1985 (8) TMI 121 - AT - Wealth-tax

Issues Involved:
1. Delayed submission of returns and initiation of penalty proceedings under s. 18 (1) (a) of the WT Act, 1957.
2. Whether the assessee was prevented by sufficient and reasonable cause from submitting the returns on time.
3. Whether the penalty orders were imposed according to law, particularly regarding the rates applied.
4. Whether the assessee was afforded a reasonable opportunity of being heard.
5. Whether the WTO extended the time for submission of returns up to 15th March 1977.

Detailed Analysis:

1. Delayed Submission of Returns and Initiation of Penalty Proceedings:
The assessee, an individual, was required to file returns of wealth for the assessment years 1971-72 to 1975-76 by specific due dates but filed them on 16th March 1977. Due to the delayed submission, the WTO initiated penalty proceedings under s. 18 (1) (a) of the WT Act, 1957, and levied penalties for each assessment year.

2. Sufficient and Reasonable Cause for Delay:
The assessee contended that the delay was due to the serious illness of his grandfather from 1971 to 1974. However, the WTO rejected this explanation, stating that there was no sufficient cause preventing timely submission. The AAC also did not accept the contention that the failure to submit returns on time was due to reasonable cause.

3. Imposition of Penalty According to Law:
The WTO applied two different rates for calculating penalties: one rate up to 31st March 1976 and another from 1st April 1976, based on an amendment to s. 18 (1). The AAC upheld the contention that penalties should be imposed according to the law as it stood at the date of default, not based on subsequent amendments. The Tribunal agreed, citing the Gauhati High Court's decision in T. K. Roy & Ors. vs. CWT, which held that penalties must be based on the law at the time of default.

4. Reasonable Opportunity of Being Heard:
The AAC found that the WTO did not provide a reasonable opportunity for the assessee to be heard. The Tribunal supported this, noting that the WTO should have allowed the assessee to substantiate his explanation with evidence. The penalty orders were passed on the same date the explanation was submitted, without giving the assessee a chance to provide further evidence. The Tribunal cited the Madras High Court's decision in V. L. Dutt vs. CIT, emphasizing the need for natural justice and the opportunity to present further materials if the initial explanation is not accepted.

5. Extension of Time for Submission of Returns:
The assessee claimed that the WTO extended the time for filing returns up to 15th March 1977. The Tribunal reviewed the correspondence and concluded that the WTO had indeed extended the deadline, and since the returns were filed on 16th March 1977, no penalties were imposable for the assessment years 1971-72 to 1974-75.

Conclusion:
The Tribunal dismissed the Departmental appeals, upholding the AAC's decision to remit the penalties. The key reasons were the lack of reasonable opportunity for the assessee to be heard and the incorrect application of penalty rates based on amendments that came into effect after the default dates. Additionally, the Tribunal recognized the extension of the deadline for filing returns granted by the WTO.

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