Reasonable cause for delayed wealth-tax return filing defeats penalty where required accounts were unavailable.

Penalty for delayed filing of a wealth-tax return was held unsustainable where the assessee showed reasonable cause for the default. The delay was only two months, the assessee had sought extension of time twice, and the return could not be filed earlier because the capital account and balance-sheets needed to value shares under the Wealth-tax Rules were not available. On these facts, the delay was treated as attributable to practical difficulty rather than deliberate or contumacious non-compliance, so the penalty under the wealth-tax penalty provision was not justified and cancellation was sustained in favour of the assessee.

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Issues: Whether penalty under section 18(1)(a) of the Wealth-tax Act, 1957 was exigible for delayed filing of the wealth-tax return when the assessee had sought extension of time and had difficulty in obtaining the capital account and balance-sheets required for valuation under the Wealth-tax Rules, 1957.

Analysis: The delay was only of two months. The assessee had made two applications for extension of time and the factual basis for the return was handicapped by non-receipt of relevant accounts and balance-sheets needed to determine the market value of shares under rules 1C and 1D. On these facts, the failure to file the return within time was attributable to a reasonable cause and not to any deliberate or contumacious default.

Conclusion: Penalty under section 18(1)(a) was not justified and its cancellation was sustained in favour of the assessee.

Ratio Decidendi: Penalty for delayed filing cannot be sustained where the assessee establishes reasonable cause for the default.

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