Voluntary disclosure scheme immunity barred penalty for delayed wealth-tax returns, with bona fide belief accepted as reasonable cause.

Penalty for delayed filing of wealth-tax returns was treated as inapplicable where the assessee became liable only after making a post-search disclosure under a voluntary disclosure scheme. Section 14 of the scheme was understood to extend immunity from penalty to the disclosed income and the assets representing it, including the resulting wealth-tax consequences, so the late filing was protected. Independently, the assessee's bona fide belief that wealth-tax compliance arose only after the disclosure constituted reasonable cause for the delay. On either basis, the penalty was not exigible and the cancellation of penalties was sustained.

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Issues: Whether penalty could be levied for delay in filing wealth-tax returns where the assessee had made disclosure under the voluntary disclosure scheme after a search, and whether the assessee had reasonable cause for the delay.

Analysis: The assessee became liable to wealth-tax only as a consequence of the disclosure made after the search, and the wealth-tax returns were filed thereafter. Section 14 of the voluntary disclosure scheme was treated as extending immunity from penalty in respect of the disclosed income and the assets representing it, and the scheme was understood to cover wealth-tax consequences as well. Independently, the assessee's belief that wealth-tax compliance was only consequential after the disclosure was held to be a reasonable belief, constituting reasonable cause for the delayed filing.

Conclusion: The assessee was protected by the statutory immunity and, in any event, had reasonable cause for the delay; penalty for late filing of the wealth-tax returns was not exigible.

Final Conclusion: The departmental appeals failed and the cancellation of penalties was sustained.

Ratio Decidendi: Where a search-triggered disclosure under the voluntary disclosure scheme makes wealth-tax liability consequential, penalty for delayed wealth-tax returns is not leviable if the statutory immunity applies or if the assessee had a reasonable cause based on a bona fide understanding of the scheme.

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