Madras H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the provisions of s. 18(1)(c) of the WT Act, 1957, are not attracted to the assessee’s case for the asst. yr. 1973-74 ?

Counsel Appeared

N. V. Balasubramaniam, for the Revenue : Janarthana, for the Assessee

RATNAM, J.:

In this reference under s. 27(3) of the WT Act, 1957 (hereinafter referred to as “the Act”), the questions of law referred for the opinion of this Court are as follows :

“(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the provisions of s. 18(1)(c) of the WT Act, 1957, are not attracted to the assessee’s case for the asst. yr. 1973-74 ?

(2) Whether the finding of the Tribunal that the assessee had not deliberately furnished any inaccurate particulars of wealth is based on relevant materials and is a reasonable view to be taken on the facts of the case ?”

The assessee is an individual and in relation to the valuation date 31st March, 1973, relevant for the asst. yr. 1973-74, she filed a return on 22nd June, 1973, admitting a net wealth of Rs. 97,345. This included two items of immovable property, viz., a house bearing door No. 3, Bharathi Nagar First Street, T. Nagar, Madras, valued at Rs. 40,000 and door No. 22, Anderson Street, Madras, valued at Rs. 1,00,000. We are not concerned in this reference with the latter item of immovable property. On 6th Oct., 1973, the assessee entered into an agreement for the sale of property bearing door No. 3, Bharathi Nagar First Street, T. Nagar, Madras, in favour of two persons for Rs. 75,000 and received an advance of Rs. 20,001 on that day and agreed to receive the balance of Rs. 54,999 within four months from that day, at the time of registration of the sale deed. Subsequently, on 24th Dec., 1973, the assessee filed a revised return including the value of certain jewellery which had not been originally shown, but retaining the value of the immovable properties as shown earlier. While completing the assessment, on 27th March, 1974, the WTO, in respect of the property bearing door No. 3, Bharathi Nagar First Street, T. Nagar, Madras, took the view that the value of Rs. 40,000 returned was not acceptable as that property had been subsequently sold in Jan. 1974 for Rs. 70,000, deducting the stamp expenses, etc., though the total sale price was Rs. 75,000, and instead of the returned value of Rs. 40,000, adopted a value of Rs. 70,000. With reference to the difference of Rs. 30,000 in the value of this item of property, penalty proceedings were initiated and the assessee contended that the assessee had purchased the property in question under a hire- purchase agreement with Bharathi Nagar Co-operative House Construction Society on 3rd June, 1971, for a consideration of Rs. 22,365 and its valuation in 1968 was Rs. 38,000, as it was fetching only a monthly rental of Rs. 250 even at the time of sale and, therefore, there was no concealment and the penalty proceedings should be dropped. The IAC was of the view that the provisions of s. 18(1)(c) of the Act stood attracted as the assessee had not admitted the correct market value of the property on 31st March, 1973, and that the valuation report of 1968 could not be relied upon as there had been a steep rise in the value of properties in that area and the rental yield would not be relevant. Considering the entering into of the agreement for sale of the property by the assessee in October, 1973, and the value set out therein and the receipt of an advance of Rs. 20,001 by the assessee and the omission by the assessee to mention that value in the revised return, the IAC imposed a penalty of Rs. 30,000 on the assessee. On appeal by the assessee before the Tribunal, the Tribunal found that the offer for the sale of the property was received by the assessee only subsequent to the filing of the return and the value reflected in the agreement entered into in October, 1973 was not indicative of the price as on 31st March, 1973, and, as such, it cannot be concluded that the assessee had deliberately furnished inaccurate particulars or had concealed wealth and, therefore, the imposition of the penalty cannot be sustained.

The principal contention of learned counsel for the Revenue is that the fact that the assessee, in the revised return filed by her on 24th Dec., 1973, after entering into an agreement for the sale of the property in October 1973, had not disclosed the value as reflected in the agreement, clearly indicated that she had concealed the particulars of assets or furnished inaccurate particulars of assets or debts and that would justify the levy of penalty. On the other hand, learned counsel for the assessee submitted that inasmuch as the property had been disclosed, though a low value, according to the Revenue, had been put on it, the expression “value” cannot be equated to particulars and, as such, there can be no concealment of particulars or furnishing of inaccurate particulars, when the property itself had been disclosed. Reference in this connection was also made to the views expressed by Sri A. C. Sampath Iyengar in Three New Taxes, Sixth Edition, Volume 1, at page 749.

We have carefully considered the rival submissions. We are of the view that it is unnecessary, on the facts and circumstances of this case, to consider and decide the question whether inaccuracy in the value declared would amount to concealment of particulars or furnishing of inaccurate particulars of an asset. It is seen that the property in question was a single storeyed house in an area of 4,574 sq. ft. and had been purchased by the assessee from the Bharathi Nagar Cooperative House Construction Society for a sum of Rs. 22,365 under a document dt. 10th June, 1971. The property was valued in 1968 at Rs. 38,000 and that really formed the basis of the value as returned by the assessee for the assessment year in question as well as for the prior years and that value had been accepted. It is this value which was adopted by the assessee when she filed a return of wealth for the assessment year in question on 22nd June, 1973. At that time, there was absolutely no negotiation for the sale of her property or any offer for the same and as matters stood on the day on which she filed the return, it cannot be said that the assessee had furnished inaccurate particulars regarding the value of the property. The adoption of the value of Rs. 40,000 with reference to this item of property as in the previous years cannot but be bona fide when the return of wealth was filed. It was later in October, 1973, that she had entered into an agreement for the sale of the property for Rs. 75,000, though the actual sale price was only Rs. 70,000, after deducting stamp and other related expenses. It is true that the assessee filed a revised return on 24th Dec., 1973 adding the value of some jewellery not included in the earlier return and retaining the value of immovable properties as before. Though this was done after the entering into of the agreement for the sale of the property by the assessee in October, 1973, we cannot project backwards the value reflected in the agreement entered into in October, 1973, to the valuation date 31st March, 1973. In other words, the value reflected in the agreement entered into in October, 1973, cannot be considered to be the value as on 31st March, 1973. So looked at, the assessee cannot be stated to have concealed any particulars even with reference to the value of the property. There is, therefore, no question of the assessee having concealed particulars of any asset or furnished inaccurate particulars of any asset attracting the levy of penalty under s. 18(1) (c) of the Act. We hold that the Tribunal was right in the view it took that no case is made out for the levy of penalty. We, therefore, answer the questions referred in the affirmative and against the Revenue. The assessee will be entitled to the costs of this reference. Counsel’s fee Rs. 500.

[Citation : 177 ITR 120]