Bona fide belief of no taxable wealth constituted reasonable cause, so late-filing penalty under wealth-tax law was not leviable.

Penalty for late filing of a wealth-tax return was not leviable where the assessee showed a genuine belief, supported by the wealth statement, that net wealth was negative and therefore no taxable wealth existed. On those facts, the delayed return was attributable to reasonable cause, and the request for extension was treated as a precautionary step rather than an admission of liability. The deletion of penalty was therefore upheld in favour of the assessee.

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Issues: Whether penalty for late filing of the wealth-tax return was leviable under section 18(1)(a) of the Wealth-tax Act when the assessee claimed a bona fide belief that no taxable wealth existed and that there was reasonable cause for the delay.

Analysis: The assessee had filed material showing that, on the basis of the wealth statement prepared for the relevant year, the net wealth was in the negative. The earlier explanation submitted in response to the show-cause notice was also on record. On these facts, the belief that no taxable wealth was chargeable was treated as genuine, and the request for extension was regarded as a precautionary measure rather than an admission of taxable wealth. The existence of such bona fide belief constituted reasonable cause for the delayed return.

Conclusion: The penalty was not leviable, and its deletion was upheld in favour of the assessee.

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