1991 (4) TMI 73 - HC - Wealth-tax

Issues Involved:
1. Compliance with Section 15 of the Voluntary Disclosure of Income and Wealth Ordinance, 1975.
2. Assessment under the Wealth-tax Act vs. the Ordinance.
3. Validity of the returns filed on June 23, 1975.
4. Issuance of penalty notice.

Issue-wise Detailed Analysis:

1. Compliance with Section 15 of the Voluntary Disclosure of Income and Wealth Ordinance, 1975:
The petitioner claimed to have complied fully with Section 15 of the Ordinance by making a voluntary disclosure of wealth for the assessment years 1968-69 to 1975-76. The petitioner filed eight separate returns on June 23, 1975, and later made a voluntary disclosure on December 10, 1975, under the Ordinance. The petitioner paid Rs. 36,933 towards wealth-tax and invested Rs. 15,200 in security bonds as required by the Ordinance. The court found that the petitioner met all conditions under Section 15 of the Ordinance, which aimed to encourage voluntary disclosure of undisclosed wealth by waiving penalties.

2. Assessment under the Wealth-tax Act vs. the Ordinance:
The Wealth-tax Officer assessed the petitioner under the Wealth-tax Act for the assessment years 1968-69 to 1974-75 and 1975-76, ignoring the voluntary disclosure made under the Ordinance. The court held that the petitioner should have been assessed under the Ordinance, which provided immunity from penalties for voluntary disclosures. The Ordinance was intended to offer an opportunity to taxpayers to declare undisclosed wealth and pay tax without facing penalties, thus encouraging civic responsibility.

3. Validity of the Returns Filed on June 23, 1975:
The respondents argued that the returns filed on June 23, 1975, should be treated as returns under Section 14(1) of the Wealth-tax Act, making the petitioner ineligible for the benefits of the Ordinance. However, the court clarified that these returns were not filed within the time allowed under Section 14 and were thus deemed to be filed under Section 15 of the Wealth-tax Act. Since no notice under Section 14(2) or Section 17 of the Wealth-tax Act was served on the petitioner before the Ordinance's commencement, the returns filed on June 23, 1975, could not disqualify the petitioner from the benefits of the Ordinance.

4. Issuance of Penalty Notice:
A penalty notice was issued to the petitioner, which was also contested. The court quashed the penalty notice, emphasizing that the Ordinance provided immunity from penalties for those who made voluntary disclosures. The court reiterated that the Ordinance's provisions should be liberally construed to encourage voluntary disclosures and bring undisclosed wealth into the tax net.

Conclusion:
The court allowed the writ petitions, quashing the assessment orders and penalty notice. The respondents were directed to give effect to the declarations made by the petitioner under Section 15 of the Ordinance and pass fresh orders in accordance with the law. The parties were left to bear their own costs.

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