2005 (2) TMI 39 - HC - Wealth-tax

Whether penalty for failure to furnish the wealth-tax return within time for the assessment year 1979-80 was imposable on the assessee under section 18(1)(a) of the Wealth-tax Act, 1957? As per circular No. 281/8/86-I.T. (INV. III) dated February 14, 1986, immunity against the levy of penalty is available only if the assessee had voluntarily and in good faith made disclosure of net wealth between November 15, 1985 and March 31, 1986. In the present case, notices had been issued under sections 17(1) and 16(4) of the Act much before the filing of return. Therefore, the assessee cannot claim immunity from levy of penalty by relying on circular dated February 14, 1986. - reference made by the Tribunal is answered in the affirmative, i.e., in favour of the Revenue

Summary

Issues involved:
1. Imposition of penalty for failure to furnish wealth-tax return within time for the assessment year 1979-80 under section 18(1)(a) of the Wealth-tax Act, 1957.
2. Legality of penalty imposed under section 18(1)(a) of the Act.
3. Applicability of circular No. 281/8/86-I.T. issued by the Central Board of Direct Taxes for immunity against penalty.

Analysis:
1. The case involved the imposition of a penalty for the failure to furnish the wealth-tax return within the stipulated time for the assessment year 1979-80 under section 18(1)(a) of the Wealth-tax Act, 1957. The assessee failed to file the return by the due date and did not respond to subsequent notices. The Departmental Valuation Officer valued the property, but the Wealth-tax Officer determined a different value. The Commissioner initiated proceedings under section 25(2) and imposed a penalty under section 18(1)(a).

2. The Tribunal allowed the appeal filed by the assessee, holding that the assessments made were invalid due to the invalidity of the returns filed. Therefore, the penalties imposed under section 18 were considered without jurisdiction and were canceled. The Tribunal also noted that the assessee did not conceal any wealth or furnish inaccurate particulars of wealth under section 18(1)(c). The High Court observed that the Tribunal erred in canceling the order of the Commissioner passed under section 25(2) and set aside the Tribunal's conclusion on the penalty imposed under section 18(1)(a).

3. The High Court further analyzed the argument regarding the applicability of circular No. 281/8/86-I.T. issued by the Central Board of Direct Taxes for immunity against penalty. The circular provided immunity if the assessee voluntarily disclosed income between specific dates. However, as notices were issued before the disclosure and the filing of return, the assessee could not claim immunity under the circular. The Court held in favor of the Revenue and against the assessee, upholding the penalty imposed under section 18(1)(a) of the Act.