2003 (12) TMI 26 - HC - Wealth-tax

Delay in filing the return penalty petitioner submitted that though levy of penalty may be justified when there was unexplained delay in filing the return but having regard to the fact that the returns were filed voluntarily without notice under section 14(2) of the Act having been issued and full disclosure of net wealth was made, the amount of penalty should be reasonable and proportionate to the tax assessed - Revenue is unable to show any reason as to why the amount of penalty should not be reduced - Having regard to the quantum of tax assessed and the fact that the petitioner filed returns voluntarily disclosing his wealth, though belatedly, penalty imposed is reduced by 50 per cent.

Summary

Issues:
1. Quashing of order dismissing the application for waiver of penalty under the Wealth-tax Act.
2. Justification for the penalty imposed for late filing of wealth-tax returns.
3. Reduction of penalty amount based on the quantum of tax assessed and voluntary disclosure of wealth.

Issue 1: Quashing of Order:
The petitioner sought the quashing of an order dismissing the application for waiver of penalty under section 18(1)(a) of the Wealth-tax Act for the assessment years 1971-72 to 1974-75 and another petition for the assessment year 1975-76. The assessments were completed, and penalties were imposed for late filing of returns. The petitioner filed an application for waiver of penalty under section 18B of the Act, citing reasons for the delay. The application was dismissed on grounds of negligence by the assessee and failure to seek an extension of time for the delay in filing.

Issue 2: Justification for Penalty:
The petitioner contended that although penalties may be justified for unexplained delays in filing returns, in this case, the returns were voluntarily filed without receiving notice under section 14(2) of the Act and with full disclosure of net wealth. The petitioner argued that the penalty imposed was disproportionate to the tax assessed, seeking a 50% reduction in the penalty amount. The petitioner relied on the decision in Prithipal Singh v. CWT [1998] 234 ITR 45 to support the request for a reduction in the penalty.

Issue 3: Reduction of Penalty Amount:
The court considered the petitioner's submission and the decision in Prithipal Singh [1998] 234 ITR 45. The court noted that the penalty amount should be reasonable and proportionate to the tax assessed, especially when returns were voluntarily filed with full wealth disclosure. Consequently, the court reduced the penalty imposed by 50% based on the quantum of tax assessed and the voluntary disclosure of wealth by the petitioner.

In conclusion, the writ petition seeking the quashing of the order dismissing the application for waiver of penalty under the Wealth-tax Act was disposed of, with the court reducing the penalty amount by 50% considering the circumstances of the case and the principles established in relevant legal precedents.