1990 (3) TMI 26 - HC - Wealth-tax

Filing tax returns does not exempt from penalties. Criminal prosecution allowed independently. Wilful default issue for trial.

Jai Singh Versus Wealth-Tax Officer/Income-Tax Officer And Another

The court held that filing wealth-tax returns under Section 15 does not exempt petitioners from penal liability under Section 35B. The initiation of ... Due Time, Offence, Prosecution, Wealth Tax Issues Involved:1. Whether the wealth-tax returns filed in consonance with Section 15 of the Wealth-tax Act can be considered as filed in 'due time' under Section 35B.2. Whether the initiation of penalty proceedings precludes the launching of criminal prosecution under Section 35B.3. Whether there was a wilful default by the petitioners in not filing wealth-tax returns in due time.Issue-wise Detailed Analysis:1. Wealth-tax Returns Filed in Consonance with Section 15:The petitioners argued that since they filed the wealth-tax returns before the completion of the assessment proceedings, it should be inferred that there was no wilful default, and thus, the penal provisions of Section 35B should not be attracted. The court referred to Section 14(1) and Section 14(2) of the Wealth-tax Act, which mandate the filing of returns by June 30 or within a specified period upon notice. Section 15 allows filing returns before the assessment is made. However, Section 35B penalizes wilful failure to file returns in 'due time,' which is interpreted as the time prescribed under Section 14(1) or Section 14(2). The court emphasized that Section 15 is an enabling provision for assessment purposes and does not negate the penal liability under Section 35B. The court rejected the petitioners' interpretation that filing returns under Section 15 absolves them of criminal liability, as it would render Section 35B's proviso (ii) redundant.2. Initiation of Penalty Proceedings and Criminal Prosecution:The petitioners contended that since directions for initiating penalty proceedings were given, criminal prosecution should not be launched. The court cited Dharma Pratishthan v. Miss B. Mandal, IAC, where it was held that criminal proceedings can be initiated independently of assessment or penalty proceedings. The court also noted that Section 35A explicitly allows criminal prosecution without prejudice to penalty imposition, whereas Section 35B does not include such language. However, since no penalty proceedings were initiated against the petitioners, this argument was moot. The court referenced Gulab Chand Sharma v. H. P. Sharma, where it was held that penalty proceedings and criminal complaints are distinct, and the absence of penalty proceedings does not bar criminal prosecution.3. Wilful Default in Filing Returns:The petitioners argued that their explanations for the delay, which were accepted by the income-tax authorities, should also be accepted for wealth-tax returns. The court noted that the delay in filing wealth-tax returns was significantly longer than for income-tax returns. The court held that whether there was wilful default is a factual question to be determined during the trial. The court referenced Gopalji Shaw v. ITO, which emphasized the need to consider the gravity of the offense and attendant circumstances before launching prosecution. However, in the present case, the Wealth-tax Officer had rejected the petitioners' applications for condonation of delay, and thus, the court found prima facie evidence of wilful default.Conclusion:The court concluded that the mere filing of returns under Section 15 does not absolve the petitioners of penal liability under Section 35B. The initiation or absence of penalty proceedings does not preclude criminal prosecution. The question of wilful default is a factual matter to be determined at trial, and prima facie evidence suggests wilful default by the petitioners. The criminal revision petitions were dismissed, and the trial court was directed to proceed in accordance with the law.