Delhi H.C : Whether, on the facts and circumstances of the case the Tribunal was right in cancelling the penalty of Rs. 25,000 levied under s. 18(1)(c) of the WT Act, 1957?

High Court Of Delhi

CIT vs. Mrs. Kuku Narang

Section WT 18(1)(C)

Asst. Year 1971-72

Arijit Pasayat, C.J. & D.K. Jain, J.

WT Ref. No. 41 of 1979

4th July, 2000

Counsel Appeared : Sanjiv Khanna with Ajay Jha, for the Petitioner : None, for the Respondent



On being moved by the Revenue under s. 27(1) of the WT Act, 1957 (for short the Act), the Income-tax Appellate Tribunal, Delhi Bench-C (for short the Tribunal), has referred following question for opinion of this Court : “Whether, on the facts and circumstances of the case the Tribunal was right in cancelling the penalty of Rs. 25,000 levied under s. 18(1)(c) of the WT Act, 1957?”

2. Factual position, as stated in the statement of the case, is as follows : For the asst. yr. 1971-72, assessee filed her return declaring net wealth of Rs. 1,36,083. The WTO completed the assessment on a total wealth of Rs. 1,71,040. During the assessment proceedings, the AO noticed two omissions on the part of the assessee. First omission related to remuneration receivable from M/s J. Bond and Co. (P) Ltd. amounting to Rs. 18,700 and the second one related to income from boats receivable, amounting to Rs. 3.252 which was disclosed at Rs. 1,134. A number of other minor additions were also made while computing the wealth. AO was of the view that there was concealment of particulars in respect of assets or that the assessee had furnished inaccurate particulars thereby attracting levy of penalty provisions of s. 18(1)(c) of the Act. Proceedings were initiated against the assessee. Since difference between the declared wealth and the assessed wealth exceeded Rs 25,000, the AO referred the matter to the IAC under s. 18(3) of the Act for finalisation of penalty proceedings. In response to the notice issued by the IAC, assessee submitted her explanation. After considering the same, the IAC levied penalty in respect of the two items referred to above. The matter was, carried in appeal before the Tribunal by the assessee. It was contended that there was bona fide omission and there was no conscious concealment of wealth and no contumacious conduct was involved. The Revenue’s stand was that there was deliberate concealment and/or omission, clearly attracting the provisions of s. 18(1)(c) of the Act. The Tribunal accepted the plea of the assessee that the omissions were bona fide and cancelled the notice. It was inter alia observed by it as follows : “Before us these conclusions of the IAC have been assailed and we are of the opinion that there is force in the appellant’s argument. So far as the income from boats is concerned, the copy of the particulars of wealth filed along the return, which is at pp. 1 and 2 of the paper book, would show that although the value of the boat income is mentioned at Rs. 1,133.83 it has been specifically pointed out that the amount was taken professionally and the exact figure shall be submitted at the time of assessment. This has been done by putting an asterisk (1) mark against the item so that it was not a case of concealment at all. Regarding the other item, namely, the amount receivable from M/s J. Bond & Co., it is not the case of the Department that this item was never mentioned in the return. In fact, this item has been continuously mentioned even earlier as the return for the asst. yr.1970-71 shows.

There the amount mentioned was Rs. 6,700. During the current year another Rs. 12,000 were added and a certificate of M/s J. Bond & Co. at p. 13 of the paper book would show that a sum of Rs. 14,400 was paid to the appellant as ‘remuneration from 1st April, 1970 to 31st March, 1971, and even income-tax was deducted on this amount. It is contended by the appellant that at the time of preparing the return the clerk concerned thought that all these amounts had already been received by the appellant, and, therefore, nothing was left receivable. No doubt, it is a mistake and rather a serious mistake, but one thing is certain that there could not have been any intention to defraud the taxation Department because the heading ‘remuneration receivable from J. Bond & Co. (P) Ltd.’ is specifically mentioned in the statement showing the particulars of wealth.” It was further held by the Tribunal that the difference between the disclosed wealth and the assessed wealth was not beyond the permissible limit to deem concealment and, therefore, penalty was not attracted. Learned counsel for the Revenue submitted that the factual position as highlighted by the AO clearly established that there was an attempt by the assessee to conceal wealth and/or to omit it and, therefore, penal provisions were clearly attracted. There is no appearance on the part of the assessee in spite of service of notice.

5. We are of the view that the conclusions of the Tribunal are essentially factual in nature with reference to the background facts. It has clearly come to the conclusion that the omissions were not deliberate and it was a clerical mistake with no contumacious conduct or conscious act involved. Such finding of fact does not give rise to any question of law. We, therefore, decline to answer the question referred.

Decision in favour of Reference not answered.

[Citation : 246 ITR 198]

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