1996 (12) TMI 21 - HC - Wealth-tax

Assessed Tax, Assessment Proceedings, Delay In Filing Return, Reduction Or Waiver, Waiver Of Penalty

Issues Involved:

1. Legality of the penalty imposed under section 18B of the Wealth-tax Act, 1957.
2. Compliance with the conditions for waiver or reduction of penalty under section 18B.
3. Consideration of delay in filing wealth-tax returns.
4. Voluntary disclosure and cooperation by the petitioner.
5. Justification for remanding the matter to the Income-tax Commissioner.

Issue-wise Detailed Analysis:

1. Legality of the Penalty Imposed under Section 18B of the Wealth-tax Act, 1957:

The petitioner challenged the order passed by the respondent under section 18B of the Wealth-tax Act, 1957, which imposed a penalty for failure to file wealth-tax returns within the prescribed period. The petitioner argued that his wealth was invested in industrial undertakings and was under the impression that he was exempted from filing wealth-tax returns. Upon realizing the mistake, he filed returns for the assessment years 1981-82 to 1987-88 and paid the due tax.

2. Compliance with the Conditions for Waiver or Reduction of Penalty under Section 18B:

The court examined section 18B(1) of the Wealth-tax Act, which allows the Commissioner to reduce or waive penalties if certain conditions are met:
- The assessee must make a full and true disclosure of net wealth voluntarily and in good faith before being served with a notice under section 14(2).
- The assessee must not have concealed any particulars of assets or provided incorrect particulars.
- The assessee must cooperate in any inquiry and pay or arrange for the payment of any tax or interest due.

The court found that the petitioner had fulfilled all these conditions. The returns were filed voluntarily before any notice was served, the wealth disclosed was accurate, and the petitioner cooperated fully with the Department and paid the due tax and interest.

3. Consideration of Delay in Filing Wealth-tax Returns:

The Commissioner had rejected the petitioner's application for waiver of penalty, citing the delay in filing the returns. The court held that the delay should not have been a factor in considering the waiver application under section 18B. The very existence of a penalty implies a delay, and the petitioner's voluntary disclosure and compliance with the other conditions should have been the focus.

4. Voluntary Disclosure and Cooperation by the Petitioner:

The court emphasized that the petitioner had voluntarily disclosed his wealth and filed accurate returns without any notice under section 14(2) or section 17. The Department had not found any additional wealth or inaccuracies in the returns. The petitioner also paid the due tax and interest, demonstrating full cooperation.

5. Justification for Remanding the Matter to the Income-tax Commissioner:

The Department's counsel argued for remanding the matter to the Commissioner to reconsider the penalty. However, the court found no justification for this, as the petitioner had already fulfilled all the necessary conditions for waiver. The court cited a precedent where a similar case resulted in the waiver of both penalty and interest.

Conclusion:

The court concluded that the petitioner's claim for waiver of the penalty was justified. The reasons given by the Commissioner for rejecting the waiver were deemed perverse. The court exercised its discretionary powers under Article 226 of the Constitution of India, quashed the Commissioner's order, and directed the Commissioner to waive the penalty imposed on the petitioner for the assessment years 1981-82 to 1987-88. The rule was made absolute, and no orders as to costs were issued.

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