1987 (1) TMI 155 - AT - Wealth-tax

Summary

Issues:
Imposition of penalty under section 18(1)(a) of the Wealth Tax Act for the assessment year 1973-74.

Detailed Analysis:

1. The appeal was filed by the assessee against the order of the Appellate Commissioner dismissing the appeal regarding the imposition of a penalty under section 18(1)(a) of the Wealth Tax Act for the assessment year 1973-74. The Wealth Tax Officer (WTO) had imposed a penalty of Rs. 14,121 as the return was filed late, on 14th March 1979, instead of the due date in July 1973. The WTO noted that there was no request for an extension to file the return. The assessee explained that he believed his wealth was below the taxable limit due to certain circumstances. The WTO did not accept this explanation, considering the filing of the return for the subsequent year in August 1974. Consequently, the penalty was imposed.

2. The Appellate Commissioner upheld the penalty but provided some directions regarding the quantum of the penalty by passing an order under section 35.

3. During the hearing, it was argued on behalf of the assessee that he was a retired Lt. Gen. in the Indian Army by the relevant valuation date and was under the impression that the Controller of Defence Accounts would file the relevant returns. The net wealth determined by the WTO included amounts gifted to the assessee's wife and bank balances, which were claimed to be exempt under specific provisions of the Wealth Tax Act. It was contended that the assessee's belief that his wealth was below the taxable limit was genuine and could have been proven if the correct assessment was made. The departmental representative argued that even after excluding the gifted amount, the net wealth would still be above the taxable limit.

4. The Tribunal, after considering the facts, concluded that this was not a suitable case for imposing a penalty under section 18(1)(a) of the Act. The Tribunal found that even after including the gifted amount, the net wealth of the assessee would have been marginally taxable. The Tribunal also considered the nature of the assets held and exemptions available, indicating that the correct legal view might have resulted in the assessee's wealth being below the taxable limit. The Tribunal noted that the filing of the return for the subsequent year demonstrated the assessee's good faith and belief. Therefore, the Tribunal canceled the penalty order, stating that the assessee had a bona fide belief and it was not a fit case for the imposition of a penalty under the Wealth Tax Act.

5. Consequently, the Tribunal allowed the appeal, canceling the penalty imposed on the assessee under section 18(1)(a) of the Wealth Tax Act for the assessment year 1973-74.