Reasonable cause for delayed wealth-tax return defeated penalty where declared net wealth was supported by prior valuation records.

Belated filing of a wealth-tax return was held not to justify penalty where the assessee had declared net wealth below the taxable limit and showed reasonable cause for the delay. The returned figure was supported by the assessee's earlier record, including an accepted valuation basis in a prior assessment, and the later valuation dispute did not make the declaration unreasonable. On those facts, the assessee could credibly believe that no taxable liability arose, so penalty under section 18(1)(a) of the Wealth-tax Act, 1957 was not sustainable and cancellation of the penalty was justified.

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Issues: Whether penalty for delay in filing the wealth-tax return was leviable when the assessee declared net wealth below the taxable limit and showed cause for the delay.

Analysis: The declared wealth was supported by the assessee's earlier record, including an accepted valuation basis in the past assessment, and the subsequent valuation dispute showed that the returned figure could not be treated as unreasonable. On the facts, the assessee had a credible basis to believe that no taxable liability arose, furnishing reasonable cause for the belated return.

Conclusion: The cancellation of penalty was justified and the penalty under section 18(1)(a) of the Wealth-tax Act, 1957 was not sustainable.

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