1984 (1) TMI 154 - AT - Wealth-tax

Delay In Filing Wealth Tax Return, Late Filing, Reasonable Cause, Voluntary Disclosure Of Income, Wealth Tax Act

Summary

Issues:
1. Imposition of heavy penalties for late filing of wealth-tax returns.
2. Interpretation of the Voluntary Disclosure of Income and Wealth Ordinance, 1975 regarding immunity from penalties under the Wealth-tax Act, 1957.
3. Assessment of reasonable cause for failure to file wealth-tax returns.

Analysis:
1. The judgment pertains to the imposition of heavy penalties totaling Rs. 88,373 for late filing of wealth-tax returns for the assessment years 1970-71 to 1974-75. The penalties were levied on an assessee who had a petty wealth-tax liability of Rs. 7,121 for the same years. The Appellate Tribunal noted that the penalties were canceled by the AAC, leading the department to appeal against this decision.

2. The assessee, engaged in money-lending, availed of the benefits of voluntary disclosure under the Voluntary Disclosure of Income and Wealth Ordinance, 1975 following a search in their premises. The assessee disclosed concealed income for the assessment years 1967-68 to 1974-75, becoming liable to wealth-tax. The Wealth Tax Officer (WTO) contended that separate disclosure under section 15 of the VDO was necessary for immunity. However, the AAC found reasonable cause for the failure and canceled the penalties.

3. The assessee argued that section 14 of the VDO provided absolute immunity from penalties under the Wealth-tax Act, 1957, and that penalties under the 'said Acts' were prohibited. The Tribunal agreed with the assessee's interpretation, emphasizing that the disclosed income made the assessee liable to wealth-tax, and hence, there was immunity from penalty for not filing wealth-tax returns. Additionally, the Tribunal found reasonable cause for failure to file the returns, as the disclosure was accepted without modification, and the Press Note clarified immunity in cases of search under the Income-tax Act or the Wealth-tax Act.

4. The Tribunal concluded that there was both immunity from penalties under the Wealth-tax Act due to the disclosure and reasonable cause for the failure to file wealth-tax returns. The Tribunal upheld the AAC's decision to cancel the penalties, dismissing the departmental appeals based on the reasonable belief held by the assessee regarding the consequential nature of wealth-tax assessments following the disclosure of income.