The Income Tax Appellate Tribunal (ITAT), Rajkot Bench held that the penalty under Wealth Tax Act can not be levied without any specific findings.
The assessee, Yannaben Anilbhai Jethani is an individual who filed a return of income for the AY 2011-12 showing total income at Rs.1,72,290/-. In the assessment completed under section 143(3), the returned income was accepted and assessed accordingly. Thereafter, the AO noticed that the assessee was liable to file a wealth tax return, but she did not do so. According to the AO, the aggregate total wealth amounted to Rs.1,07,78,088/- and after deduction of exemption wealth of Rs.30.00 lakhs, the net wealth worked out at Rs.77,78,088/-.
Since the assessee has not filed the return, her case was reopened under section 17 and issued notice under section 17(1) of the Act on 27.10.2014. In response to that notice, the assessee filed wealth-tax return declaring net wealth of Rs.86,78,088/- on 11.02.2015. The assessment under section 16(3) r.w.s. 17 of the WT Act was finalized on 16.11.2015 by accepting net taxable wealth as returned by the assessee. Simultaneously, the AO also initiated penalty proceedings under section 18(1)(c)for not filing the wealth-tax return within the statutory time allowed.
The AO issued requisite notice and sought a reply against the proposed levy of penalty. Since no satisfactory reply was given by the assessee, the AO observed that the assessee has deliberately failed to disclose full and true value of wealth, and that omission on the part of the assessee to hide or conceal the wealth was intended to avoid payment tax. The AO accordingly recorded a satisfaction that the case of the assessee was fit for imposition of penalty as the assessee has made the concealment or furnished inaccurate particulars of her wealth.
As a result, the AO imposed a penalty of Rs.56,780/-. This issue was agitated before the CWT(A), wherein it was observed that this being clerical lacuna in the notice of penalty, the same could not help the assessee to infer that the AO was not clear as to under which limb the penalty was initiated/levied. He rejected the contentions of the assessee by treating the same as technical in nature and confirmed the order of the WTO.
Advocate G.R. Sanghvi on behalf of Assessee urged that the order passed by the Revenue authorities is bad in law, because penalty notice was issued under section 18(1)(2) of the WT Act for “filing inaccurate particulars and concealing the particulars of wealth”; while penalty was imposed under different reason i.e. “the assessee has made the concealment or furnished inaccurate particulars of her wealth”.
The coram headed by the Vice President, Rajpal Yadav and Accountant Member Amarjit Singh noted that the AO was not specific in his finding for which he has visited the assessee with penalty.
“Where the satisfaction of the AO while initiating penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961 is with regard to alleged concealment of income by the assessee, whereas the imposition of the penalty is for ‘concealment/furnishing inaccurate particulars of income’, the levy of penalty is not sustainable. It is pertinent here to note that section 271(1)(c) of the Income Tax Act, 1961 and section 18(1)(c) of the Wealth Tax Act, 1957 are pari materia to each other in terms of purpose and object, and therefore, proposition of law laid down by various higher judicial forums would be applicable on the same analogous in the cases of proceedings under section 18(1)(c) of the Act as well,” the ITAT while quashing the penalty, said.
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