Reasonable cause for belated wealth-tax return accepted where delay arose from bona fide misunderstanding of amended exemption limits.

A belated wealth-tax return was treated as supported by reasonable cause where a salaried assessee, acting without professional assistance, believed that an amended exemption provision kept his wealth below the taxable limit and so no return was required. After receiving notice and a show-cause notice, he verified his net wealth and filed the return, which indicated a bona fide misunderstanding rather than wilful default. On that basis, the penalty for delayed filing was held not justified.

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Issues: Whether the assessee had reasonable cause for the belated filing of the wealth-tax return so as to justify cancellation of penalty.

Analysis: The assessee, a salaried person filing returns without professional assistance, believed on the basis of the amendment to section 5(1) of the Finance Act, 1970 that his wealth fell within the non-taxable limit and that no return was required. After receipt of the notice and show-cause notice, he took time to ascertain his net wealth and then filed the return. The delay was thus attributed to a bona fide misunderstanding of the amended exemption provision rather than wilful default.

Conclusion: The delay was supported by reasonable cause and the penalty was not justified.

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