1999 (6) TMI 56 - AT - Wealth-tax

Summary

Issues:
Levy of penalty under section 18(1)(a) of the Wealth Tax Act, 1957 for the assessment year 1986-87.

Analysis:

1. Filing of Unsigned Return:
The appellant, a company engaged in advertisement business, filed an unsigned return within the extended period, followed by another unsigned return marked as "Duplicate." The appellant contended that the tax was paid based on the wealth declared in the return. The appellant sought to rectify the deficiency, but instead of providing an opportunity, the Assessing Officer (AO) issued a notice under section 17. The AO did not intimate the appellant of the unsigned return, as required in income tax matters. The appellant argued that the mistake of not signing the return was inadvertent and could be condoned under section 42C of the Wealth Tax Act. The AO and CIT(A) upheld the penalty, citing case laws. The appellant relied on tribunal decisions and High Court rulings to support their case.

2. Department's Contention:
The Departmental Representative argued that the appellant's filed return was invalid, and a notice was served for filing the return, which was submitted belatedly. Therefore, the penalty was justified based on the invalid return.

3. Tribunal's Decision:
The Tribunal noted that the appellant filed unsigned returns within the extended period, and the tax was paid based on the declared wealth. The AO failed to inform the appellant of the unsigned return and did not provide an opportunity to rectify the defect. While the Income Tax Act specifies the duty of the AO to intimate defects, the Wealth Tax Act lacks such provisions. However, section 42C allows for curable mistakes in conformity with the Act's intent. The Tribunal opined that the penalty should not be levied as the assessment was completed on the same figure declared by the appellant, and the tax was paid. The Tribunal's decision was supported by the precedent in the case of IAC vs. Punjab United Pesticides & Chemicals Ltd.

Conclusion:
The Tribunal allowed the appeal, ruling in favor of the appellant, emphasizing that the penalty should not be imposed in a scenario where the tax was paid, and rectification was sought for the technical mistake of filing an unsigned return, in line with the provisions of the Wealth Tax Act and the spirit of the law.