1997 (3) TMI 68 - HC - Wealth-tax

Summary

Issues:
- Quashing of order imposing penalty for late filing of wealth tax returns under section 18(1)(a) of the Wealth-tax Act.
- Consideration of applications for waiver of penalty under section 18B of the Wealth-tax Act.
- Fulfillment of conditions for waiver of penalty.
- Comparison with previous judgments on waiver of penalty.

Analysis:
The judgment involves two writ petitions challenging the order passed by the Commissioner of Wealth-tax imposing penalties for late filing of wealth tax returns. The petitioners sought waiver of penalties under section 18B of the Wealth-tax Act, claiming they had reasonable grounds. The petitioners argued that penalties should be waived as they voluntarily filed returns before notice issuance and cooperated in the enquiry. The Commissioner reduced penalties in some years but did not consider the petitioners' compliance with the law. The petitioners' counsel contended that fulfilling conditions under section 18B warrants penalty waiver.

The court referred to a previous case establishing five conditions for penalty waiver under section 18B, including timely, voluntary, and truthful filing, cooperation in inquiry, and payment of tax. The petitioners' counsel emphasized that fulfilling these conditions should result in penalty waiver. The Commissioner acknowledged the petitioners' compliance but opted for penalty reduction instead of waiver. The court noted that if all conditions were met, penalty waiver was justified, citing a previous case where satisfaction of conditions led to penalty waiver.

In another case, the court discussed the discretion of the Commissioner to grant relief or partial relief under a similar provision in the Income-tax Act. The court found that the petitioners fulfilled all conditions for penalty waiver, including timely filing, truthful disclosure, cooperation, and tax payment. As no concealment proceedings were initiated, and the Commissioner was satisfied with the petitioners' compliance, penalty waiver was deemed appropriate. The court emphasized that late filing alone should not attract penalties if all conditions for waiver were met.

Ultimately, the court granted both petitions, waiving penalties imposed under section 18(1)(a) of the Wealth-tax Act for all relevant years. The judgment highlighted the importance of fulfilling conditions under section 18B for penalty waiver and emphasized that satisfaction of these conditions should lead to the grant of waiver. No costs were awarded in the matter.