Reasonable cause for delayed wealth-tax returns supported cancellation of penalty where illness and staff disruption explained the default.

Penalty for delayed filing of net wealth returns under section 18(1)(a) of the Wealth-tax Act was considered in light of the assessee's explanation of illness and death of his wife, together with the sudden departure of the employee handling tax matters. Those circumstances were found to have caused difficulty in gathering records and completing the returns, and the fact that returns for earlier and later years were filed on time supported the view that the default was confined to the two years in question. The delay was therefore treated as supported by reasonable cause, and cancellation of the penalties was justified.

---

---

Issues: Whether penalty under section 18(1)(a) of the Wealth-tax Act was leviable for delay in filing the returns of net wealth for the assessment years 1973-74 and 1974-75, or whether the assessee had shown reasonable cause for the delay.

Analysis: The delay was explained by the assessee on the basis of illness and death of his wife and the sudden departure of the employee who was handling his income-tax and wealth-tax matters, which caused difficulty in collecting the necessary records and completing the returns. The record also showed that returns for earlier and subsequent years were filed in time, supporting the explanation that the default was confined to the two years in question and was occasioned by the stated circumstances.

Conclusion: The delay was covered by reasonable cause, and the cancellation of the penalties was justified.

---