1985 (4) TMI 124 - AT - Wealth-tax

Summary

Issues Involved:
1. Imposition of penalty under section 18(1)(a) of the Wealth-tax Act, 1957.
2. Period of default for non-filing of wealth-tax returns.
3. Bona fide belief regarding non-taxable wealth.
4. Illness and inability to file returns.
5. Applicability of penalty on deceased assessee.
6. Legal representative's liability under section 19 of the Wealth-tax Act, 1957.

Detailed Analysis:

Imposition of Penalty under Section 18(1)(a) of the Wealth-tax Act, 1957:
The appeal was against the imposition of a penalty of Rs. 1,63,500 for not filing any return under section 14(1) or in response to notice under section 17 of the Act. The assessee's counsel argued that the penalty was unjustified as the assessee believed his wealth was below the taxable limit.

Period of Default for Non-filing of Wealth-tax Returns:
The department calculated the period of default as 109 months, starting from 1-10-1970 to 31-10-1979. The counsel for the assessee contended that the default period should only be 7 months, starting from 8-3-1979, as the assessee was under no obligation to file returns prior to receiving the notice in February 1979.

Bona Fide Belief Regarding Non-taxable Wealth:
The assessee's counsel submitted that the assessee was under a bona fide belief that his wealth was below the taxable limit due to historical assessments showing negative wealth. The Commissioner, however, argued that the assessee should have been aware of his obligation to file returns due to previous assessments indicating wealth above the taxable limit.

Illness and Inability to File Returns:
The counsel argued that the assessee was chronically ill and had relocated to Indore for medical treatment, which prevented him from receiving notices and filing returns. This was supported by a tenancy agreement and a doctor's certificate. The Commissioner dismissed these claims, stating there was no evidence of illness and that the assessee had consciously disregarded his obligations.

Applicability of Penalty on Deceased Assessee:
The counsel argued that penalty cannot be imposed on a deceased person, referencing section 19 of the Wealth-tax Act and section 159 of the Income-tax Act. Various case laws were cited to support this argument.

Legal Representative's Liability under Section 19 of the Wealth-tax Act, 1957:
The Tribunal did not find it necessary to address the issue of the legal representative's liability under section 19, as the primary issue of penalty imposition was resolved in favor of the assessee.

Conclusion:
The Tribunal concluded that the penalty under section 18(1)(a) was not exigible as the assessee was under a bona fide belief that his wealth was below the taxable limit. The Tribunal relied on precedents set by the Allahabad High Court and the Gauhati High Court, which emphasized the importance of the assessee's belief about his wealth rather than the final assessed value. Given the evidence of illness and relocation, the Tribunal found the assessee's explanation credible. Consequently, the appeal was fully allowed, and the stay application was dismissed as infructuous.