Sikander Khan, A.M. - (1.) IN this appeal the Revenue has contested the deletion by the learned CWT(A) of the penalty imposed by the AO under Section 18(1)(c) of the WT Act, 1957, for the asst. yr. 1988-89.
(2.) In the relevant assessment, the AO made addition of Rs. 26,09,086 for the value of farm house which was claimed by the assessee as exempt under Section 2(e)(iii) of the WT Act. Penalty proceeding under Section 18(1)(c) of the Act was initiated on the basis of this addition. No appeal was filed against the said addition of Rs. 26,09,086. However, the assessee intended to file revision petition before the learned CWT(A) seeking deletion of the said addition. In response to the show cause under Section 18(1)(c), the AO (sic-assessee) submitted that penalty under Section 18(1)(c) was not exigible in the case on the following grounds : "(a) That the exemption under Section 2(e) has been allowed in the earlier years also. (b) The assessee has not surrendered the sum of Rs. 26,09,086 as has been claimed by the AO. (c) There should be no distinction between the agricultural land and the farm house built on the same. If exemption is admissible under Section 2(e) on the agricultural land and same should also be allowed on the farm house. (d) Admission of an exemption of disallowance of a claim is a matter of difference of opinion and does not tantamount to concealment of wealth. (e) The Department has not brought any item on record which has not been declared by the assessee in his wealth-tax return.
(3.) THE AO considered the assessee's reply and rejected the same on the following grounds : "(a) THE mere fact that the exemption was allowed in the earlier year does not make it correct. THE original claim made by the assessee himself was wrong and was a deliberate attempt to file inaccurate particulars of wealth. THE facts that the Department overlooked this point does not absolve the assessee from making a false claim. (b) THE assessee has claimed that he has not surrendered this amount. He has sought the production of the records to verify this statement. Even though the assessee's claim may be correct. THEre is no denying the fact that the assessee has accepted the addition since he did not file an appeal against the assessment order. (c) THE assessee has stated that there can be no distinction between the agricultural land and the farm house. This again in untenable statement since the legislature has clearly stated under what circumstances a farm house be considered for the purpose of exemption under Section 2(e). (d) THE fact that any exemption may have been allowed or disallowed being a matter of difference of opinion and not concealment of wealth is also not acceptable. THE assessee was very aware of the fact that the farm house is not being used for the purpose of storage of implements. Since this exemption is not admissible but has been claimed by him under false pretences, it tantamounts to filing of inaccurate particulars of wealth. (e) A spot inspection was conducted by the Inspector and in his report he had clearly stated that the farm house consists of bed rooms, bathrooms, dining hall drawing hall, etc. THE same is never used for the purpose of storage of livestocks implements or tools. THE AO has further held that the report of the inspector was substantiated by the statement of the supervisor recorded in the presence of the Kitchen in charge. On being confronted with the statement the assessee had no reply to the allegation that the farm house was not being used for the purpose made by the assessee.";