1994 (12) TMI 125 - AT - Wealth-tax

Summary

Issues:
1. Levy of penalties under section 18(1)(a) of the WT Act, 1957.
2. Interpretation of the provisions of section 40 of the Finance Act, 1983 regarding the levy of wealth-tax on closely-held companies.
3. Whether ignorance of the amended provisions of law constitutes a reasonable cause for late filing of returns.

Detailed Analysis:
1. The assessee appealed against the penalties levied under section 18(1)(a) of the WT Act, 1957 by the Assessing Officer for delays in filing wealth tax returns for the assessment years 1984-85 and 1985-86. The CWT (Appeals) upheld the penalties, stating that the ignorance of the amended provisions of law was not a reasonable cause for the delays. The assessee contended that the penalties should be dropped due to the extensions sought for filing the returns. However, the CWT (Appeals) found no merit in this argument and upheld the penalties, leading to the appeals before the ITAT Jabalpur.

2. The legal issue raised by the assessee's counsel focused on the interpretation of section 40 of the Finance Act, 1983, which revived the levy of wealth-tax on closely-held companies. The counsel argued that the penalty provisions of section 18(1)(a) of the WT Act were not attracted due to the specific provisions of section 40. The ITAT analyzed the provisions of section 40 and concluded that while certain provisions of the WT Act were made inapplicable for the levy of wealth-tax on closely-held companies, the penalty provisions were not excluded. The ITAT emphasized that section 40 was to be construed as part of the WT Act, and penalties could be imposed under section 18(1)(a) despite the revival of wealth-tax under section 40.

3. The assessee's counsel also argued that the ignorance of the amended provisions of law constituted a reasonable cause for the late filing of returns, citing the decision of the Hon'ble Supreme Court in a relevant case. However, the ITAT noted that the assessee had sought extensions for filing the returns, indicating awareness of the revived wealth-tax provisions. The ITAT found no justification for the delays and upheld the penalties imposed by the lower authorities. The ITAT dismissed the appeals, affirming the penalties levied for the delays in filing wealth tax returns.

In conclusion, the ITAT Jabalpur upheld the penalties imposed under section 18(1)(a) of the WT Act, 1957, rejecting the arguments regarding the interpretation of section 40 of the Finance Act, 1983 and the ignorance of the amended provisions of law as reasonable causes for the delays in filing wealth tax returns.