1993 (11) TMI 4 - HC - Wealth-tax

Court quashes order denying penalty waiver; 'case' includes penalties; genuine hardship beyond finances.

The court quashed the Commissioner's order dismissing the petitioner's application for waiver of a penalty under the Wealth-tax Act, 1957. The court ... Delay In Filing Return, Waiver Of Penalty Issues:Challenge to dismissal of application for waiver of penalty under Wealth-tax Act, 1957.Analysis:The petitioner, a P.W.D. contractor, challenged the dismissal of his application under section 18B(4) of the Wealth-tax Act, 1957, seeking waiver of a penalty of Rs. 16,880 imposed for delay in filing the return. The petitioner contended that the penalty was disproportionate to the assessed tax of only Rs. 500 and that the return was actually filed within the period, but the office made a mistake in recording the date. The Commissioner rejected the application stating that the penalty was already paid, and no evidence was provided to show genuine hardship. The petitioner invoked section 18B(4) which allows the Commissioner to reduce or waive penalties if genuine hardship is proven, and the assessee cooperated in the proceedings. The court clarified that the term 'case' in this context refers to the entire process from filing the return to final adjudication, including penalty proceedings. The Commissioner's reasoning that the penalty payment indicated lack of hardship was deemed invalid as cooperation in paying penalties cannot be seen as prejudicial to the assessee's interests. The court emphasized that 'genuine hardship' is not limited to financial hardship but encompasses all hardships arising from the case. The discretionary powers of the Commissioner must be judiciously exercised, considering the entire case history, not just the circumstances at the time of the application. The court quashed the Commissioner's order, directing a reconsideration in line with the judgment and within two months, with no costs imposed and the petitioner's security deposit refunded.