2005 (8) TMI 86 - HC - Wealth-tax

Penalty under section 18(1)(a) - relief of reduction or waiver in penalty - petition challenges the order u/s 18B passed by the respondent-Commissioner of Wealth-tax Submission made on behalf of the respondent that no reasonable cause has been shown for the delay is besides the point. In fact, the provision specifically states that the failure to furnish return of net wealth is without reasonable cause. In the circumstances, whether the petitioner had reasonable cause or not, is not germane for the purposes of exercise of discretion vested in the respondent authority under section 18B Impugned order is set aside - The petitioner having satisfied all the prerequisite conditions imposed by section 18B, Penalties levied are waived in entirety

Summary

Issues:
Challenge to order under section 18B of the Wealth-tax Act, 1957

Analysis:
The petitioner, an executor of an estate, filed voluntary wealth returns for assessment years 1973-74 to 1976-77, paying wealth tax at the time of filing. The Wealth-tax Officer accepted the wealth returned by the petitioner for all years. The petitioner sought waiver of penalties under section 18(1)(a) of the Act, contending full disclosure and cooperation in assessment. Penalties were imposed for each year, and the respondent rejected the waiver application.

The petitioner argued fulfilling all conditions for penalty waiver, citing extraneous reasons in the respondent's order. The respondent claimed lack of explanation for delay and non-acceptance of reasons for late filing. The matter was not resolved, leading to the court's intervention.

The court analyzed section 18B, emphasizing conditions for penalty reduction or waiver, including voluntary disclosure, cooperation in assessment, and payment of tax. The petitioner met these conditions by filing returns voluntarily, paying tax, and no additional demands post-assessment. The respondent's reasons for denial were found baseless, as no interest or penalty was charged, and the order lacked proper application of mind.

The court referenced a previous case to emphasize the purpose of penalty waiver provisions, focusing on admitting liability and mitigating circumstances. The court concluded by quashing the respondent's order, waiving penalties for all years as the petitioner fulfilled all conditions under section 18B.

In summary, the court allowed the petition, quashing the respondent's order and waiving penalties for the petitioner for all assessment years.