SMT. SOMAWANTI SETHI v. INSPECTING ASSISTANT OFFICER
[Citation -1987-LL-0402-6]

Citation 1987-LL-0402-6
Appellant Name SMT. SOMAWANTI SETHI
Respondent Name INSPECTING ASSISTANT OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 02/04/1987
Assessment Year 1970-71, 1972-73
Judgment View Judgment
Keyword Tags tax sought to be evaded • concealment of wealth • wealth-tax act • net wealth
Bot Summary: The assessee in these cases did not file its wealth-tax return in the first instance. On the due dated for the filing of the returns the explanation was not there and prima facie the assessee could not be penalised for concealment on the basis of law which was not prevalent during the relevant period. The said explanation could not ordinarily be said to constitute a rule of evidence inasmuch as the same sought to establish concealment of wealth on the part of the assessee even when the basic act of filing the returns had not been done. Even after the insertion of section 17A of the Wealth-tax Act the assessee could file return of wealth at any time and consequently the provisions of Explanation 3 would not apply to the assessee. In the present case the returns were filed by the assessee in pursuance of a notice to her under section 17 of the Wealth-tax Act. Lastly the time limit for completion of both these assessments under clause of section 17A(1) of the Wealth-tax Act would be 4 years commencing on and from the first day of April, 1975 if no return at all had been filed by the assessee or one year from the date of filing of the return whichever was later. The assessee could file return up to 1st April, 1979 and would be hit by the Explanation in question only if she did not do so up to that date, but the returns were actually filed on 16- 3-1979.


These are four appeals two each by assessee and department. assessee in these cases did not file its wealth-tax return in first instance. Accordingly, notices under section 17 of WT Act had to be issued to her. In response thereto she filed returns of wealth on 16-3-79 disclosing taxable figures of wealth. For not having filed returns IAC initiated penalty proceedings under section 18(1)(c) of WT Act and levied penalties of Rs. 4,04,100 and Rs. 2,75,100, respectively. On appeals CWT (Appeals) has directed IAC to modify penalty orders by working out quantum on basis of wealth- tax sought to be evaded by assessee. However, he held that penalties were otherwise leviable. assessee has come up in second appeal before Tribunal. department has filed appeals in relation to these very assessment years 1970-71 and 1972-73 challenging order of CWT (Appeals) directing IAC to recompute amount of penalty. 2. We have heard representatives of parties at length in all these appeals. It is obvious that penalties have not been levied on basis of any mis-statements on part of assessee. They have been levied under Explanation 3 to section 18(1)(c) which reads as under: "Explanation 3: Where any person who has not previously been assessed under this Act fails, without reasonable cause, to furnish within period specified in clause (a) or, as case may be, clause (b) of sub-section (1) of section 17A, return of his net wealth which he is required to furnish under section 14 in respect of any assessment year and, until expiry of either of periods applicable to him, no notice had been issued to him under sub-section (2) of section 14 or sub-section (1) of section 17 and Wealth-tax Officer or t h e Appellate Assistant Commissioner [or Commissioner (Appeals)] is satisfied that in respect of such assessment year such person has assessable net wealth, then such person shall, for purpose of clause (c) of this sub- section, be deemed to have concealed particulars of his assets or furnished inaccurate particulars of any assets or debts in respect of such assessment year, notwithstanding that such person furnishes return of his net wealth at any time after expiry of either of periods aforesaid applicable to him in pursuance of notice under section 17." This explanation was added with effect from 1-4-1976 and dispute relates to assessment years 1970-71 and 1972-73. Therefore, on due dated for filing of returns explanation was not there and prima facie assessee could not be penalised for concealment on basis of law which was not prevalent during relevant period. It only needs to be pointed out that these penalties for concealment and not for any delay in filing of returns. Therefore, interpretation regarding retrospective application of provisions should be taken in favour of assessee. said explanation could not ordinarily be said to constitute rule of evidence inasmuch as same sought to establish concealment of wealth on part of assessee even when basic act of filing returns had not been done. This contention of assessee is supported by decision of Madras High Court in S. Santhosa Nadar v. First Addl. ITO [1962] 46 ITR 411 and also of Kerala High Court in case of Thoppil Kutti Error v. CIT [1958] 34 ITR 850. 3. It was only after insertion of section 17A that time limit was provided for completion of assessment under Wealth-tax Act. perusal of provision of this section would make it clear that this provision was sought to be applied only in respect of assessment years after 1975-76 and not earlier assessment years. Therefore, even after insertion of section 17A of Wealth-tax Act assessee could file return of wealth at any time and consequently provisions of Explanation 3 would not apply to assessee. 4. This apart, under sub-section (3A) of section 18 maximum penalty leviable for filing inaccurate particulars of wealth or concealing particulars of wealth under clause (3) of sub-section (1) of section 18 read with Explanation 3 to that sub-section shall not exceed in aggregate 5 times amount of tax sought to be evaded which clearly shows that provision was not intended to be applicable in respect of assessment years 1970-71 and 1972-73 or any other assessment year perior to 1976-77. 5. Again this Explanation seeks to make liable only those assessees to whom no notice had been issued under sub-section (2) of section 14 or sub- section (1) of section 17 of Wealth-tax Act. In present case returns were filed by assessee in pursuance of notice to her under section 17 of Wealth-tax Act. Therefore, this Explanation otherwise would not apply to assessee at all. 6. Lastly time limit for completion of both these assessments under clause (a) of section 17A(1) of Wealth-tax Act would be 4 years commencing on and from first day of April, 1975 if no return at all had been filed by assessee or one year from date of filing of return whichever was later. Obviously first alternative would have to be taken for purpose of considering applicability of Explanation. Therefore, assessee could file return up to 1st April, 1979 and would be hit by Explanation in question only if she did not do so up to that date, but returns were actually filed on 16- 3-1979. Therefore, even upon language of statute, assessee's case does not fall within Explanation 3 at all. Consequently penalties in question could not be levied upon assessee. They are accordingly deleted. 7. Coming to departmental appeals probably grounds raised therein for recomputing amount of penalties on basis of wealth concealed and not tax sought to be evaded has force, because in these years penalties leviable were wealth based. However, in view of our aforesaid discussion, appeals become infructuous. 8. In result, appeal Nos. 1710 and 1711/Del/84 are allowed while appeal Nos. 1700 and 1701/Del/84 are dismissed. *** SMT. SOMAWANTI SETHI v. INSPECTING ASSISTANT OFFICER
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