1978 (2) TMI 89 - HC - Wealth-tax

Summary

Issues Involved:

1. Legitimacy of the Commissioner's refusal to waive or reduce the penalty for late filing of returns for assessment years 1969-70 and 1970-71.
2. Interpretation and application of section 18(2A) of the Wealth-tax Act, 1957.

Summary:

Issue 1: Legitimacy of the Commissioner's Refusal to Waive or Reduce Penalty

The petitioner, the karta of a Hindu undivided family, filed returns for three assessment years, with delays. The Commissioner waived the penalty for the assessment year 1971-72 but refused to do so for 1969-70 and 1970-71, citing that the returns were filed only after being asked during the assessment proceedings for 1971-72, thus not voluntary. The petitioner challenged this order.

Issue 2: Interpretation and Application of Section 18(2A) of the Wealth-tax Act, 1957

Section 18(2A) allows the Commissioner to reduce or waive the minimum penalty if certain conditions are met: full disclosure of net wealth voluntarily and in good faith before the issue of notice u/s 14(2), cooperation in any enquiry, and payment or satisfactory arrangements for tax or interest. The Commissioner misinterpreted the term "voluntarily" by associating it with the filing of returns rather than the disclosure of net wealth. The court clarified that the word "voluntarily" pertains to the disclosure of net wealth and not the act of filing the return itself.

The Commissioner also erred in considering that the relief u/s 18(2A) is only for new assessees, which is not supported by the statute. The court ruled that the Commissioner must exercise discretion if the statutory conditions are met and cannot refuse based on misinterpretation.

Conclusion:

The court directed the Commissioner to reconsider the petitioner's application u/s 18(2A) and determine it afresh in accordance with the correct legal interpretation. The rule was made absolute, and the Commissioner was ordered to pay the costs of the petition to the petitioner.