1983 (6) TMI 40 - AT - Wealth-tax

Tribunal cancels penalties under Wealth Tax Act for delayed filing, citing justified delays and absence of habitual default.

HIMATLAL R. THAKKAR. Versus WEALTH TAX OFFICER.

The Tribunal canceled the penalties imposed under section 18(1)(a) of the Wealth Tax Act for the assessment years 1972-73 and 1973-74, amounting to Rs. ... - Issues:- Levy of penalty under section 18(1)(a) of the Wealth Tax Act, 1957 for assessment years 1972-73 and 1973-74 based on delayed filing of wealth tax returns.Detailed Analysis:1. The appeals were filed by the assessee against the penalty imposed under section 18(1)(a) of the Wealth Tax Act, 1957 for the assessment years 1972-73 and 1973-74. The delay in filing the returns was explained by the assessee citing reasons related to the finalization of accounts of the firm in which he was a partner, health issues, and family responsibilities. The WTO and AAC did not accept these explanations, leading to the appeals before the Tribunal.2. The assessee's counsel presented evidence showing that the firm's income tax returns were also filed late but no penalties were imposed, indicating a lenient approach by the tax authorities in similar cases. The departmental representative argued that the delay in the firm's return did not justify the delay in the partner's wealth tax return. The Tribunal examined the submissions and the material placed before it.3. The Tribunal observed that the penalty under section 18(1)(a) could only be imposed if the assessee failed to furnish the wealth tax return without reasonable cause. It noted that the WTO's decision to levy the penalty was based on the unverifiability of the claim regarding the delayed finalization of the firm's accounts. The Tribunal disagreed with this approach, stating that the WTO could have verified the filing dates of the firm's returns or sought necessary particulars from the assessee.4. The Tribunal found that the delay in filing the returns of the firm indicated a delay in finalizing its accounts, justifying the delay in the partner's wealth tax returns. Since the delays were only two months for one assessment year and one month for the other, and there was no evidence of habitual default by the assessee, the Tribunal concluded that the penalties were unwarranted. Additionally, it noted the lack of clarity on whether similar penalty proceedings were initiated under the Income Tax Act.5. Consequently, the Tribunal decided to cancel the penalties imposed for both assessment years, amounting to Rs. 4,487 for the year 1972-73 and Rs. 2,284 for the year 1973-74. The appeals filed by the assessee were allowed, and the penalties were revoked based on the reasoning that the delays were justified by sufficient cause and the penalties were not warranted in the absence of habitual default or clear findings.