1. These five appeals by the assessee are directed against the orders of the Commissioner (Appeals), Bhopal, dismissing the assessee's appeals against the imposition of penalties under Section 18(1)(c) of the Wealth-tax Act, 1957 ('the Act').
2. The assessee is the karta of the HUF known as Girwarlal Pyarelal Morena. The penalties have been imposed in respect of the assessment years 1967-68 to 1971-72. The assessee-family has been assessed to wealth-tax from the inception of that Act. Most of the facts are common in all the five years and in fact the learned Commissioner (Appeals) has passed a speaking order only in the assessment year 1967-68 and in other years, he has followed that order. The position of the assessed wealth and the returned wealth for the five years as given in the order of the Commissioner (Appeals) is as under :-----------------------------------------------------------------Assessment Returned Assessed After appeal year Rs. Rs. Rs.----------------------------------------------------------------- 1967-68 3,78,890 6,87,225 5,83,000 1968-69 3,52,115 7,09,061 6,04,811 1969-70 3,17,717 7,37,383 6,31,133 1970-71 3,38,000 7,46,534 6,40,284 1971-72 4,20,000 7,72,034 3. The facts are that for all the five years, the returns of wealth had been filed on different dates starting from January 1969 to June 1971.
On the basis of these returns, the WTO proceeded to pass orders on 31-3-1973. Before passing these orders, the WTO initiated proceedings under Section 18(1)(c). Before making of the assessment, the assessee had moved two applications-one of these applications related to the disclosure about agricultural lands and they were moved before the Commissioner, on 19-2-1972 and 25-2-1972 for non-imposition of the penalty or waiving the same. Another petition was made on 26-7-1972 making a disclosure about six houses in Morena. Against these assessment orders, there were appeals before the Commissioner (Appeals). While deciding the other grounds, he set aside the assessment orders in respect of the inclusion and valuation of land measuring 6 bighas or 10,325 square yards. According to the assessee, these lands were agricultural in nature but the WTO had not accepted the same. After discussing the factual position, the AAC set aside the assessment order and directed him to consider the real nature of this land. The WTO was to determine whether any part of the land was agricultural or not and whether agricultural operations were carried on such land. This order of the AAC was passed on 31-3-1974. The assessee had filed an appeal before the Tribunal on the points decided against him and the Tribunal disposed of the assessee's appeals on 26-10-1976 and allowed the appeals in part. On question of agricultural land, where the matter had been set aside by the AAC, the Tribunal had confirmed that part of the order.
4. After this order of the Tribunal, the WTO proceeded to complete the assessments for each assessment year on 5-3-1979 and held that land to the extent of 1 bigha and 13 biswas was not agricultural land whereas the balance of 4 bighas and 7 biswas was agricultural land. In respect of the non-agricultural land, the WTO determined the value at Rs. 20,000 and included it in the wealth of the assessee. Against these assessment orders, there were further appeals before the AAC, who by his order dated 29-9-1982 confirmed the orders of the WTO. After this, the WTO has proceeded to impose penalties in respect of all the years and the orders of penalty have been passed on 21-5-1983.
5. The WTO proceeded to hold that in respect of certain assets there was concealment on the part of the assessee. After pointing out to the various assets in respect of which the WTO made a charge of concealment, he made specific reference to certain items. They were as under : 1. Six house properties whose annual value was Rs. 700 for the whole year-the value of this asset was taxed by the Tribunal at Rs. 40,000.
2. Non-agricultural land chargeable to tax-1 bigha and 13 biswas valued at Rs. 20,000.
3. The assessee-HUF had claimed its net business asset at nil after adjusting the debit balance standing in the names of the members of the family and also adjusting the loss in Deepak Iron Foundry. The WTO had determined the value of the capital at Rs. 1,15,975. The claim of Rs. 42,210 in Deepak Iron Foundry was also rejected.
The other item which is involved is the question of value of debts which according to the assessee had become bad several years prior to the valuation date and had been claimed as bad debt in the earlier years. According to the assessee, there was no value of these assets on the valuation dates.
6. The WTO, however, proceeded to hold that the assessee had concealed the particulars of his wealth and had furnished inaccurate particulars of the same. He proceeded to impose the minimum penalty in each year, which was as under : 7. When the matter came up before the Commissioner (Appeals), it was contended before the Commissioner (Appeals) that regarding the large properties, the assessee had got them valued by the valuer but in respect of six small properties such valuation remained to be done. As the return was filed on the basis of the valuer's report, there was an omission regarding the value of these six properties. It was also contended that before any detection could be made, the assessee had disclosed the value of this property and had moved the Commissioner in the matter. Regarding the agricultural land, it was claimed that after the matter was set aside, only a small portion of the land was held to be non-agricultural on the ground that it was a fallow land. It was held to be non-agricultural on the ground that it had not been used for the agricultural purposes. Regarding the business asset, it was contended that the loss in Deepak Iron Foundry was as per the assessee's accounts and if the loss was not accepted that could not mean that the wealth of the assesses increased to that extent. In respect of the debit balance, in the accounts of the members of the family, it was urged that they were withdrawals for household expenses.
According to the assessee, there was no concealment on the part of the assessee as the facts were before the WTO. It was also contended that in respect of the house properties and agricultural land, the assessee had come forward to make disclosure before the Commissioner only with a view to avoid penalty.
8. The Commissioner, however, held that the assessee had omitted to show certain assets and as they were likely to be detected, he came forward to disclose them. He held that the disclosure could not be considered to be prior to any detection. The penalties imposed were, therefore, confirmed.
9. The learned counsel for the assessee submitted before us that all the particulars of wealth were being submitted from time to time in earlier years as well. In no other year, there was any question of penalty. It was further contended that as regards the house properties they were duly disclosed in all the earlier years and the value was adopted by taking it 20 times of the annual rental. It was submitted that it was a case of omission and not concealment on the part of the assessee. He submitted that in the first year of 1967-68, the confusion arose as the assessee got the properties valued by the valuer and in that process, six house properties were not valued by the valuer. As soon as this fact was detected, it was brought to the notice of the revenue authorities and the application was moved before the Commissioner. The learned counsel submitted that the assessee should have only revised the return and there was no need for making this petition. He drew our attention to the entries in the order sheet and submitted that there were no enquiries either regarding the house properties or agricultural land. He, therefore, submitted that the behaviour of the assessee was against the charge of concealment as he disclosed the value of these properties, as soon as he realised that there had been an omission. It was also contended by him that the assessee would not conceal properties worth Rs. 14,000, when he was disclosing substantial wealth and the wealth-tax was quite nominal. It was also pointed out that the WTO has not held that there was a prior detection before the assessee moved the Commissioner in respect of this asset.
10. Regarding the agricultural land, it was submitted that it was not a case of concealment but a case of making a claim that the whole land was agricultural in nature. He pointed out that firstly, the WTO rejecting the claim of the assessee in full and after the matter was set aside, he went into the facts and accepted the claim of the assessee to substantial extent and held that only 1 bigha and 13 biswas was not qualified for being treated as agricultural land. In respect of this also, it was submitted that it was a question of difference of opinion and the fact that the major portion of the assessee's claim was accepted is a proof of the bona fides of the assessee. He also submitted that the assessee had moved a disclosure petition before the Commissioner prior to any detection and in fact all the facts were before the WTO. There was nothing to show that the claim of the assessee that the whole land was agricultural in nature was the result of any intention to avoid wealth-tax.
11. Coming to the capital in, business, it was explained by the learned counsel that there were two branches in the family and each branch had certain debit balance which has been coming over from the earlier year.
According to the assessee, these debits were for meeting the household expenses of the members and as there were certain disputes between the members of the family each branch was trying to withdraw some money for its use. It was also pointed out that in the earlier years in the balance sheet of the assessee-HUF, they were debit balances in the names of the members of the family and the assessee had claimed in the wealth-tax assessment that these balances should be deducted in computing the wealth. Reference was made to the assessment orders of the earlier years. It was pointed out that this claim of the assessee has not been allowed as the amounts had continued to be in the books.
In this year, the assessee adjusted the capital account with the debit balances and this went to reduce the capital of the family. He submitted that there was no question of concealment when the actual position was before the WTO in the earlier years as well as in this year. He also contended that merely rejecting the claim could not result in an inference of concealment. It was pointed out by the learned counsel that for the later years, the WTO has added six per cent interest on the balance of capital and has worked out the family's capital accordingly. He submitted the whole exercise by the WTO was erroneous and unjustified.
12. The learned counsel drew our attention to certain debts which total-led to Rs. 18,226. These were very old debts which were time barred and were lying in the books for the last 15 to 20 years. There was no question of their being realised but they were being carried on in the books. It was submitted that in this year the assessee tried to adjust it as there was no value of these debts and no question of their realisation as they had been outstanding since the year 1957-58. He showed to us the assessment orders in support of this claim.
13. The learned counsel submitted that from the facts, it would be clear there was no intention to avoid any wealth-tax and if at all, it was a case of the assessee's mistakes or omissions which were not committed with the intention to defraud the revenue. He submitted that primary facts were before the WTO and wherever there were omissions it was pointed out before the department could detect it.
14. The learned counsel for the assessee then made some submissions on legal grounds and contended that the penalty orders were barred by limitation and lacked proper jurisdiction. It was submitted that the assessments made by the WTO had been set aside only on one point and, therefore, it could not be held that the latter appellate orders should be taken into consideration for working out the position of limitation.
Relying on Seetharama Lakshmi Rice & Groundnut Oil Mill Contractors Co.
v. ITO  111 ITR 212 (AP), he submitted that the proceedings should beheld to be time barred and wanting in jurisdiction.
15. The departmental representative supported the orders of the Commissioner (Appeals) and submitted that neither the house properties nor the non-agricultural land had been disclosed in the first return and the assessee's approach to the Commissioner showed that he had attempted to conceal. He also submitted that there was nothing to show that the debits in the accounts of the members of the family was for meeting household expenses. He also contended that the debits were not proved to have become bad and in respect of these items penalty was imposable. On legal aspect, he submitted that it did not arise out of the Commissioner (Appeals)'s order.
16. We have carefully considered the rival contentions. The question for consideration is whether the assessee concealed any assets or deliberately undervalued them while filing the returns. For this purpose, it would be necessary to consider the items which have been the basis of imposition of penalty. The first item relates to the house properties. In the earlier years, the assessee was disclosing the value of properties on the basis of annual letting value and after multiplying them by 20. In this year, the assessee had referred the matter to a valuer who had submitted detailed reports regarding the properties. The contention of the assessee was that by mistake or inadvertence six small properties were not valued by the valuer and, hence, it remained to be included in the wealth-tax returns. The further plea of the assessee was that the WTO had himself not detected this fact and it was the assessee who brought this to his notice by filing a petition before the Commissioner. In this petition, mistake and inadvertence was shown as the cause for omission. It was also submitted that the return of wealth had been filed voluntarily and there was no notice under Section 14(2) of the Act. It was in this petition that the details of the properties had been mentioned. Thus, according to the assessee, the particulars of the properties had been furnished prior to the completion of the assessments and there was no intention to conceal this fact as the properties were included in the past and the wealth-tax on their value would have been very nominal.
Ultimately, the Tribunal had valued these properties at Rs. 14,000 only. In view of the above position, we are inclined to accept the plea of the assessee that the omission to show these properties was by mistake and inadvertence and there was neither any fraud nor gross or wilful neglect in such omission. The WTO has not stated that he had himself detected this fact before the assessee brought this to the notice of the revenue authorities.
17. Regarding the agricultural land, it was pointed out that the assessee owned 10,325 square yards of land which the assessee considered to be agricultural land, the value of this, therefore, was not included in the returns filed. The WTO had, however, held that these properties were not agricultural properties and he, therefore, included the value of such properties in the wealth of the assessee. In appeal, the assessee had contended that these properties were shown as agricultural properties in the revenue records and though some part of the properties may have been shown as fallow land they were essentially agricultural in nature. The AAC in appeal, set aside the order on this issue and directed that the WTO should redetermine the nature of the properties after considering the agricultural operations, the payment of land revenue and other relevant factors. This order of the AAC setting aside the order on this point was upheld by the Tribunal. The WTO while making the assessment in pursuance of the order of the AAC accepted the plea of the assessee regarding agricultural land in respect of the most of the land though he did not accept it in respect of 1 bigha and 13 biswas. According to him, there was no evidence of agricultural operations on this piece of land. He, therefore, included Rs. 20,000 as the value of this land.
18. According to the assessee, there was no concealment as the fact about the assessee's owning this land was before the WTO and the assessee had not included it in his return as he was of the view that the land in question was fully agricultural land. It was also submitted that most of the land was accepted as agricultural land by the WTO. It was also pointed out that the assessee had before making of the original assessment moved the Commissioner to disclose the fact about these agricultural lands and it was submitted that this may be considered for the purpose of wealth-tax if permitted under law. It is stated before us that there was no order of the Commissioner on these petitions.
19. Having considered the facts, we are of the view that this was not a case of concealment as the assets themselves were in the knowledge of the WTO though the assessee was claiming this land to be agricultural land. It is significant that the claim of the assessee was accepted about major portion of this land and only a small portion remained to be explained. There also, the assessee accepted the ultimate finding given by the WTO only because small wealth-tax was involved. Where an assessee makes bona fide claim and is able to substantially establish it, it cannot be held that there was concealment only on the ground that a part of his claim was not acceptable in the absence of necessary of material.
20. The third item is in respect of the capital of the business. The assessee-HUF was maintaining accounts and was preparing the balance sheets. There were two branches of the HUF and there were debit balances in the name of these branches. According to the assessee, they represented the withdrawals for meeting household expenses. In the earlier years, these amounts were shown separately in the balance sheet but in this year the assessee adjusted these debits to the capital account. The HUF was having business named as Deepak Iron Foundry and there was a loss in earlier years as well as this year. Though this loss was not accepted for the income-tax purposes, it stood in the books of the assessee, instead of showing it separately the assessee adjusted it against the HUF's capital account. Apart from the above, there were certain debts which the HUF had to realise and were shown in the balance sheet for the last several years. The assessee found that these debts were outstanding for almost 20 years, and they had been claimed as bad debts in the books and reduced the capital to that extent. These adjustments in the capital accounts were not accepted by the ITO who took the same at Rs. 1,50,957 by rejecting the plea of the assessee.
21. After hearing the learned counsel for the assessee and after perusing the materials on record, we are of the view that on this question also there cannot be any charge of concealment. The balance sheets were there and all has happened in this year was the adjustment made in the capital account. No facts were concealed and they were all in the books. The revenue has not accepted the case of the assessee on the ground that the assessee had no material to establish that the withdrawals were for the household purposes and the bad debts had actually become bad and the loss in Deepak Iron Foundry has not been accepted in the income-tax assessment. According to us, this stand of the revenue could not result in the interference that there was any concealment by the assessee insofar as the wealth-tax assessments were concerned. The accounts were already in the balance sheet and the adjustments were also made in the books. After making those adjustments, the capital had been reduced to a minus figure. Having regard to this, there cannot be any charge of concealment or fraud on the part of the assessee. Regarding the bad debts also the assessee had a plausible case as these debts were outstanding for almost 20 years and there was no question of there being realised. At least, there could be no charge of concealment if the assessee values these debts as nil. In view of this, we hold that no concealment is proved or established regarding the business capital also. Thus, all the items which formed the basis for imposition of penalty under Section 18(1)(c) are duly explained and we hold that there was no concealment by the assessee in respect of these assets. The explanation given by the assessee clearly proves that there was neither any fraud or gross or wilful neglect on the part of the assessee in making the return under the Act. On merits, therefore, we hold that no penalty was leviable.
22. Coming to the legal issue, we are not inclined to accept the plea of the assessee regarding time bar or jurisdiction. The law requires that the penalty order can be passed within a specified time after the passing of the final appellate order. In the present case, we cannot say that the assessment proceedings had been finally completed till the final appellate order was available. The law does not contemplate more than one penalty to be levied under Section 18(1)(c) from time to time and, thus, when the final position of the wealth assessed is available then alone it can be ascertained as to what were the properties in respect of which there can be a case of concealment. Admittedly, penalty orders were within time if counted from the date of the final appellate order. This plea of the assessee regarding time bar and jurisdiction is, therefore, rejected. The appeals are, however, allowed on merits.