1982 (10) TMI 73 - AT - Wealth-tax

Summary

Issues:
1. Imposition of penalty under section 18(1)(a) of the Wealth Tax Act, 1957 for delay in filing the return for the assessment year 1974-75.
2. Whether the penalty imposed on the assessee was justified based on the circumstances and the bona fide belief of the assessee.
3. Interpretation of the provisions of the Wealth Tax Act regarding the imposition of penalties for delayed filing of returns.

Detailed Analysis:
1. The appeal was filed against the penalty imposed by the WTO under section 18(1)(a) of the Wealth Tax Act, 1957 for the delay in filing the return for the assessment year 1974-75. The assessee voluntarily filed the return after becoming aware of the requirement during the assessment proceedings for the subsequent year. The penalty was upheld by the AAC in the impugned order.

2. The counsel for the assessee argued that the delay in filing the return was due to a bona fide belief that the net wealth was not above the taxable limit. The assessee's belief was supported by the fact that the return for the subsequent year was filed voluntarily upon realizing the potential tax liability. The counsel relied on previous judgments to support the contention that no penalty should be levied in such circumstances.

3. The revenue contended that penalties serve as a check and balance to ensure compliance with tax laws. It was argued that the assessee, having filed a return with taxable net wealth, could not claim a bona fide belief to avoid filing the return. Reference was made to a judgment of the Punjab & Haryana High Court to emphasize the importance of the final assessed net wealth for penalty imposition.

4. The Tribunal, after considering the submissions and facts of the case, held that the penalty was wrongly imposed. The Tribunal noted that the assessee's belief was bona fide, supported by the voluntary filing of the subsequent year's return upon realizing the potential tax liability. The assessee's explanations and submissions were not adequately considered by the WTO in imposing the penalty.

5. It was highlighted that no notice was served by the WTO for filing the return, and the assessee had voluntarily furnished the returns for both years. The Tribunal found that the assessee's conduct did not indicate a habitual contumacious behavior. The Tribunal applied the ratio of the Orissa High Court judgment to conclude that the penalty was not leviable in the present case.

6. The Tribunal distinguished the judgment of the Punjab & Haryana High Court cited by the revenue, stating that the facts of that case were different and not applicable to the present case. Consequently, the Tribunal allowed the appeal and canceled the penalty imposed on the assessee.