TaxTMI 
TaxTMI 
2005 (9) TMI 56
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....mstances of the case and having upheld the orders of the Commissioner of Wealth-tax (Appeals) in quantum appeal, the Income-tax Appellate Tribunal is legally correct in holding that the assessee is not debarred from raising the plea of illegality of assessment for the limited purpose of penalty proceedings? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in allowing the appeals of the assessee against the imposition of penalties of Rs. 11,364, Rs. 17,206, Rs. 19,688 and Rs. 16,462 under section 18(1)(c) of the Wealth-tax Act for the assessment years 1980-81, 1981-82, 1982-83 and 1983-84, respectively?" The brief facts of the case are as follows: The assessee-respondent (hereinafter referred to as "the assessee") is an individual. His assets for the purposes of wealth-tax included various house properties, including 1/4th share in the property known as "Town Hall" property, Moradabad. The other three co-owners of this property are the assessee's brothers. The assessee had disclosed the value of his share in the said property at Rs. 65,541, Rs. 71,491, Rs. 71,491 and Rs. 71,905 for the respective assessment years. This was acce....
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....the assessee that the learned Commissioner of Wealth-tax (Appeals) having decided to draw the mantle or the Assessing Officer when he proposed enhancement of the value of the property was legally required to make a reference to the Valuation Officer under section 16A of the Wealth-tax Act, when admittedly the provisions of rule IBB of the Wealth-tax Rules are not applicable, the property being commercial. Even for the limited purpose of finding out the multiplier the learned Commissioner of Wealth-tax (Appeals) could not have at his own taken recourse to the provisions of rule IBB when admittedly rule 1BB is not attracted. Having not made a reference under section 16A the learned Commissioner of Wealth-tax (Appeals) committed an error of law which touches the very validity of his order. It is a settled proposition of law that the provisions of section 16A(1), clause (b), when read with rule 3B of the Wealth-tax Rules, 1957, mandatorily require the Wealth-tax Officer to make a reference to the Valuation Officer even when the difference in the value of assets returned by the assessee and the fair market value of the asset as estimated by the Wealth-tax Officer is more than the limit ....
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....or the levy of penalty. He submitted that the Tribunal has illegally entertained the aforesaid plea of the assessee and deleted the penalty on the ground that section 16A of the Act read with rule 3B of the Wealth-tax Rules was mandatory and reference ought to have been made to the Valuation Cell when the assessee had specifically requested the Commissioner of Wealth-tax (Appeals) to make such reference. He further submitted that the reference under section 16A of the Act depends upon various circumstances which require adjudication. He further submitted that section 16A of the Act is not mandatory. In support of his contention he relied upon the decision of the Delhi High Court in the case of Sharbati Devi Jhalani v. CWT reported in [1986] 159 ITR 549. He further submitted that only in a situation where the order is ab initio void a plea can be taken in a penalty proceedings but in a case where some procedural requirement has not been complied with and which is curable, such plea cannot be raised in the penalty proceedings inasmuch as for the want of non-compliance of such procedural requirement the valuation cannot be challenged and the penalty cannot be deleted on this ground. I....
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....l. His power is co-terminous with that of the Assessing Officer. He can do what the assessing authority can do. In this view of the matter, the Commissioner of Wealth-tax (Appeals) had proposed to enhance the valuation of the property exercising the powers of the assessing authority. Since the Commissioner of Wealth-tax (Appeals) had proposed to enhance the valuation of the property and was exercising the power of the assessing authority in the case of difference in the valuation shown by the assessee and the valuation proposed on the request of the assessee being made for referring the matter to the Valuation Cell, the Commissioner of Wealth-tax (Appeals) ought to have referred the matter to the Valuation Cell. In the case of Sharbati Devi Jhalani v. CWT reported in [1986] 159 ITR 549, the Delhi High Court held that section 16A of the Act is mandatory. The Division Bench of the Delhi High Court held as follows: "We are unable to agree with the submission of the learned counsel for the Revenue. Section 16A read with rule 3B clearly lays down the circumstances under which reference is to be made by the Wealth-tax Officer to the Valuation Officer. There can be no doubt that valuat....
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....arly states that the provisions of section 16A are mandatory and not directory as contended by the learned counsel for the respondents. The Wealth-tax Officer is bound by the circular issued by the Central Board of Direct Taxes and, in our opinion, the interpretation of the said provision by the Central Board of Direct Taxes is correct." In view of the foregoing discussions question No. 1 is answered in the affirmative, i.e., in favour of the assessee and against the Revenue. Now coming to question No. 2, it is true that the penalty proceedings are independent proceedings to the assessment proceeding and it is open to the assessee to adduce fresh evidence to justify its stand that there was no concealment (vide judgments Maney and Co. v. CIT reported in [1963] 47 ITR 434 (Ker), CIT v. Gurudayalram Mukhlal [1991] 190 ITR 39 (Gauhati), Raj Paul Oswal v. CWT reported in [1988] 171 ITR 489 (P&H), Sharbati Devi Jhalani v. CWT reported in [1986] 159 ITR 549 (Delhi)), but the question for consideration is whether a valuation of property estimated by the Commissioner of Wealth-tax (Appeals) as confirmed by the Tribunal and has become final in the assessment proceeding can be challeng....
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....eting the penalty. Section 18(1)(c) of the Act reads as follows: "18.(1) If the Wealth-tax officer, Appellate Assistant Commissioner, Commissioner (Appeals), 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;" A similar provision relating to levy of penalty for the concealment of income exists under the Income-tax Act, 1961 as section 271(1)(c). Section 271(1)(c) of the Act came up for consideration in the case of K.C. Builders v. Asst. CIT [2004] 265 ITR 562 (SC). The apex court observed as follows: "One of the amendments made to the abovementioned provisions is the omission of the word 'deliberately' from the expression 'deliberately furnished inaccurate particulars of such income'. It is implicit in the word 'concealed' that there has been a deliberate act on the part of the assessee. The meaning of the word 'concealment' as found in Shorter Oxford English Dictionary, third edition, Volume I, is as follows: 'In law, the intentional suppression of truth or fact known, to the injury or prejud....