Delhi High Court

Dy. Cwt vs I.C. Khurana on 29 April, 2002

Equivalent citations: (2002) 75 TTJ Del 840

ORDER

Sikander Khan, A.M.

In this appeal the revenue has contested the deletion by the learned Commissioner of Wealth Tax (Appeals) of the penalty imposed by the assessing officer under section 18(1)(c) of the Wealth Tax Act, 1957, for the assessment year 1988-89.

2. In the relevant assessment, the assessing officer made addition of Rs. 26,09,086 for the value of farm house which was claimed by the assessed as exempt under section 2(e)(iii) of the Wealth Tax Act. Penalty proceeding under section 18(1)(c) of the Act was initiated on the basis of this addition. No appeal was filed against the said addition of Rs. 26,09,086. However, the assessed intended to file revision petition before the learned Commissioner of Wealth Tax (Appeals) seeking deletion of the said addition.

3. In response to the show cause under section 18(1)(c), the assessing officer (sic-assessed) submitted that penalty under section 18(1)(c) was not exigible in the case on the following grounds :

"(a) That the exemption under section 2(e) has been allowed in the earlier years also.

(b) The assessed has not surrendered the sum of Rs. 26,09,086 as has been claimed by the assessing officer.

(c) There should be no distinction between the agricultural land and the farm house built on the same. If exemption is admissible under section 2(e) on the agricultural land and same should also be allowed on the farm house.

(d) Admission of an exemption of disallowance of a claim is a matter of difference of opinion and does not tantamount to concealment of wealth.

(e) The department has not brought any item on record which has not been declared by the assessed in his wealth-tax return.

4. The assessing officer considered the assessed's reply and rejected the same on the following grounds :

"(a) The mere fact that the exemption was allowed in the earlier year does not make it correct. The original claim made by the assessed himself was wrong and was a deliberate attempt to file inaccurate particulars of wealth. The facts that the department overlooked this point does not absoive the assessed from making a false claim.

(b) The assessed has claimed that he has not surrendered this amount. He has sought the production of the records to verify this statement. Even though the assessed's claim may be correct, there is no denying the fact that the assessed has accepted the addition since he did not file an appeal against the assessment order.

(c) The assessed has stated that there can be no distinction between the agricultural land and the farm house. This again is untenable statement since the legislature has clearly stated under what circumstances a farm house be considered for the purpose of exemption under section 2(e).

(d) The fact that any exemption may have been allowed or disallowed being a matter of difference of opinion and not concealment of wealth is also not acceptable. The assessed was very aware of the fact that the farm house is not being used for the purpose of storage of implements. Since this exemption is not admissible but has been claimed by him under false pretences, it tantamounts to filing of inaccurate particulars of wealth.

(e) A spot inspection was conducted by the Inspector and in his report he had clearly stated that the farm house consists of bed rooms, bathrooms, dining hall, drawing hall, etc. The same is never used for the purpose of storage of livestocks implements or tools.

The assessing officer has further held that the report of the inspector was substantiated by the statement of the supervisor recorded in the presence of the kitchen in charge. On being confronted with the statement the assessed had no reply to the allegation that the farm house was not being used for the purpose made by the assessed."

5. Aggrieved the assessed preferred first appeal before the learned Commissioner of Wealth Tax (Appeals). It was submitted before him that the assessed had furnished all the relevant particulars but had claimed exemption under section 2(e)(ii) under bona fide belief that the exemption was admissible. While claiming the exemption the assessed had also relied on the fact that the exemption had been allowed in earlier years. He added that the assessing officer had made the addition on the basis of the particulars furnished by the assessed holding the view that the exemption under section 2(e)(ii) was not admissible. He added that the assessing officer had not brought any material on record which had not been declared by the assessed in the wealth-tax return. Thus, it was merely the difference of opinion with regard to the admissibility of the exemption under section 2(e)(ii) and it was not a case of furnishing of inaccurate particulars of wealth. It was, therefore, contended that penalty under section 18(1)(c) of the Act was not exigible in the case. Reliance was placed on the Delhi High Court decision in the case of CIT v. Prithiviraj & Co. (1993) 199 ITR 424 (Del).

6. The learned Commissioner of Wealth Tax (Appeals) was satisfied and convinced with the submissions and the contentions made before him. He, therefore, cancelled the penalty. He made the following observations in this regard :

"I have considered the facts of the case and find that value of the relevant property was disclosed by the appellant from year to year and the exemption was claimed though no appeal has been filed by the appellant against the assessment order for the assessment year 1988-89 but the fact remains that the value of the property in question was disclosed by the appellant for which imposition of penalty under section 18(1)(c) is not justified. This view is also supported by the judgment of the Delhi High Court in the case of CIT v. Prithiviraj & Co. (1993) 199 ITR 424 (Del). In effect the appeal is allowed and penalty order is cancelled."

7. Aggrieved the revenue has come up in second appeal before this Tribunal.

8. The learned Departmental Representative relied on the assessing officer's order and submitted that on the facts and in the circumstances of the case, the penalty levied under section 18(1)(c) was proper and justified and the same ought to have been confirmed by the learned Commissioner of Wealth Tax (Appeals).

9. The learned authorised representative of the assessed, on other hand, relied on the order of the learned Commissioner of Wealth Tax (Appeals). He submitted that the assessed had not concealed or furnished inaccurate particulars of wealth. He stated that the assessed had disclosed all the particulars of the property in question but the assessing officer made the addition rejecting the claim of exemption under section 2(e)(ii) of the Act. He added that such exemption in respect of the same property had been allowed in the earlier years. It was agricultural property and as such it was claimed exemption under section 2(e)(ii) of the Act. He further added that income from the agricultural property had been assessed as agricultural income in the income-tax assessment. The assessed had sufficient reasons and bona fide belief that the exemption under section 2(e)(ii) was admissible but the assessing officer rejected the claim and added the value of the property to the total wealth. He initiated penalty proceeding under section 18(1)(c) on account of this addition. He contended that this addition could not be considered as proper and valid basis for levy of penalty under section 18(1)(c) because the assessed had not concealed or furnished inaccurate particulars of wealth. He submitted that the learned Commissioner of Wealth Tax (Appeals) had correctly appreciated the facts and circumstances of the case and the decision of the Delhi High Court in the case of CIT v. Prithiviraj & Co. (supra) and on that basis cancelled the penalty.

10. We have considered the rival submissions and the materials on the file. We are of the view that on the facts and in the circumstances of the case and for the reasons given in the impugned appellate order the learned Commissioner of Wealth Tax (Appeals) was justified in cancelling the penalty under section 18(1)(c) of the Act. It is an admitted fact that the assessed had furnished the particulars of the property in the wealth-tax return. He, however, claimed exemption under section 2(e)(ii) of the Act on the ground that it was agricultural property. Exemption under section 2(e) was allowed in the earlier years. The assessed had this also in mind while claiming the exemption under section 2(e)(ii) for the assessment year covered under the present appeal. Thus, the addition was based on difference of opinion about the claim of exemption under section 2(e)(ii) of the Act. It was not a case of detection of concealment or detection of furnishing of wrong particulars of wealth. We are of the view that penalty under section 18(1)(c) was not exigible in the case. In this view of the matter, we uphold the order of the learned Commissioner of Wealth Tax (Appeals) and dismiss the revenue's appeal.