Reasonable cause for defective wealth-tax return filings defeated late-filing penalties where the assessee acted bona fide.

Penalty for late filing of wealth-tax returns under section 18(1)(a) was held unsustainable where the assessee had originally filed the returns within time, albeit signed by a special power of attorney holder. When the defect was noticed, fresh returns signed by the karta were filed. On the peculiar facts, the assessee could bona fide have believed the original returns were valid, particularly since similar filings had been accepted in earlier years and the net wealth disclosed did not materially differ. The conduct indicated an to comply with the law rather than deliberate default, so the delay, if any, was attributable to reasonable cause and the penalties were cancelled.

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Issues: Whether the penalties levied for late filing of wealth-tax returns under section 18(1)(a) of the Wealth-tax Act were sustainable in the absence of reasonable and sufficient cause.

Analysis: The returns for the relevant assessment years had originally been filed within time, though signed by a special power of attorney holder. When the defect was noticed, fresh returns signed by the karta were filed. The Tribunal found that, on the peculiar facts, the assessee could bona fide have believed that the original returns were valid, especially as the earlier years had been accepted on a similar basis and there was no material difference in the net wealth disclosed in the two sets of returns. The conduct also showed an attempt to comply with the law rather than deliberate default.

Conclusion: The delay, if any, was due to reasonable cause and the penalties could not be sustained. The penalties were cancelled in favour of the assessee.

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