1995 (10) TMI 57 - AT - Income Tax

Assessment Year, Delay In Filing, Failure To File Return In Time, Reasonable Cause, Time Limit For Completion

Summary

Issues Involved:
1. Barred by Limitation of Time for Assessments.
2. Non-deduction of Outstanding Wealth-tax and Income-tax Liabilities.
3. Validity of Reference to Valuation Officer under Section 16A.
4. Levy of Penalty under Section 18(1)(a).

Detailed Analysis:

1. Barred by Limitation of Time for Assessments:
The first common ground raised was the claim that the assessments made by the Wealth-tax Officer (WTO) under section 16(3) were barred by limitation as prescribed by section 17A of the Wealth-tax (W.T.) Act. The relevant assessment years were 1986-87 and 1987-88. The returns for these years were filed in March 1991, and the assessments were completed in February/March 1992.

The assessee argued that assessments should have been completed by 31st March 1991, as per the W.T. Act. The departmental representative countered that the provisions of section 16(7) of the W.T. Act allowed the WTO to complete assessments within one year from the date of filing the return, thus making the assessments valid.

Upon careful consideration of the submissions and relevant provisions, it was noted that section 15 and proviso (a) & (b) of the W.T. Act allowed returns for assessment years 1987-88 or earlier to be furnished up to 31st March 1990. The assessments should have been completed by 31st March 1991. Since the returns were filed after the prescribed date, they were deemed invalid. The WTO should have initiated proceedings under section 17 to regularize the belated returns but failed to do so. Consequently, the assessments made in February/March 1992 were barred by limitation.

2. Non-deduction of Outstanding Wealth-tax and Income-tax Liabilities:
The remaining grounds involved points relating to non-deduction of outstanding wealth-tax and income-tax liabilities. These grounds were not pressed by the assessee before the Deputy Commissioner of Income-tax (Appeals) [Dy. CIT(A)] and were rejected as not pressed. The assessee's counsel acknowledged this and did not submit any arguments on these grounds before the Tribunal. Therefore, these grounds were rejected.

3. Validity of Reference to Valuation Officer under Section 16A:
Similarly, the issue of the alleged invalidity of the reference made to the Valuation Officer under section 16A was not pressed before the Dy. CIT(A) and was thus rejected. The counsel for the assessee conceded that these grounds could not be pressed before the Tribunal, leading to their rejection.

4. Levy of Penalty under Section 18(1)(a):
The appeals also involved the levy of penalty under section 18(1)(a) for assessment years 1981-82, 1982-83, and 1984-85. The relevant details of filing dates and penalties were provided. The Assessing Officer levied penalties due to habitual default in filing returns.

The assessee argued that returns for 1981-82 and 1982-83 were filed under the Amnesty Scheme, and the delay should be considered reasonable due to illness. However, these arguments were not pressed during the hearing. The primary argument was that the delay in filing income-tax returns should be considered a reasonable cause for the delay in filing wealth-tax returns.

The Tribunal considered the arguments and relevant case laws, including judgments from the Hon'ble Madras High Court and Hon'ble Gujarat High Court. The Tribunal decided to follow the consistent view taken by the Hon'ble Madras High Court, which treated the delay in filing income-tax returns as a reasonable cause for the delay in filing wealth-tax returns. Therefore, the penalty for the period up to the delay in filing income-tax returns was canceled, while the penalty for the remaining period was confirmed.

Conclusion:
In summary, the Tribunal allowed the ground of assessments being barred by limitation, rejected the grounds related to non-deduction of liabilities and validity of reference to the Valuation Officer, and partially allowed the appeals related to the levy of penalty under section 18(1)(a) by canceling the penalty for the period corresponding to the delay in filing income-tax returns.