2015 (12) TMI 1321 - HC - Wealth-tax

High Court upholds Tribunal decisions to delete penalties under Wealth Tax Act for assessment years 1984-85 to 1988-89

The High Court upheld the Tribunal's decisions to delete penalties under Section 18(1)(c) of the Wealth Tax Act for assessment years 1984-85 to 1986-87 ... Valuation - Inclusion of value of assets - Levy of penalty - Held that:- Difference in the valuation of the property as declared by the assessee and as assessed by the Assessing Officer did not tantamount to furnishing of inaccurate particulars of the asset as it is well settled that valuation is a matter of estimation and estimation by registered valuer of the assessee and estimation by the District Valuation Officer being at variance did not attract the levy of penalty under section 18(1)(c) of the Act. Thus, the penalty was deleted in respect of the assessment years 1984- 85 and 1986-87. With regard to the assessment years 1987-88 and 1988-89, it was recorded that since the assessee had incurred losses in the assessment year 1987-88, its case fell within the purview of reasonable cause as it was under bonafide belief that no wealth tax was payable under the said years when it had incurred losses. Thus, the penalty in respect of these assessment years was also deleted. - no substantial question of law arises - Decided against Revenue. Issues:1. Penalty imposition under Section 18(1)(c) of the Wealth Tax Act, 1957 for assessment years 1984-85 to 1986-87.2. Penalty imposition under Section 18(1)(c) of the Wealth Tax Act, 1957 for assessment years 1987-88 and 1988-89.Issue 1: Penalty imposition under Section 18(1)(c) of the Wealth Tax Act, 1957 for assessment years 1984-85 to 1986-87.The appellant-revenue filed WTA Nos. 2 to 6 of 2014 against the order of the Income Tax Appellate Tribunal regarding penalty imposition under Section 18(1)(c) of the Wealth Tax Act, 1957. The dispute centered around the variance in the valuation of a plot of land owned by the assessee. The Tribunal found that the difference in valuation did not amount to furnishing inaccurate particulars of the asset. It was established that valuation is an estimation process, and the variance between the valuations of the registered valuer and the District Valuation Officer did not warrant penalty imposition. Consequently, the penalty for the assessment years 1984-85 to 1986-87 was deleted. The Tribunal's decision was upheld as it was based on a plausible view supported by the material on record, with no substantial question of law arising.Issue 2: Penalty imposition under Section 18(1)(c) of the Wealth Tax Act, 1957 for assessment years 1987-88 and 1988-89.For the assessment years 1987-88 and 1988-89, the assessee did not include the value of the asset in its wealth tax return due to incurring losses and believing it was covered under Schedule I Part II of the Wealth Tax rules, exempting wealth tax in cases of losses. The Tribunal found that the assessee's omission was due to a reasonable cause, as it genuinely believed no wealth tax was payable during the loss years. Therefore, the penalty for these assessment years was also deleted. The Tribunal's decision was supported by the fact that the assessee acted in good faith under the belief of the law's provisions. The Tribunal's findings were upheld as no illegality or perversity was identified, leading to the dismissal of the appeals.In conclusion, the High Court dismissed the appeals, upholding the Tribunal's decisions to delete penalties under Section 18(1)(c) of the Wealth Tax Act, 1957 for the respective assessment years based on valid reasoning and legal interpretations.