2016 (2) TMI 506 - AT - Wealth-tax

Levy of penalty u/s 18(1)(c) of Wealth Tax Act, 1957 - assessee demonstrated before AO that assessee is a non-technical person and solely dependent upon the advice of his accountant in respect of technical matters, accordingly, assessee was under the impression that liability for filing of Wealth Tax return would be looked after by his accountant. As the assessee received the notice for filing wealth tax return, he immediately acted and reacted accordingly and paid the demand of tax on time. - Held that - it is clear that there was sufficient cause which prevented the assessee to pay wealth tax in the wealth tax return. Therefore, in the interest of natural justice, we delete the penalty imposed by Assessing Officer and confirmed by Ld. CWT(A). - Decided in favor of assessee.

Summary

Issues:
Penalty imposition under section 18(1)(c) of the Wealth Tax Act, 1957.

Analysis:
The appeal pertained to the penalty imposed on the assessee under section 18(1)(c) of the Wealth Tax Act, 1957. The assessee had declared a net wealth under the Wealth Tax Act, which was accepted by the Assessing Officer. However, penalty proceedings were initiated as the assessee did not file the wealth tax return voluntarily. The main contention raised by the assessee was that the penalty order confirming the penalty levied by the Assessing Officer was erroneous.

The assessee argued that he was solely dependent on the advice of his accountant and believed that the accountant would take care of the wealth tax return filing. When the notice for filing the return was received, the assessee promptly acted and paid the tax. The Assessing Officer, however, imposed a penalty of 200% of the tax sought to be evaded under section 18(1)(c) of the Act. The assessee contended before the Commissioner of Wealth Tax (Appeals) that due to ongoing litigation with the Central Excise Department and Income Tax Department, he had overlooked filing the wealth tax return on time.

The Commissioner of Wealth Tax (Appeals) acknowledged the assessee's cooperation in promptly filing the wealth tax return upon receiving the notice. The penalty was reduced from 200% to 100% of the tax sought to be evaded. The assessee then appealed to the Appellate Tribunal, where it was argued that the ongoing litigations and search and seizure actions by other departments had diverted the assessee's attention, leading to the delay in filing the wealth tax return. The Tribunal found merit in the assessee's arguments, considering the circumstances and the substantial compliance by the assessee.

After hearing both parties and examining the facts, the Tribunal concluded that there was a sufficient cause that prevented the assessee from filing the wealth tax return on time. In the interest of natural justice, the Tribunal decided to delete the penalty imposed by the Assessing Officer and upheld by the Commissioner of Wealth Tax (Appeals). Consequently, the appeal filed by the assessee was allowed, and the penalty was set aside.

In conclusion, the Tribunal's decision was based on the assessee's genuine reasons for the delay in filing the wealth tax return, considering the ongoing litigations and the substantial compliance shown by the assessee upon receiving the notice. The Tribunal's ruling emphasized the importance of natural justice and the circumstances that warranted the deletion of the penalty in this case.