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Issues Involved:
1. Challenge to the order dated December 21, 1979, under section 18B(1) of the Wealth-tax Act, 1957. 2. Challenge to the three notice letters issued under section 226(3) of the Income-tax Act, 1961. Detailed Analysis: 1. Challenge to the Order Dated December 21, 1979, under Section 18B(1) of the Wealth-tax Act, 1957: The petitioner challenged the order by the Commissioner of Wealth-tax, Meerut, which partially rejected an application for waiver or reduction of penalty under section 18B(1) of the Wealth-tax Act, 1957. The order pertained to a penalty imposed on the deceased Sardar Jeewan Singh for the assessment year 1968-69. The Commissioner had waived penalties for other assessment years but not for 1968-69, citing non-disclosure of a deposit item of Rs. 5,460. The petitioner argued that the return was filed voluntarily and in good faith, with a full and true disclosure of net wealth, and that the omission of Rs. 5,460 was a bona fide mistake corrected during assessment proceedings. The court noted that under section 18B(1), the Commissioner has discretion to waive penalties if three cumulative conditions are met: voluntary and good faith disclosure of net wealth, cooperation in the enquiry, and satisfactory arrangements for payment of tax or interest. The court emphasized that "good faith" implies honesty and absence of bad faith or mala fides. The Commissioner did not consider whether the omission was an honest mistake. The court referenced previous rulings, including Hasan Ahmad Khan v. CWT, which clarified that "good faith" involves honest intent without fraud. The court held that the mere addition of Rs. 5,460 did not justify denying relief and that the Commissioner should have considered whether the omission was bona fide. The court quashed the impugned order and directed the Commissioner to reconsider the application for waiver/reduction for the assessment year 1968-69, taking into account the observations made and in accordance with the law. 2. Challenge to the Three Notice Letters Issued under Section 226(3) of the Income-tax Act, 1961: The petitioner also challenged three notice letters issued by the Income-tax Officer (Wealth-tax) 'E' Ward, Saharanpur, under section 226(3) of the Income-tax Act, 1961. These notices required the second petitioner, Messrs. Rana Rubber Industries, and its banker to remit Rs. 26,539 to the Department in satisfaction of the penalty and interest due for the assessment year 1968-69. However, during the hearing, the petitioner's counsel did not address the validity of these notices, presumably because the amount had been paid in compliance with the court's interim order dated March 3, 1982. Consequently, the court did not examine the validity or correctness of the notices under section 226(3). Conclusion: The court quashed the Commissioner's order dated December 21, 1979, concerning the assessment year 1968-69, and directed a fresh consideration of the waiver/reduction application. The court did not address the challenge to the notices under section 226(3) as the issue was not pursued by the petitioner. The petition succeeded in part, and the petitioners were awarded costs of Rs. 300.
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