1976 (11) TMI 115 - AT - Wealth-tax

Issues Involved:
1. Penalty levied under Section 18(1)(a) of the Wealth-tax Act.
2. Assessee's claim of bona fide belief regarding wealth-tax liability.
3. Voluntary filing of wealth-tax returns by the assessee.
4. The Appellate Assistant Commissioner's decision to cancel the penalties.
5. Revenue's contention against the cancellation of penalties.

Issue-wise Detailed Analysis:

1. Penalty levied under Section 18(1)(a) of the Wealth-tax Act:
The Wealth-tax Officer initiated penalty proceedings under Section 18(1)(a) of the Wealth-tax Act due to the delay in filing the wealth-tax returns for the assessment years 1962-63 to 1970-71. Penalties were imposed as follows:
- 1962-63: Rs. 31,824
- 1963-64: Rs. 30,624
- 1964-65: Rs. 60,220
- 1965-66: Rs. 59,778
- 1966-67: Rs. 57,117
- 1967-68: Rs. 75,403
- 1968-69: Rs. 72,946
- 1969-70: Rs. 61,645
- 1970-71: Rs. 15,928

2. Assessee's claim of bona fide belief regarding wealth-tax liability:
The assessee, a Hindu undivided family, argued that it was under the bona fide impression that its wealth did not exceed the taxable minimum of Rs. 4 lakhs. The assessee claimed that the properties were inherited and not marketable, and that it was unaware of the wealth-tax liability until it filed the returns voluntarily. The Appellate Assistant Commissioner accepted this explanation, noting that the returns were filed voluntarily and that the assessee had no wilful intention to evade the provisions of the Wealth-tax Act.

3. Voluntary filing of wealth-tax returns by the assessee:
The assessee filed its wealth-tax returns for the assessment years 1962-63 to 1965-66 on 9th March 1971, and for the assessment years 1966-67 to 1970-71 on 5th February 1971. The Appellate Assistant Commissioner found that the returns were filed voluntarily, and there was no evidence to suggest that the assessee acted in deliberate defiance of the law. The assessee had obtained a valuer's report and filed the returns showing the net wealth above the taxable minimum as soon as it got the valuation of the properties ascertained.

4. The Appellate Assistant Commissioner's decision to cancel the penalties:
The Appellate Assistant Commissioner considered the assessee's submissions and found that there was reasonable cause for the delay in filing the returns. The Commissioner noted that the assessee's plea of being under a bona fide impression regarding its wealth-tax liability was acceptable. The Commissioner also observed that the substantial variation in the net wealth assessed arose from the valuation of the Mount Road property, and the assessee had chosen to get the property valued on its own. Consequently, the penalties for all the years under appeal were cancelled.

5. Revenue's contention against the cancellation of penalties:
The Revenue argued that the Appellate Assistant Commissioner erred in cancelling the penalties, contending that the assessee's ignorance of the Wealth-tax Act and its bona fide impression regarding the taxable limit did not constitute reasonable cause. The Revenue pointed out that the assessee owned extensive property in Mount Road, Madras, and should have known that such a valuable property would attract wealth-tax liability. However, the Tribunal found no reason to hold that the Appellate Assistant Commissioner's finding was unreasonable. The Tribunal observed that the assessee had obtained an approved valuer's report and that the plea of the assessee being under a bona fide impression was credible.

Conclusion:
The Tribunal upheld the orders of the Appellate Assistant Commissioner, concluding that the assessee was not guilty of filing its wealth-tax returns late without reasonable cause. The appeals of the Revenue were dismissed. The Tribunal emphasized that penalty should not be imposed unless the party acted deliberately in defiance of the law or was guilty of contumacious or dishonest conduct. The Tribunal found no material on record to show that the assessee acted in deliberate disregard of the provisions of the law.

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