1981 (9) TMI 158 - AT - Wealth-tax

Summary

Issues:
1. Calculation of penalty under section 18(1)(a) of the Wealth Tax Act.
2. Computation of the period of default for penalty assessment.
3. Validity of penalty orders passed by the WTO.
4. Consideration of reasonable cause for delay in filing wealth tax returns.
5. Application of mind by the WTO and AAC in penalty proceedings.

Analysis:

Issue 1: Calculation of penalty under section 18(1)(a) of the Wealth Tax Act
The appeals consolidated for convenience involved penalty assessments under section 18(1)(a) of the Wealth Tax Act for various assessment years. The AAC held that penalties should be 2% per month of the assessed tax, even for defaults post-April 1968. The Supreme Court's decision in CWT vs. Suresh Seth clarified that the law applicable is that on the due date of the return. The Tribunal rejected the Revenue's challenge on this ground.

Issue 2: Computation of the period of default for penalty assessment
The issue of computing the default period arose when the Tribunal set aside the assessment orders, leading to reassessments in June, July, and August 1976. The Revenue contended that default should be counted from the due date of returns to the filing date. However, the Tribunal rejected this argument, stating that once a matter is conceded before the first authority, it cannot be re-agitated. The Tribunal also noted that the assessee was not liable for penalties at all.

Issue 3: Validity of penalty orders passed by the WTO
The WTO imposed penalties without considering the assessee's explanation or applying his mind. The AAC reduced the penalties but upheld the liability. However, the Tribunal found that penalties were imposed without proper consideration and canceled them for all years under appeal.

Issue 4: Consideration of reasonable cause for delay in filing wealth tax returns
The assessee claimed a reasonable cause for delay, arguing that the wealth belonged to the HUF, and returns were filed based on that belief. The Tribunal agreed that the delay was reasonable due to the genuine belief of the assessee, leading to the cancellation of penalty orders.

Issue 5: Application of mind by the WTO and AAC in penalty proceedings
Both the WTO and AAC were found to have not adequately considered the assessee's explanations for the delayed filings. The Tribunal concluded that penalties were levied without proper consideration and canceled them for all years under appeal.

In conclusion, the Tribunal dismissed the Revenue's appeals and allowed the Cross Objections filed by the assessee, canceling the penalty orders for all the assessment years under consideration.