LT. GENERAL J.S. AURORA v. WEALTH-TAX OFFICER
[Citation -1987-LL-0130-1]

Citation 1987-LL-0130-1
Appellant Name LT. GENERAL J.S. AURORA
Respondent Name WEALTH-TAX OFFICER
Court ITAT
Relevant Act Wealth-tax
Date of Order 30/01/1987
Assessment Year 1973-74
Judgment View Judgment
Keyword Tags imposition of penalty • bona fide belief • succeeding year • valuation date • provident fund • taxable limit • deemed wealth • bank balance • net wealth
Bot Summary: The assessee had explained before the WTO that he was under a bona fide belief that his wealth was below the taxable limit in this year. Counsel for the assessee and the departmental representative. This was inclusive of an amount of Rs. 50,000 which had been gifted by the assessee to his wife but was deemed to be includible in the assessee s wealth under s. 4(1)(a) of the WT Act. Apart from this the assessee was holding Rs. 51,894 as balance in the banks and this amount was held on the valuation date mainly due to the receipt of provident fund which was due to the assessee. The net wealth of the assessee, even after including the gifted amount to the wife would have been just marginally taxable and an Officer of the Army may have a bona fide belief that the amount given away to the wife was no more his wealth. Apart from this the nature of the assets held by him and his wife could have provided him the exemptions and if the correct legal view would have been taken, the wealth of the assessee might have been below the taxable limit or may have been just marginally taxable. Considering all the circumstances of the case, we do not consider it a fit case for imposition of any penalty under the WT Act as the assessee was having bona fide belief.


This appeal by assessee is directed against order of AAC dismissing assessee s appeal regarding imposition of penalty under s. 18(1)(a) of WT Act for asst. yr. 1973-74. WTO had imposed penalty of Rs. 14,121 as he found that return was filed on 14th March, 1979 though it was due to be filed on July, 1973. WTO however, noted that there was no request for extension for filing return. assessee had explained before WTO that he was under bona fide belief that his wealth was below taxable limit in this year. WTO did not accept this plea as he found that in immediately succeeding year i.e. 1974-75 return had been filed in Aug., 1974. He, therefore, held that assessee should have filed return for this year as well. He held that there may be reasonable cause in Aug., 1974 but after that there was no reasonable cause of this period. He imposed penalty. AAC has upheld penalty though he gave some directions regarding quantum of penalty by passing order under s. 35. We have heard ld. counsel for assessee and departmental representative. It was submitted before us that assessee was Lt. Gen. in Indian Army and he retired on 11th March, 1973. Thus on relevant valuation date he was still in Government service and at time returns were being filed by Controller of Defence Accounts at Poona. Even after his retirement he was under impression that for period prior to retirement Controller of Defence Accounts would be filing relevant return. It was also submitted that net wealth determined by WTO was Rs. 1,52,286. This was inclusive of amount of Rs. 50,000 which had been gifted by assessee to his wife but was deemed to be includible in assessee s wealth under s. 4(1)(a) of WT Act. Apart from this assessee was holding Rs. 51,894 as balance in banks and this amount was held on valuation date mainly due to receipt of provident fund which was due to assessee. From Bank account this amount is shown at Rs. 76,038. It was submitted that under law as it stands this amount would also be exempt from wealth-tax in view of provisions of s. 5(2)(xxvi). It was contended that deposit in form of bank balance and prior to that in form of provident fund amount was exempt from wealth-tax. It was, therefore, submitted that on correct consideration this amount would have been exempted and assessee s wealth would have been below taxable limit but for inclusion of deemed wealth which was gift to wife. It was, therefore, submitted that belief of assessee that his wealth was below taxable limit was not only bona fide but could have been so held if correct assessment was made. Even amount gifted to wife was held on valuation date in form of fixed deposit in bank and it was exempt asset. It was therefore, contended that this was not case where assessee could be said to be avoiding to file return or impression that his wealth was below taxable limit was without any basis. departmental representative has relied on orders of lower authorities and has submitted that even after excluding deemed wealth, net wealth would be above taxable limit though marginally. Having considered facts we are of view that this was not at all fit case for imposition of penalty under s. 18(1)(a) of Act. net wealth of assessee, even after including gifted amount to wife would have been just marginally taxable and Officer of Army may have bona fide belief that amount given away to wife was no more his wealth. Apart from this nature of assets held by him and his wife could have provided him exemptions and if correct legal view would have been taken, wealth of assessee might have been below taxable limit or may have been just marginally taxable. fact that assessee filed return for year 1974- 75 in next year itself shows his bona fides and that cannot be used against assessee while imposing penalty for this year. Considering all circumstances of case, we do not consider it fit case for imposition of any penalty under WT Act as assessee was having bona fide belief. penalty order is, therefore, cancelled. In result, appeal is allowed. *** LT. GENERAL J.S. AURORA v. WEALTH-TAX OFFICER
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