T.D.SUGLA, J. - (1.) IN this Departmental reference relating to the assessee's assessment for the asst. yrs. 1965 66 to 1968 69, the Tribunal has referred to this Court the following question of law under S. 27(1) of the WT Act, 1957 : "Whether, on the facts and circumstances of the case, the Tribunal was justified in law in quashing the orders of penalty for the assessment years 1965 66 to 1968 69 ?"
(2.) BRIEFLY stated, the relevant facts are that, for the assessment years 1962 63 and 1963 64, there appeared certain credits in the capital account as well as third parties' accounts in the books of the assesses. Some of these were added as the assessee's income from other sources. The additions were confirmed by the Tribunal. 15th March, 1991 : These cash credits continued to appear as liabilities in the assessee's books in the subsequent years while filing his returns of net wealth for asst. yrs. 1965 66 to 1968 69, the assessee disclosed his net wealth on the basis of the balance sheets, i.e., without reducing the liabilities by such credits. However, the WTO held that these liabilities were not real and represented the assessee's own moneys. Reference was made, in particular, to a letter dt. 26th March, 1970, written by the assessee's income tax representative wherein it was stated that "As the honourable Tribunal of Income tax, Bombay, had confirmed the addition of cash credits in the names of 7 persons (mentioned in the list), he had no objection to the addition of the same in the assessee's wealth tax assessment". While completing the assessments, the WTO recorded a finding that the penal provisions of S. 18(1)(c) were attracted as the assessee had claimed these fictitious credits as liabilities. The IAC to whom the matter was referred under S. 18(3) of the WT Act, 1957, held, after allowing the assessee an opportunity of being heard, that the provisions of S. 18(1)(c) were attracted and that in the facts and circumstances of the case, it would be reasonable to levy minimum penalties imposable under the Act. The assessee filed appeals against the orders of the IAC and urged that the mere fact that the assessee's explanation as regards cash credits was not accepted as satisfactory and the amounts were treated as part of the assessee's wealth on the basis of the assessee's authorised representative's letter does not mean that the assessee had filed inaccurate particulars of wealth or concealed the particulars of wealth within the meaning of S. 18(1)(c) of the WT Act. For the elaborate reasons given in the impugned order, the Tribunal accepted the assessee's explanation and held that the provisions of S. 18(1)(c) were not attracted. Penalties imposed by the Inspecting Asstt. CIT were set aside.
(3.) THE short question in this reference is whether the fact that the nature and source of certain cash credits was held not to have been satisfactorily explained and the amount represented by them was treated as the assessee's income from undisclosed/other sources for assessment years 1962 63 and 1963 64 and the further fact that, in the subsequent wealth tax proceedings, the liabilities representing those cash credits were added back to the wealth of the assessee on the basis of a letter written by the assessee's income tax representative brings the case within the four corners of S. 18(1)(c). Sec. 18(l)(c) of the WT Act reads as under : "18(1). If the WTO, AAC, CIT (A), Commissioner or Tribunal, in the course of any proceedings under this Act is satisfied that any person . . . (c) has concealed the particulars of any assets or furnished inaccurate particulars of any assets or debts ; he or it may, by order in writing direct that such person shall pay by way of penalty . . ." ;