2004 (12) TMI 47 - HC - Wealth-tax

Penalty under section 18(1)(a) - Whether the Appellate Tribunal is right in law and on fact in holding that no penalty under section 18(1)(a) of the Wealth-tax Act for delay in submission of the wealth-tax return can be levied for the period till the date of furnishing of the Income-tax return by the assessee? Held that there is no infirmity in the order made by the Tribunal upholding the order of the Appellate Assistant Commissioner whereunder penalty came to be reduced up to the date of filing of income-tax returns for both the assessment years under consideration. - In the result, the question referred to the court is answered in the affirmative, i.e., in favour of the assessee and against the Revenue.

Summary

Issues:
- Interpretation of penalty under section 18(1)(a) of the Wealth-tax Act for delay in submission of wealth-tax return.
- Relationship between filing of wealth-tax return and income-tax return.
- Validity of reducing penalty up to the date of filing income-tax returns.

Analysis:
The judgment revolves around the interpretation of penalty under section 18(1)(a) of the Wealth-tax Act for delayed submission of wealth-tax returns. The court addressed the question of whether the Appellate Tribunal was correct in holding that no penalty can be levied until the date of furnishing the income-tax return by the assessee. The court examined the factual background of the case, where penalties were imposed by the Wealth-tax Officer for delays in filing wealth-tax returns for the assessment years 1978-79 and 1979-80. The Appellate Assistant Commissioner and the Tribunal had reduced the penalties, considering the period up to the dates of filing income-tax returns for both assessment years.

Regarding the relationship between filing wealth-tax and income-tax returns, the court analyzed the provisions of the Wealth-tax Act and the Income-tax Act. It highlighted that the liability to pay tax under the Income-tax Act is a permissible deduction while computing the net wealth of an assessee on the valuation date. The court emphasized that the liability becomes ascertainable only when the income-tax return is finalized. Therefore, the filing of the wealth-tax return is dependent on or at least influenced by the filing of the income-tax return.

The court concluded that based on the scheme of the Acts and the interplay between income-tax and wealth-tax provisions, there was no error in the orders of the Appellate Assistant Commissioner and the Tribunal in reducing the penalties up to the dates of filing income-tax returns for the relevant assessment years. The court upheld the decision in favor of the assessee, stating that the penalty could not be levied for the period until the income-tax returns were submitted. As a result, the court answered the referred question in favor of the assessee and against the Revenue, disposing of the reference with no order as to costs.