Service of statutory notice and voluntary disclosure scheme protected the assessee from wealth-tax penalty.

Penalty for failure to furnish a wealth-tax return was held unsustainable because service of the statutory notice under section 14(2) was not proved. The record contained no direct evidence of issue or service, the order sheet did not corroborate it, and the dates noted in the penalty order were unsupported. The return had been filed before the Commissioner under the voluntary disclosure scheme, and that filing was not disputed. On these facts, the statutory precondition for penalty was not established, and the assessee was entitled to the benefit of the scheme.

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Issues: Whether the penalty under section 18(1)(a) of the Wealth-tax Act was sustainable when no notice under section 14(2) of the Wealth-tax Act was shown to have been issued or served and the return was filed under the voluntary disclosure scheme.

Analysis: The record contained no direct evidence of issue or service of notice under section 14(2). The order sheet also did not record any such issuance or service, and the dates mentioned in the penalty order were unsupported by the material on record. The assessee's application for extension of time did not show service of notice. On the other hand, the return was filed before the Commissioner under the voluntary disclosure scheme, and the department did not dispute that filing. In these circumstances, the statutory precondition for penalty was not established and the assessee was entitled to the benefit of the scheme.

Conclusion: The penalty under section 18(1)(a) was not leviable and the finding was in favour of the assessee.

Final Conclusion: The appeal succeeded and the penalty orders were set aside because the department failed to prove service of notice under section 14(2), while the return had been filed under the voluntary disclosure scheme.

Ratio Decidendi: A penalty for failure to furnish a wealth-tax return cannot be sustained unless service of the statutory notice is proved, and a return filed under the voluntary disclosure scheme defeats penalty where such notice is not established.

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