1983 (3) TMI 66 - AT - Income Tax

Summary

Issues:
1. Whether the AAC erred in canceling the penalty levied under section 18(1)(a) of the Wealth-tax Act, 1957.

Comprehensive Analysis:
The appeals were filed by the revenue against the orders of the AAC dated 15-6-1981 concerning the assessment years 1974-75 and 1975-76. The main issue was whether the AAC erred in canceling the penalty under section 18(1)(a) of the Wealth-tax Act, 1957. The assessee had filed the returns of net wealth for the respective assessment years with delays. Before the penalty orders were passed, the assessee sought waiver of penalty from the Commissioner of Wealth-tax under section 18B, which was partially allowed. The WTO then levied the penalty, which was restricted to 50% based on the Commissioner's order.

The AAC, in considering the appeals, relied on legal precedents and held that there were reasonable causes for the delay in filing the returns since the applications for extension of time were not rejected. The revenue, being aggrieved, contended that the appeals were not maintainable as the WTO had given effect to the Commissioner's order under section 18B, which was not appealable. However, the assessee argued that the orders under section 18(1)(a) were independent of the Commissioner's order under section 18B, citing relevant case laws.

Upon thorough review of the evidence, the Tribunal analyzed the legal precedents cited by both parties. The Tribunal noted that the Commissioner's order under section 18B only determined the quantum of penalty, while the WTO's order under section 18(1)(a) focused on the imposition of penalty based on reasonable cause. The Tribunal emphasized that the WTO's order had a dual effect, imposing the penalty and giving effect to the Commissioner's order. Therefore, the appeals against the WTO's orders were deemed maintainable.

Regarding the merits of the penalty, the Tribunal found that the assessee had filed applications for extension of time, and as the results were not communicated, the assessee believed the extensions were granted. Citing a decision of the Gujarat High Court, the Tribunal held that the assessee had reasonable causes for the delay in filing the returns, affirming the AAC's view.

In conclusion, the Tribunal dismissed the appeals, upholding the AAC's decision to cancel the penalty levied under section 18(1)(a) for the assessment years in question.