Legal heir's penalty upheld for late wealth-tax return filing; Tribunal distinguishes tax & penalty liabilities.

The Tribunal reversed the AAC's decision and upheld the penalty imposed by the WTO on the legal heir for the delay in filing the wealth-tax return. The Tribunal emphasized that the liability to file the return devolved on the legal heir after the deceased's passing, and since the return was not filed before the due date, the penalty was justified. The Tribunal distinguished between liability to tax and liability to pay penalty, ultimately ruling in favor of the revenue and reinstating the penalty.

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Issues:
1. Whether penalty under section 18(1)(a) of the Wealth-tax Act, 1957 was correctly imposed on the legal heir for the delay in filing the wealth-tax return.

Detailed Analysis:

1. The appeal was filed by the revenue against the order of the AAC, which had deleted the penalty imposed by the WTO under section 18(1)(a) of the Wealth-tax Act, 1957. The delay in filing the wealth-tax return was 25 months, and the penalty imposed was Rs. 7,650. The WTO found that the assessee failed to furnish the return within the stipulated time without reasonable cause, leading to the penalty imposition.

2. The AAC, on appeal by the assessee, noted that the return was filed by the legal heir upon knowing about the liability, and relied on a decision by the Hon'ble Andhra Pradesh High Court to cancel the penalty. The revenue contended that the penalty was correctly imposed as there was a clear default in filing the return within the specified time. The assessee's counsel argued that since the default was of the deceased, the penalty should not be imposed on the legal representative, citing relevant case laws.

3. The Tribunal observed that the deceased had passed away before the due date for filing the return, and therefore, the liability to file the return devolved on the legal heir. The Tribunal emphasized that if an assessee files a return before the due date, they cannot be treated as a defaulter. The Tribunal referred to relevant case laws and the distinction between liability to tax and liability to pay penalty. It was noted that the penalty proceedings were initiated after the due date and long after the death of the deceased.

4. The Tribunal concluded that the penalty proceedings were not pending at the time of the deceased's death and that the AAC erred in deleting the penalty. Therefore, the Tribunal reversed the AAC's order and restored that of the WTO, allowing the appeal by the revenue.

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