Bona fide explanation for delayed wealth-tax return filing defeats penalty where taxable liability was realised later.

Penalty for delayed filing of a wealth-tax return was not leviable where the assessee gave a bona fide and reasonable explanation for the delay. The explanation accepted was that the ornaments had not been understood to be taxable when the return was due, and the liability for the relevant year was realised only when the later return was being prepared. The delay was treated as having been promptly cured after discovery of the liability, and these circumstances were considered sufficient to show reasonable cause, making penal action unduly harsh.

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Issues: Whether penalty for delay in filing the wealth-tax return was leviable on the facts and whether the assessee had shown a reasonable and sufficient explanation for the delay.

Analysis: The return was filed after the due date, but the explanation accepted in substance was that the assessee was not aware that the ornaments had become taxable and that the liability for the relevant year was realised only when the later return was being filed. The delay was treated as having been cured promptly after discovery of the liability. The circumstances were considered sufficient to support a bona fide and reasonable explanation, making the imposition of penalty unduly harsh.

Conclusion: Penalty was held not leviable and the assessee succeeded.

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