS) NO.1245 of 2006 has awarded decree against Jagrit Khaitan for recovery of Rs.13,42,31,700/- plus interest.
b) The Hon'ble High Court of Delhi, in Suit No.CS(OS) No.1244 of 2006 has also awarded decree against Jagrit Khaitan for recovery of Rs.12,19,44,636/- plus interest.
c) That the Sales Tax Authorities of Aligarh have auctioned the article/assets lying at 13-KM Rohtak Road, New Delhi on 05.04.2010 to recover S. Tax demand of Rs.4,80,64,706/-
plus interest thereon. Rs.25,500/- was realized from sale of assets by the S. Tax authorities and the money was taken by them.
d) That Premises No.13 KM, Rohtak Road, Sakur Basti, Delhi is on lease from Railways. It may be stated here that the Railway Administration through DRM office, Delhi has 4 W.T.A .Nos.-36 to 39/Del/2013 initiated proceeding for re-possession of the land under the Public Premises Act and the matter is pending before the Estate Officer, Railway Delhi. The Railway has also raised demand of about Rs.30 crore as damages and lease rent.
e) That the following case are also pending in Delhi High Court and Debt Recovery Tribunal Delhi:-
i) Four cases of BPCL Vs Jagrit Khaitan in Delhi High Court
ii) State Bank of Mysore in DRT 2.3. In response to notice u/s 17 of the W.T.Act, 1957, the legal heir of the deceased assessee filed the return of wealth for A.Y.2004-05 on the basis of photocopies of Schedule of Fixed Assets. Schedule of Secured Loans and one page Balance Sheet of his concern M/s Jagannath Dudhdhar, New Delhi and Schedule of Fixed Assets and Schedule A, B, C, D of M/s Dass Transport Company, New Delhi, provided by the AO to the L/R. ...................................."
(emphasis provided)
8. However, the Ld. CWT(A) having summed up the facts and considering the explanation, confirmed the penalty imposed by the AO.
9. Still aggrieved, the assessee is in appeal before the Tribunal. The Ld. Sr. DR relies upon the orders of the authorities below.
10. We have heard the rival submissions and perused the material available on record. The decisions cited before the tax authorities and cited by the tax authorities have all been taken into consideration before arriving at the conclusion. Reference thereto is refrained from us the issue is largely factual. A perusal of the material available on record shows that penalty has been imposed and confirmed on the ground that firstly the assessee did not file return of wealth u/s 14 and the legal representative of the assessee the widow in the present proceedings filed the return only in response to notice u/s 17 of the Wealth tax Act. The legal representative was also faulted for not challenging the re-opening and the addition made on merits as per para 5.7 of the impugned order so as to lead the ld. CWT(A) to reach the conclusion in para 5.8 that the assessee has failed to substantiate the explanation which was consequently considered to be not bonafide. For ready-reference we reproduce the above-mentioned relevant extracts from the impugned order:-
5W.T.A .Nos.-36 to 39/Del/2013 5.7. "..........................................In the instant case, the appellant has not challenged the reopening of the assessments u/s 17 of the Act, before the appellate authorities, nor did it Challenge the quantum proceedings or additions made in the net wealth .............................................Therefore, it is clear that the assessee - legal representative was not very serious about filing appeals as regards the quantum proceedings. Since the assessee has not advanced any cogent arguments for non filing of appeal before the CWT (Appeal) in the quantum proceedings .........................................."
11. Considering these facts, reasoning and material available on record, we are of the view that the conclusions arrived at on facts are incorrect. The reasons for the said conclusions are brought out herein after by us in greater detail. We find that it is evident from the record that the widow of Late Sh. Jagrit Khaitan has consistently taken a position that the wealth of the Late assessee was below the taxable limit and this pleading is evident from para 1 of the penalty order itself which is identical in each of the years. It is also consistently pleaded before the AO in the quantum proceedings and the penalty proceedings as well as in the appellate proceedings before the CIT(A) that due to multiple health problems suffered by Late Sh. Jagrit Khaitan, the business establishments were lost atleast 2 to 3 years prior to his death which occurred in January 2010 and the return which was called upon to be filed as a legal heir was filed on the basis of the particulars provided by the department. Evidence of multiple litigation during the lifetime of her late husband has been cited as an evidence in support of the claim that the wealth for the period under consideration was below the taxable limit. This evidence of multiple litigations cited before the authorities has been extracted from the impugned order in the earlier part of this order. Her pleading that due to lack of funds, she has not been able to contest the matter in the quantum proceedings is a fact on record which handicap pleaded is used by the Ld. CIT(A) as a weapon to conclude the issue against her. There is nothing on record to show that the pleading of financial inability was a wrong plea on facts. The fact that the appeal had not been filed is evident on record. The fact that in the penalty proceedings 6 W.T.A .Nos.-36 to 39/Del/2013 no appearance has been put before us on behalf of the assessee is also a matter of record.
12. It is unfortunate that the authorities did not care to address the consistent claim of the legal representative that she is finding it difficult to maintain herself as is evident from the explanation offered vide letter dated 11.05.2012 extracted by him at page 2 para 7 (reproduced in the earlier part of this order). Similar pleading it is seen is made by her before the CWT(A) that due to lack of finances no appeal against the additions made in the quantum order were filed by her. The pleadings on facts consistently made on record as observed has not been shown to be untrue. The fact that the legal representative lacked legal advice presumably due to her financial inability is a fact on record as the Ld. CWT(A) himself notes the shortcoming in the representation that even the re-opening was not challenged by her. Had the legal representative had the benefit of sound legal advice she may have had an arguable case in the quantum proceedings as she has consistently pleaded before the authorities that wealth of her Late husband was wiped out during his lifetime as due to his prolonged illness and litigation faced by him in the final years of his life as per the awareness of the legal representative, the business closed. Evidence of litigation is referred to by her. In these peculiar facts and circumstances, we find that the explanation offered by the assessee on facts is bonafide and acceptable in law and on facts the penalty deserves to be quashed.
13. Considering the conclusions drawn in the impugned order it is our unfortunate position to refer to the well recorded and oft repeated, ironical historic insensitivity exhibited by a reigning monarch to the plea that peasants are dying for lack of bread where the reigning monarch so drunk on authority and completely divorced from the realities of life is known to have expressed a genuine shocked concern for the welfare of the dying peasants by advising them to instead of bread eat pastries. Here is a case where the legal representative affected by her changed circumstances is grappling with the loss of her husband on facts is pleading financial constraints as a reason for not litigating further. The sheer insensitivity of the observation by the Appellate authority renders us speechless where her 7 W.T.A .Nos.-36 to 39/Del/2013 financial inability pleaded consistently is used as a tool to further damn her. In an ideal situation, we would all like to hope and aspire that every person has the opportunity to approach the Courts/Tribunals/Authorities for justice but where financial inability is consistently pleaded by a citizen in this case a widow, we cannot insist on taking a utopian world vide and leave her cry for justice unheeded as we believe that there was no impediment to further litigation except her lack of seriousness. It is our constitutional duty to alteast have the courtesy to consider the plea. The Revenue would have been justified in concluding the issue against her if on facts the claim was found to be incorrect on facts. The concerned authority in such a situation may then be justified to proceed to consider the remaining arguments. In the facts of the present case unfortunately this basic courtesy to a widow has been found missing. We should not be so divorced from reality so as to forget that the state alongwith its agents exists for the benefit of its citizens. It is the bounden duty of the agents of the state to consider the just and legitimate claims put forth by the teeming millions before it. To our minds, the authorities should necessarily conduct their functioning within the four corners of the Constitution upholding its goals and values. The benefit of democratic participation should necessarily flow to all, especially the widows, the old and the infirm who appear before the tax authorities as assessee's in their own rights or as legal heirs. The discipline and rigours of constitutionalism whose essence is "accountability of power" "accountability" of that "power" which is vested in every organ of the state and its agents and the "agents of the state" in the facts of the present case are the tax authorities with whom an assessee necessarily is required to interact. In the said interaction, the assessee, to our minds must go with the experience, knowledge and belief that he or she has been heard with an open mind. The widow, a citizen of India, deprived of her lifemate and the alleged loss of wealth by which in his healthier days her husband had presumably given her a certain standard of living should not be treated as an outcaste or a pariah merely because of her changed circumstances. The presumption that a financially successful person's growth is necessarily only in one direction and the person cannot fall in dire straits may be a view 8 W.T.A .Nos.-36 to 39/Del/2013 subscribed by a happy optimist but it behoves us to be realists and consider the claims of the crying public. The voice of a litigant should not be treated as a voice in silence, in vacuum. The assessee/legal heir deserves the dignity of a fair hearing. Her pleadings and cry for justice should not be treated as words spoken in vacuum unheard by anyone. It is our earnest belief that course correction in tax administration requiring inculcating of due sensitivity in the exercise of quasi judicial powers is required to be addressed by the Appropriate Authority at the earliest possible time.
14. It is also worthwhile to refer to section 19(3) of the Wealth Tax on which specific reliance has been placed qua the ground raised by the assessee. The same reads as under:-
Section 19(3) ..............................
"The provisions of sections 14, 15 and 17 shall apply to an executor, administrator or other legal representative as they apply to any person referred to in those sections."
15. A perusal of the same shows that section 19(3) of the Wealth Tax Act mandates that section 14, 15 & 17 shall apply to an executor, administrator or other legal representative as they apply to any person referred to in those conclusions. It is seen that section 18 does not have a specific mention in section 19(3) accordingly even otherwise in the face of the statutory position legal representative can not be made liable for penalty u/s 18(1)(c).
16. Accordingly in view of the above detailed reasoning, the appeal of the assessee is allowed and the impugned order is set aside and the penalty order is quashed.
17. Since the facts and arguments remain identical in the remaining three appeals applying the reasoning and conclusion in WTA No.-36/Del/2013 the remaining three appeals of the assessee namely WTA No.-37 to 39/Del/2013 are also allowed.
18. In the result the appeals of the assessee are allowed.
The said order was pronounced in the Open Court on 30th April, 2015.
Sd/- Sd/- (INTURI RAMA RAO) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER 9 W.T.A .Nos.-36 to 39/Del/2013 Dated: the 30th April, 2015 *Amit Kumar* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 10