1987 (4) TMI 98 - AT - Wealth-tax

Tribunal cancels penalties for non-compliance with Wealth-tax Act, emphasizes legal requirements

The Tribunal dismissed the Department's appeals and upheld the cancellation of penalties imposed under section 18(1)(c) of the Wealth-tax Act, 1957 for ... Minor Child, Total Income Issues:Assessment of penalties under section 18(1)(c) of the Wealth-tax Act, 1957 for the assessment years 1968-69 to 1973-74 without proper jurisdiction and approval.Analysis:1. The appeals before the Appellate Tribunal ITAT BOMBAY-B involved penalties imposed under section 18(1)(c) of the Wealth-tax Act, 1957 for the assessment years 1968-69 to 1973-74. The penalties were based on the alleged concealment of assets in the original returns filed by the assessee.2. The penalties were imposed after reassessment proceedings initiated due to variations in the valuation of a flat and garage by the Departmental Valuation Officer compared to the registered valuer's valuation in the original assessment orders. The penalties were imposed under section 18(1)(c) based on discrepancies in the valuation figures.3. The assessee raised objections before the AAC, including insufficient show cause notices, lack of opportunity, and non-consideration of explanations provided. The assessee argued that all facts regarding the assets were disclosed during original assessments and that penalties were unjustified.4. The AAC found that the penalties were imposed without the necessary approval of the Inspecting Assistant Commissioner (IAC) as required by section 18(3) of the Act. As a result, the AAC canceled the penalty orders due to lack of jurisdiction.5. The Department appealed the cancellation, arguing that the non-compliance with section 18(3) was a procedural irregularity and should not invalidate the penalties. The Department also contended that the AAC should have rectified the penalties instead of canceling them.6. The Tribunal held that the penalties were imposed without jurisdiction as they exceeded twenty-five thousand rupees and required approval from the IAC, which was not obtained. The Tribunal cited the law applicable at the time of filing the original returns to determine the validity of the penalties.7. Referring to the Supreme Court decision in Brij Mohan v. CIT, the Tribunal emphasized that the law in force at the time of filing the returns governed the penalty impositions. The Tribunal concluded that the penalties were without jurisdiction due to non-compliance with section 18(3) requirements, even if approval was granted by a higher-ranking authority.8. Ultimately, the Tribunal dismissed the Department's appeals, upholding the AAC's decision to cancel the penalties due to lack of jurisdiction. The Tribunal affirmed that the penalties were rightly canceled, and no opinion was given on other grounds raised by the assessee.This comprehensive analysis outlines the issues, objections raised, legal provisions, and the Tribunal's decision regarding the imposition of penalties under the Wealth-tax Act, 1957.