1990 (2) TMI 84 - AT - Wealth-tax

Summary

Issues:
1. Levy of penalties under section 18(1)(a) of the Wealth Tax Act, 1957 for assessment years 1977-78 to 1981-82.

Comprehensive Analysis:
The appeals by the Revenue were directed against the consolidated order of the Deputy Commissioner of Wealth Tax (Appeals) upholding the levy of penalties under section 18(1)(a) of the Wealth Tax Act, 1957 for the assessment years 1977-78 to 1981-82. The Wealth Tax Officer (WTO) initiated penalty proceedings as the assessee, an individual, had not filed the returns in time. The WTO levied penalties for each year, which the assessee appealed before the Deputy Commissioner of Wealth Tax (Appeals). The Deputy Commissioner confirmed the penalties for all years, stating that the assessee's belief about jewelry being exempt from wealth tax was not bona fide. The Deputy Commissioner did not find the other points raised by the assessee relevant.

The arguments before the ITAT were twofold. Firstly, it was argued that the assessee had submitted an explanation to the WTO, which was not considered. The ITAT found that the explanation had indeed been submitted by the assessee, but the WTO did not take it into account. The ITAT emphasized that penalty proceedings require serious consideration and the explanation offered by the assessee must be duly considered before levying any penalty. The ITAT found the penalty orders flawed as the WTO did not apply his mind to the facts and did not consider the explanation submitted by the assessee.

Secondly, it was argued that the assessee, not previously assessed to wealth tax, believed jewelry was exempt from taxation, hence the delay in filing returns. The ITAT agreed with this argument, noting that the conduct and behavior of the assessee indicated a bona fide belief. The ITAT considered the conduct and behavior of the assessee, the timely payment of taxes, and the voluntary filing of returns as indicative of an honest intention. The ITAT found the assessee's belief, though erroneous, to be bona fide. Considering all facts and circumstances, the ITAT concluded that the assessee should succeed in the appeals.

In conclusion, the ITAT allowed all appeals and canceled the penalties levied for all assessment years under consideration.