1982 (5) TMI 94 - AT - Wealth-tax

Summary

Issues:
1. Whether there was a failure on the part of the assessee to file the returns without reasonable cause.
2. Whether the penalty imposed under section 18(1)(a) of the Wealth-tax Act is valid for the assessment years 1973-74 and 1974-75.
3. Whether the quantum of penalty imposed is justified.

Analysis:
1. The judgment deals with an appeal filed by the assessee against the penalty levied under section 18(1)(a) of the Wealth-tax Act for the assessment years 1973-74 and 1974-75. The assessee contended that filing returns in response to notices under section 14(2) within the allowed time meant there was no default to attract penalty proceedings. However, the AAC rejected this argument, stating that the delay in not filing the returns voluntarily is not condoned by issue of notices under section 14(2). The AAC upheld the penalty, considering it reasonable and sustained the same.

2. The assessee further appealed, arguing that compliance with notices under section 14(2) eliminated any default. The assessee relied on decisions of various High Courts to support this position. The Departmental representative, however, supported the lower authorities' orders, emphasizing that the default to file returns voluntarily is distinct from compliance with notices under section 14(2). The WTO had imposed the penalty, considering the default deliberate and wilful.

3. The Tribunal analyzed the provisions of section 18(1)(a) of the Wealth-tax Act, emphasizing that penalty for failure to furnish a return is quasi-criminal and should be imposed judiciously. The Tribunal considered whether the assessee had failed to file returns without reasonable cause. It held that the default occurred when the returns were not filed by the due dates, even though they were filed later in response to notices under section 14(2). The Tribunal cited decisions of various High Courts to support its conclusion that the default under section 14(1) could be penalized despite subsequent filing of returns.

4. The Tribunal noted that the assessee did not provide any explanation for the default in filing returns voluntarily. It inferred that the assessee had no reasonable cause for the delay, indicating a conscious disregard of the legal obligation. Therefore, the Tribunal agreed with the lower authorities that penalty was justified for both assessment years.

5. Regarding the quantum of penalty, the assessee argued that for the assessment year 1974-75, the penalty should be related to the default under a notice issued under section 17(1). However, the Tribunal held that the penalty under section 18(1)(a) had to be levied according to the law in force on the last day for filing returns. The penalty was based on the original assessments and the provisions of section 18(1)(a) as applicable on the due dates for filing returns. The Tribunal found no grounds to modify the penalty imposed, as it was in accordance with the law. Consequently, the appeals were dismissed.