1984 (11) TMI 129 - AT - Wealth-tax

Summary

Issues:
1. Penalty imposed under section 18(1)(a) of the Wealth Tax Act for delayed filing of return.
2. Whether the penalty imposed on the assessee is justified.

Detailed Analysis:
1. The appeal was filed by the assessee against the penalty of Rs. 49,096 imposed under section 18(1)(a) of the Wealth Tax Act for delayed filing of the return for the assessment year 1974-75. The penalty proceedings were initiated by the WTO due to a delay of 76 months in filing the return. The AAC upheld the penalty, stating that the appellant had shown taxable wealth in the return, and the valuation of assets for wealth tax purposes should be at market value, not book value. The appellant's explanation was deemed unsatisfactory as they were aware of the market rate of gold, being a dealer in gold. The AAC rejected the appellant's argument that they were not aware of the valuation rules under the Wealth Tax Act.

2. The assessee, represented by counsel, appealed the decision. It was argued that the assessee, a regular income-tax assessee, had been filing income tax returns on time. The assessee, a proprietor of a jewelry business, had purchased gold bars in previous years, which were carried forward as stock-in-trade at cost price. Subsequently, the assessee was advised to value the gold at market value under the Wealth Tax Rules. The assessee filed wealth tax returns for multiple assessment years on the same date in December 1980. The capital of the assessee without considering the market value of gold was below the taxable limit. The Tribunal noted that the assessee had disclosed the quantity of gold in income tax returns and filed wealth tax returns voluntarily. Citing a Supreme Court decision, it was emphasized that there is no presumption that every person knows the law. Therefore, the Tribunal held that the penalty imposed under section 18(1)(a) was not justified as the assessee believed in good faith that they were not assessable under the Wealth Tax Act, and the penalty was cancelled.

In conclusion, the Tribunal allowed the appeal, ruling in favor of the assessee and cancelling the penalty imposed under section 18(1)(a) of the Wealth Tax Act.