Skip to content


Commissioner of Wealth-tax Vs. Tara Chand Khanna - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberWealth-tax Case Nos. 26, 27 and 28 of 1977
Judge
Reported in[1984]148ITR647(P& H)
ActsWealth Tax Act, 1957 - Sections 18(1) and 27(2)
AppellantCommissioner of Wealth-tax
RespondentTara Chand Khanna
Appellant Advocate Ashok Bhan and; A.K. Mittal, Advs.
Respondent AdvocateNone
Excerpt:
.....under this act is satisfied that any person- (c) has concealed the particulars of any assets or furnished inaccurate particulars of any assets or debts ;he or it may, by order in writing, direct that such person shall pay by way of penalty--(iii) in the cases referred to in clause (c), in addition to any wealth-tax payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount representing the value of any assets in respect of which the particulars have been concealed or any assets or debts in respect of which inaccurate particulars have been furnished. ..then, such person shall, unless he proves that the failure to return the correct value of the asset or, as the case may be, the correct value of the debt or the correct net wealth did not arise..........and in the circumstances of the case, the tribunal was right in law in ignoring the fact that the value of assets/ debts as returned by the assessee was less than 75% of the value of such assets/debts as assessed by the wealth-tax officer, thus attracting the explanation to section 18(1)(c) of the wealth-tax act ? 4. whether, on the facts and in the circumstances of the case, the tribunal is right in law in deleting the penalty of rs. 1,63,870 imposed upon the assessee by the inspecting assistant commissioner, under section 18(1)(c) of the wealth-tax act ?' 8. the tribunal partly accepted the application and referred the following three questions which in substance are questions nos. 1, 3 and 4 but did not refer question no. 2 as claimed by the petitioner :'1. whether, on the facts and.....
Judgment:

R.N. Mittal, J.

1. This judgment will dispose of Wealth-tax Cases Nos. 26, 27 and 28 of 1977, which have been filed under Section 27(2) of the W.T. Act, 1957, and which contain common questions of law. Wealth-tax Case No. 26 relates to the assessment year 1968-69, No. 27 to 1969-70 and No. 28 to 1970-71.

2. Briefly, the facts are that the respondent filed wealth-tax return relating to the assessment year 1968-69, on January 27, 1969, showing the valueof the land situate at Jail Road at Rs. 17,050. He did not include in the return the house situated at Kennedy Avenue. A revised return was filed on July 5, 1969, enhancing the value of the land to Rs. 27,050 from Rs. 17,050. In the return he showed that he also owned a house in Kennedy Avenue but he claimed an exemption on the ground that it was a residential house. The WTO assessed the house at Rs. 1,15,000.

3. The assessee submitted his return relating to the assessment year 1969-70 on August 20, 1969, declaring the value of the land at Rs. 17,050 and that of the house at Rs. 1,03,997. He claimed exemption to the extent of Rs. 1,00,000 in respect of the house and included the balance of Rs. 3,997 in the total wealth. The WTO again estimated the value of the house at Rs. 1,15,000.

4. In the assessment year 1970-71, the assessee filed a return on November 9, 1970, declaring the value of the land at Rs. 17,050 and that of the house at Rs. 15,000; probably he valued the house after deducting the statutory deduction of Rs. 1,00,000 which is available for a residential house. On June 13, 1972, he filed a revised return declaring the value of the house at Rs. 2,07,934. The estimate was arrived at by him considering the value of the plot at the rate of Rs. 50 per sq. yard. The WTO enhanced the estimate of the plot from Rs. 50 to Rs. 80 per sq. yard and the value of the house to Rs. 2,51,224. The value of the land situated at Jail Road was increased to Rs. 27,050.

5. The WTO, in view of the fact that the assessee had filed a revised return relating to the assessment year 1970-71, reopened the assessment relating to the assessment years 1968-69 and 1969-70, and issued notices under Section 17 of the Act to the assessee. The latter filed the return in the course of the reassessment proceedings declaring the value of the house at Rs. 2,07,934 and that of the land at Rs. 27,050. While estimating the value of the house at Rs. 2,07,934 for each of the assessment years, he estimated the value of the plot of land at the rate of Rs. 50 per sq. yard. The WTO enhanced the value of the plot from Rs. 50 to Rs. 70 per sq. yard for the aforesaid assessment years and estimated the value of the house at Rs. 2,36,794.

6. The assessment proceedings were followed by penalty proceedings. The assessee pleaded before the IAC that full particulars of the assets were disclosed and, therefore, he could not be charged for concealment. He also, inter alia, pleaded that a lower value of the house was shown for the assessment years 1968-69 and 1969-70, because that remained under construction in those years. The pleas raised by the assessee were not accepted by him and penalties were imposed on the assessee for all the three assessment years.

7. The assessee went up before the Income-tax Appellate Tribunal in appeal which accepted the same and deleted the penalties. The Commissioner of Wealth-tax moved an application under Section 27(1) of the Act requesting the Tribunal to draw up a statement of case and refer the following four questions for the opinion of this court:

'1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that if the assessee has shown an asset in his wealth-tax return, he cannot be penalised under Section 18(1)(c) of the Wealth-tax Act for concealment of its true value or for declaring low value for the same ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that though the assessee himself showed the value of the house in Kennedy Avenue at Rs. 2,07,934 in the return filed under Section 17 of the Wealth-tax Act, there was no concealment of wealth in the return originally filed even though in the original return, the value of this house was shown below Rs. 1,00,000 ?

3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in ignoring the fact that the value of assets/ debts as returned by the assessee was less than 75% of the value of such assets/debts as assessed by the Wealth-tax Officer, thus attracting the Explanation to Section 18(1)(c) of the Wealth-tax Act ?

4. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in deleting the penalty of Rs. 1,63,870 imposed upon the assessee by the Inspecting Assistant Commissioner, under Section 18(1)(c) of the Wealth-tax Act ?'

8. The Tribunal partly accepted the application and referred the following three questions which in substance are questions Nos. 1, 3 and 4 but did not refer question No. 2 as claimed by the petitioner :

'1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that charge under Section 18(1)(c) of the Wealth-tax Act, 1957, can be created for concealment of the particulars of any asset and not for disclosing the full value of assets or for declaring lower value of assets in the return ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the Explanation to Section 18(1)(c) of the Wealth-tax Act, 1957, could not be invoked by the Inspecting Assistant Commissioner in the manner he did ?

3. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in deleting the penalties of Rs. 1,63,870, Rs. 1,67,937 and Rs. 1,48,000 for the assessment years 1968-69, 1969-70 and 1970-71, respectively ?'

9. The Commissioner has filed these petitions directing the Tribunal to refer question No. 2 (also) to this court. The actual date notices in all the cases were sent to the respondent but he has not appeared.

10. The Tribunal, while declining to refer question No. 2, observed that the assessee could not be charged for concealment as the particulars of the house had been given by him in the wealth-tax return and that was the requirement of the law. Mr. Ashok Bhan contended that the assessee is not only obliged to disclose the particulars of the property but also its value. In support of his contention he has placed reliance on Section 18 as it existed then.

11. We have given due consideration to the argument and find force in it. The relevant portion of Section 18 reads as follows:

'18. (1) If the Wealth-tax Officer, Appellate Assistant Commissioner, Commissioner or Appellate Tribunal in the course of any proceedings under this Act is satisfied that any person-

(c) has concealed the particulars of any assets or furnished inaccurate particulars of any assets or debts ;

he or it may, by order in writing, direct that such person shall pay by way of penalty--....

(iii) in the cases referred to in Clause (c), in addition to any wealth-tax payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount representing the value of any assets in respect of which the particulars have been concealed or any assets or debts in respect of which inaccurate particulars have been furnished. Explanation 1.--Where,--

(i) the value of any asset returned by any person is less than seventy-five per cent. of the value of such asset as determined in an assessment under Section 16 or Section 17 (the value so assessed being referred to hereafter in this Explanation as the correct value of the asset), or......

then, such person shall, unless he proves that the failure to return the correct value of the asset or, as the case may be, the correct value of the debt or the correct net wealth did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of assets or furnished inaccurate particulars of assets or debts for the purposes of Clause (c) of this Sub-section.'

12. From a reading of the part of the section reproduced above and the Explanation, it is evident that it is the duty of the assessee not only to disclose the particulars of the assets but also the estimated value thereof. Consequently, in our opinion, question No. 2 is a question of law and arises between the parties.

13. For the reasons given above, we accept the petitions and direct the Tribunal to refer question No. 2 for the opinion of this court. A supplementary statement be prepared as part of Wealth-tax References Nos. 7 to 9 of 1977 and sent to this court.

M. M. Punchhi, J.

14. I agree.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //