Income Tax Appellate Tribunal - Bangalore
S.V. Hariprasad , Bangalore vs Department Of Income Tax on 13 August, 2009
IN THE INCOME TAX APPELLATE TRIBUNAL
"B" BENCH : BANGALORE
BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER
AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER
WTA No.23/Bang/2009
Assessment year : 2004-05
The Wealth-tax Officer (Intl. Taxn.),
Ward 1(2),
Bangalore. : APPELLANT
Vs.
Shri S.V. Hariprasad,
No.1390, 39th Main, 9th E Cross,
J.P. Nagar I Phase,
Bangalore - 560 078. : RESPONDENT
Appellant by : Smt. V.S. Sreelekha, Addl.CIT(DR)
Respondent by : Shri G. Gurulingiah, F.C.A.
ORDER
Per A. Mohan Alankamony, Accountant Member
This appeal in WTA 23/B/09 is filed by the Revenue aggrieved by the order of CIT(A)-IV, Bangalore dated 13/08/2009 for the assessment year 2004-05.
2. During the course of Income Tax assessment proceedings for the assessment year 2004-05, the assessee a non resident was found to be in possession of certain assets. The value of these assets stated by the assessee was Rs. 32,89,000/-. When the value of these assets were WTA No.23/Bang/09 Page 2 of 7 ascertained as per the State Government Notification dated 18/07/2002, it worked out to be Rs. 76,57,900. Subsequently, notice U/s. 17 of the Wealth Tax Act was issued to the assessee, in response to which, the assessee filed his return of Wealth on 03-08-2006 for the assessment year 2004-05, admitting taxable wealth at Rs. 33,67,397. The return of Wealth was selected for scrutiny and a notice U/s. 16(2) of the W.T. Act was issued coupled with a detailed proposal for assessment. In response, the assessee filed a revised computation of wealth, as per fair market value, on 18-04-2007, declaring a net taxable wealth at Rs. 99,36,130/-. In this list, there was an addition of two items viz., site at Rashtriya Vidyalaya road, Bangalore, amounting to Rs. 43,20,000/- and Urban land at Bikehalli, amounting to Rs. 39,20,400/-. The revised computation of wealth tax filed by the assessee was accepted and assessment completed. The assessee did not prefer appeal on the assessment. However, the AO initiated penalty proceedings U/s. 18(1)(c) of the W.T.Act, citing the following reasons:
a) The assessee had not filed his return of Wealth although he had taxable Wealth which amounted to deemed concealment as per section 18(1)(c).
b) The assessee had not disclosed the correct value of certain assets and the details of the building constructed at Yelahanka, in response to notice U/s. 17 of the W.T.Act.
c) The assessee had declared the cost price of the assets instead of fair market value initially and only when a proposal for assessment was intimated fair market value was declared.
d) All these actions of the assessee led to concealment of wealth and furnishing of inaccurate particulars.
3. The AO after considering the position of law and its application, the reply of the assessee and the case laws on which the assessee placed reliance came to a conclusion that it is a fit case for levy of penalty in terms WTA No.23/Bang/09 Page 3 of 7 of section 18(1)(c) of the W.T. Act and, further, it is one of the rare case due to the assessee's premeditated plan of tax evasion with a personal role and, therefore, maximum penalty of 500% of tax was levied.
4. However CIT(A) deleted the penalty levied by the AO after a detailed examination of the facts of the case and observed in para 4.3.2 of his order as under:
"4.3.2 As regards A.Y. 2004-05, it is again a matter of record that the appellant had assessable net wealth as on 31.03.2004 and as such he was liable to file his return of net wealth for the said A.Y. u/s 14 of the Act. The appellant, however, had time to furnish the return of his net wealth for the said A.Y. till 31.03.2007 i.e. within two years from the end of the A.Y. in which his net wealth was so assessable. But the appellant filed a return of his net wealth for A.Y. 2004-05 on 03.08.2006 in response to notice u/s 17(1) issued by the AO on 18.07.2006. In other words, notice u/s. 17(1) was issued to the appellant before the expiry of the period of two years from the end of the relevant A.Y. for which his net wealth was assessable. The appellant also filed his return of net wealth for A.Y. 2004-05 within the aforesaid period of two years which was even otherwise available to him for doing so. Under these circumstances, no allegation of deemed concealment of wealth etc. on account of non-filing of return can be brought against the appellant in terms of Explanation 3, since all conditions laid down therein are not satisfied in so far as facts pertaining to A.Y. 2004-05 are concerned. In view of this position, Explanation 3 will not be applicable in case of the appellant for A.Y. 2004-05. The appellant's failure to furnish return of net wealth for A.Y. 2004-05 cannot at all be deemed to concealment of wealth or furnishing of inaccurate particulars thereof under Explanation 3 to Section 18(1)(c) of the Act. In view of this position, the action of AO in levying penalty of Rs.4,21,805/- on the appellant cannot, therefore, be sustained. The said penalty levied by the AO on the appellant u/s 18(1)(c) of the Act for A.Y. 2004-05 is hereby deleted. Both Ground Nos.1 and 2 are allowed."
5. The ld. AR submitted that the assessee was a non-resident in India till July, 2002 and has been regularly filing income tax return through his representative. It was only a lapse on the part of the representative for not WTA No.23/Bang/09 Page 4 of 7 filing wealth tax returns and there was no deliberation on the part of the assessee. On service of notice u/s. 17 of the Act, the assessee promptly filed his wealth tax return on 3.8.2006, declaring a net wealth of Rs.29,99,300 for the A.Y. 2004-05 and paid the tax due thereon along with interest. However, the AO desired that the assessee should get his asset valued as per the guidelines fixed by the State Government and compute his net taxable wealth accordingly. Without disputing the issue further, the assessee as per the desire of the AO computed his net taxable wealth according to the guidelines fixed by the State Government and paid the tax. The assessee was also under the threat of levying of penalty by the AO if the values of the assets are not declared as per the direction of the AO. To buy peace with the Department and on the belief that no penalty will be levied, the assessee cooperated and paid the tax as per the directions of the AO without further contesting on the net value of his assets. The ld. AR forcefully submitted that it is not a case where suppression of wealth is established, it is only a case of difference in valuation. The assessee has filed his return of wealth within the time prescribed under section 17(1A) of the W.T.Act, i.e., before the expiry of two years from the end of the assessment year in which the net wealth was first assessable. The AO has issued notice u/s. 17(1) before the expiry of the said two years. All these facts confirm that the assessee had no malafide intention or any predetermined plan for evasion of tax. The ld.AR prayed that penalty at the maximum rate of 500% of tax levied by the AO is not justifiable and should be deleted.
WTA No.23/Bang/09Page 5 of 7
6. The ld.DR relied upon the order of the AO, urged that the A.O's order should be confirmed since the assessee has concealed the particulars of few assets and also had furnished incorrect particulars of assets. The assessee had voluntarily not submitted his wealth tax return. The fact that the assessee is in possession of wealth above taxable limit came to light only during the scrutiny income tax assessment proceedings. Further, the assessee had failed to furnish the correct details of his assets at various stages. Therefore, it is evident that the assessee had a predetermined mind to evade wealth tax, and, hence the provisions of section 18(1)(c) of the Wealth tax Act squarely applies.
7. We have heard the rival submissions and minutely perused the records produced before us. As rightly pointed out by the CIT(A), the assessee had filed his Wealth tax return promptly on receipt of notice u/s. 17(1) of the W.T.Act and within the time limit prescribed by the Act. The assessee had also co-operated during the W.T. proceedings by submitting the details of the assets possessed by him. The assessee had also estimated the value of his assets. However, when the AO insisted that the assessee should adopt fair market value as per the guidelines issued by the State Government, the assessee had promptly complied with the request, in order to buy peace with the Department and get over the penalty threat. It is pertinent to mention here that the A.O had simply adopted the guideline value of the State Government without following the valuation procedures laid down in the W.T. Act. The Act specifies various methods to value the building, jewellery and vacant Land. None of the procedures specified under the Act were followed by the A.O. The A.O. had WTA No.23/Bang/09 Page 6 of 7 also not applied his mind in determining the Net Wealth of the assessee. It is apparent that the assessee simply followed the directions of A.O without protesting in order to avoid protracted litigation and paid the tax. In these circumstances, levy of penalty is not justifiable. The CIT(A) has analysed the issue in detail and made a finding that there is no concealment of wealth or furnishing of incorrect particulars thereof under Explanation 3 to section 18(1)(c) of the Act and thereby deleted the penalty levied. Considering all these facts, we also hold that the assessee had no malafide intention to furnish any incorrect particulars. In this context, the case of CIT v. Easun Engineering Co. Ltd. 280 ITR 678 (Mad) relied on by the assessee squarely applies in the assessee's case. In the case cited supra the issue, in brief, is that "the assessee owned some land. The case of the revenue was that the assessee declared the value of the property in the wealth-tax return at less than 70% of the value and hence was deemed to have concealed particulars of his assets by furnishing incorrect particulars. The Assessing Officer levied minimum penalty. The Commissioner (Appeals) deleted the penalty and this was upheld by the Tribunal. On appeal to the High Court, it was held that the authorities below had concurrently held that the assessee had no malafide intention to furnish any incorrect particulars. Hence penalty could not be imposed."
8. Considering the facts and issues involved in this case and the case law relied on by the assessee (supra), we are inclined to confirm the view of the ld. CIT(A) and thereby delete the penalty levied by the AO. WTA No.23/Bang/09 Page 7 of 7
9. In the result, the appeal of the Revenue is dismissed.
Pronounced in the open court on this 30th day of April, 2010.
Sd/- Sd/-
( SMT. P. MADHAVI DEVI ) (A. MOHAN ALANKAMONY )
Judicial Member Accountant Member
Bangalore,
Dated, the 30th April, 2010.
Ds/-
Copy to:
1. Appellant 2. Respondent 3. CIT 4. CIT(A)
5. DR, ITAT, Bangalore. 6. Guard file (1+1)
By order
Assistant Registrar
ITAT, Bangalore.