THE issue before the Bench is - Whether when the returned wealth is accepted by the AO u/s 153A, there cannot be a case of concealment of income or furnishing inaccurate particulars of income. YES is the answer.
Facts of the case
The assessee is an individual. A a search and seizure operation was conducted at the residential premises of the assessee, wherein books of account, documents and other valuables were found and seized by the department. During the course of assessment u/s 153A, it was found that assessee had net wealth which is chargeable to tax for A.Y 2002-03 but no return of wealth was filed u/s 14 of the W.T.Act, 1957. Consequently notice u/s 17 was issued. Subsequently, assessment was completed u/s 17/16(3) at net wealth of Rs.16,48,99,500/- and penalty proceedings u/s 18(1)(c) was initiated by issuing statutory notices. In the meantime, Commissioner of Wealth Tax (A) disposed off the quantum appeal filed by the assessee to allow certain relief by revising net wealth of Rs.10,55,41,430/-. Finally, after considering the submissions of the assessee, the DCIT imposed maximum penalty @500% of the tax sought to be evaded.
Having heard the parties, the Tribunal held that,
++ there is no dispute to the fact that the assessee had acquired gold and diamonds during the earlier year than the impugned year and it has been stated in the statement of the assessee u/s 132(4). The assessee filed the return declaring the gold and diamond. We are of the view that AO is not justified in invoking Explanation 3 to section 18(1)(c) which explanation reads that quantum of penalty is leviable in respect of failure to furnish return of wealth in ordinary course as required u/s 14 r/w/s 17A of the WT Act and the AO is satisfied that the assessee has assessable net wealth for the relevant A.Y. It is also undisputed on one hand that the AO does not believe the existence and ownership of gold and diamonds even the same are disclosed in the seized documents and on the other hand the AO has included such assets in the net wealth showing that assessee has himself declared in the return of wealth. If the value of gold and diamonds is included, the net wealth of the assessee will be below the taxable limit and accordingly AO is not satisfied that the assessee is having taxable wealth and accordingly all the conditions as per Explanation 3 are not satisfied. It is seen that the Explanation 5 to section 18(1)(c) inserted by the Taxation Laws (Amendment) Act, 1984 w.e.f. 1.10.1984 where the word "unless" squarely apply to the case of the assessee. It is also not disputed that the statement recorded u/s 132(4) with regard to the ownership and existence of gold and diamonds recorded in the seized documents was accepted as genuine as purchase and sale of gold and diamond in the earlier years. In view of the facts and circumstances of the facts of the present case Explanation 5 (2)(b) is applicable, and the AO accordingly is not justified in invoking Explanation 3 to impose maximum penalty @500% of the tax sought to be evaded. The penalty is leviable on the date on which the concealment of wealth is committed i.e. the date of offering the return of wealth. Therefore in the present case it will not be justified to refer to the returned wealth u/s 14(1) for the initiation of penalty u/s 18(1)(c). Therefore when there is no concealment there is no question of penalty u/s 18(1)(c). The concealment of income is to be determined with regard to the return of income in response to notice u/s 153A. Therefore, in the present circumstances and facts of the case once the returned wealth is accepted by the AO u/s 153A, then there cannot be a case of concealment of income or furnishing inaccurate particulars of income. Hence, the AO is not justified in imposing penalty u/s 18(1)(c) for the impugned year and we find no infirmity in the order of CWT(A), who has rightly cancelled the penalty so levied by the AO
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