1987 (1) TMI 157 - AT - Wealth-tax

Issues Involved:
1. Delay in filing wealth-tax returns for the assessment years 1970-71 to 1975-76.
2. Imposition of penalties under section 18(1)(a) for the delay.
3. Reassessment under section 17 for the assessment years 1973-74 and 1974-75.
4. Penalties for delay in furnishing returns in response to notice under section 17.
5. Reasonable cause for delay in filing returns.

Detailed Analysis:

Issue 1: Delay in Filing Wealth-Tax Returns
The assessee, a widow, illiterate, and a pardanashin lady, failed to file wealth-tax returns on the due dates for the assessment years 1970-71 to 1975-76. She voluntarily filed the returns on 7-1-1977, before any notice under section 14(2) or section 17 of the Wealth-tax Act, 1957, was issued. The returns were revised on 15-2-1977, and assessments were completed on 24-2-1977.

Issue 2: Imposition of Penalties Under Section 18(1)(a)
The WTO imposed penalties for the delay in filing returns, rejecting the assessee's explanation that she was unaware of her liability due to her circumstances. The penalties imposed were Rs. 55,653, Rs. 50,754, Rs. 63,421, Rs. 47,670, and Rs. 25,100 for the assessment years 1970-71 to 1974-75, and Rs. 29,440 for 1975-76. The AAC partially upheld the penalties, considering reasonable cause only up to 31-3-1975.

Issue 3: Reassessment Under Section 17 for Assessment Years 1973-74 and 1974-75
The WTO issued notices under section 17 for these years on 17-10-1978, and the assessee filed returns on 10-9-1979. The reassessments were completed on 12-9-1979. Penalties of Rs. 836 and Rs. 878 were imposed for the delay in filing these returns.

Issue 4: Penalties for Delay in Furnishing Returns in Response to Notice Under Section 17
The AAC confirmed the penalties for the delay in furnishing returns in response to notice under section 17. The assessee's appeals challenged the retention of these penalties.

Issue 5: Reasonable Cause for Delay in Filing Returns
The AAC held that the assessee had reasonable cause for delay up to 31-3-1975, considering her circumstances. However, for the period from 1-4-1975 to 7-1-1977, the AAC did not find reasonable cause. The Tribunal noted that the WTO's assumption that ignorance of law is no excuse was incorrect, citing the Supreme Court's ruling in Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1979] 118 ITR 326. The Tribunal found that the assessee had a bona fide belief that she was not liable to wealth-tax due to her agricultural income and her circumstances.

The Tribunal also referenced the Delhi High Court's rulings in Shakuntla Mehra v. CWT [1976] 102 ITR 301 and Sona Electric Co. v. CIT [1985] 152 ITR 507, emphasizing that mere failure to file returns within the time allowed did not automatically result in penalties without contumacious or deliberate default. The Tribunal found that the assessee's explanation for the delay was reasonable and that her conduct showed compliance once she became aware of her responsibilities.

Conclusion:
The Tribunal concluded that the assessee had reasonable cause for the delay in filing returns for the assessment years 1970-71 to 1975-76. The penalties imposed for these years were canceled. Additionally, the penalties for delay in furnishing returns in response to notice under section 17 for the assessment years 1973-74 and 1974-75 were also canceled, as the assessee had brought the matter to the WTO's attention and there was no concealment. The appeals of the assessee were allowed, and those of the revenue were dismissed.

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