678/CBDT. - Income Tax - 678/CBDT

INSTRUCTION NO. 678/CBDT Dated : April 9, 1974 Section(s) Referred: 17 ,18(1) Statute: Wealth Tax Act, 1957 Under Section 18(1)(a) of the Wealth -tax Act/17(1)(a) of the Gift-tax Act, penalty may be levied for delay in filing return of Wealth/return of gift if the delay was without reasonable cause. The penalty is prescribed at certain rates for every month during which the default continued. Recently in a case which was referred to the Board, it was noticed that the period during which reasonable cause existed for not filing the return was not excluded in computing the quantum of penalty imposable under section 18(1)(i) of the Wealth Tax Act. 2. The penalty prescribed under Section 18(1)(a) of the Wealth-tax Act and 17(1)(a) of the Gift Tax Act for failure to furnish returns has to be calculated with reference to the period during which the default continued. Hence for the operation of the penalty provisions to be attracted, there has to be a default on the part of the assessee. It is implicit that in such a case, the assessee's failure to furnish the return within the specified time is without reasonable cause. The Board are advised that if there has been reasonable cause for any period, then there is no question of any default during the period while the reasonable cause was in operation and as such this period could not be taken into account in determining the quantum of penalty imposable. Thus the period during which reasonable cause for not filing the return existed, has to be excluded while determining the quantum of penalty irrespective of the fact whether the assessee had applied for extension of time for filing return or not. What is reasonable cause for this purpose has, however, to be decided carefully on the facts of each case. 3. This may please be brought to the notice of all assessing officers.