COMMISSIONER OF WEALTH TAX-II vs. BEGUM MUNAWAR-UL-NISHA

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WTA/14/2005HC Punjab & HaryanaPHHC01069983200522 December 2008Author: MR. JUSTICE L.N. MITTAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that while the Revenue's claim to levy tax was upheld in the related quantum appeal, the penalty imposed under Section 18(1)(c) should not be interfered with. The reasoning was that the issue of eligibility of an ex-Ruler for exemption was a debatable one. Consequently, the assessee's stand in claiming the exemption could not be considered not bona fide. Therefore, the Tribunal's view in setting aside the penalty was found to be correct, and the High Court found no reason to interfere with it. The operative direction was to dismiss the appeal filed by the Revenue.

What were the facts?

The Revenue, Commissioner of Wealth Tax-II, Ludhiana, appealed to the High Court under Section 27A of the Wealth Tax Act, 1957, for the assessment year 1993-94. The appeal challenged a consolidated order of the Income Tax Appellate Tribunal (ITAT) dated May 17, 2004, which dealt with assessment years 1993-94, 1994-95, and 1995-96. The core of the appeal was the ITAT's decision to cancel a penalty imposed under Section 18(1)(c) for concealed wealth. The assessee is Begum Munwar-ul-Nisha. The High Court noted that the quantum appeal concerning the leviability of tax had been separately disposed of, where the Tribunal's view was reversed, and the Assessing Officer's view upheld regarding the taxability of property.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in canceling the penalty imposed under Section 18(1)(c) on the concealed wealth as upheld by the ITAT? Assessee's Contention: The judgment does not record any specific arguments made by the assessee's counsel. However, the reasoning implies that the assessee's claim for exemption was considered bona fide due to the debatable nature of the issue of ex-Ruler exemption. Revenue's Contention: The Revenue contended that the penalty imposed under Section 18(1)(c) for concealed wealth should be upheld. The Revenue's appeal to the High Court was based on the substantial question of law regarding the correctness of the ITAT's decision to cancel this penalty.

Which sections of the Income-tax Act were involved?

Section 27A, Section 18(1)(c)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Case No. : W. T. A. No. 14 of 2005 Date of Decision : December 22, 2008. Commissioner of Wealth Tax-II, Ludhiana .... Appellant Vs.

Begum Munwar-ul-Nisha, widow of Late Nawab Iftikhar Ali Khan, Malerkotla .... Respondent CORAM : HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE L. N. MITTAL * * * Present : Mr. Rajesh Sethi, Senior Standing Counsel for the Revenue. Mr. Akshay Bhan, Advocate for the respondent. * * * ADARSH KUMAR GOEL, J. (Oral) :

This appeal has been preferred by the Revenue under Section 27A of the Wealth Tax Act, 1957 for the assessment year 1993-94 against the consolidated order of the Income Tax Appellate Tribunal, Chandigarh Bench `B', Chandigarh passed on 17.05.2004 in W.T.A. No.11, 12 & 13/Chandi/2001 for the assessment years 1993-94, 94-95 and 95-96 respectively, proposing to raise following substantial question of law :- “Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in canceling the penalty imposed u/s 18 (1) (c) on the concealed wealth as upheld by the ITAT ?”

The appeal arises out of order of penalty. In appeal arising out of quantum proceedings, which has been separately disposed of today bearing W.T.A. No.33 of 2005, we have reversed the view taken by the Tribunal and upheld the view taken by the Assessing Officer for the leviability of tax on the value of property, in the hands of assessee, under the Wealth Tax Act. However, since the issue of eligibility of ex-Ruler for exemption was a debatable issue, it could not be held that stand of the assessee in claiming exemption was not bona fide.

Thus, even though we have upheld claim of the Revenue to levy tax, we do not find any reason to interfere with the view taken by the Tribunal setting aside the penalty.

The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE December 22, 2008

( L. N. MITTAL ) monika JUDGE

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