TaxTMI 
TaxTMI 
1979 (5) TMI 11
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....the amount soon after filing the return. He further stated that although the return was filed late, he filed the return as soon as he came to know about his liability and accordingly prayed that no penal action be taken as it was not called for. The WTO, having found the explanation not satisfactory, held the assessee to be in default and imposed a penalty as provided under s. 18(1)(a) of the Act which was to the tune of Rs. 6,825. It appears that for the assessment years 1964-65, 1965-66, 1966-67 1967-68, 1968-69 and 1969-70, the assessee had filed the returns after delay on February 3, 1970, under the W.T. Act for which six separate proceedings under s. 18 had been initiated. As the WTO had imposed penalties for all the six years, appeals filed by the assessee against such penalties were heard together by the AAC of Wealth-tax, " A " Range, Patna, and disposed of by a common order, copy of which is annex. " B ". On behalf of the assessee it was submitted before the AAC that, in the absence of any directive from the WTO, the assessee also lost sight of the fact that he was liable to pay wealth-tax and as soon as he came to know of his responsibility to file his returns, he did ....
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....er, held by the Tribunal that there was nothing to show as to how the assessee came to know about the wealth-tax liability only on 3rd February, 1970, when the returns for all the years were filed. The Tribunal further held : " No doubt the penalty cannot be levied only because there is delay but what is to be seen is whether there was any reasonable cause which prevented the assessee from filing the return. We agree with the reasoning given by the Appellate Assistant Commissioner that no such reasonable cause has been shown and we, therefore, uphold that the penalty was leviable. " The Tribunal, however, made certain reductions in the penalty imposed on the basis of the law as it was for imposing penalties in the relevant year. However, having come to the conclusion that the penalty imposed for the year 1969-70 was in accordance with the amended law applicable for the assessment year, no reduction was given for this year. The main question that falls for consideration in this reference is as to when a penalty can be imposed under s. 18(1)(a) of the W.T. Act. It would, at this stage, be convenient to quote it, which runs thus : " 18. (1) If the Wealth-tax Officer, Appel....
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....er. One of the questions formulated by the Supreme Court was whether imposition of penalties for failure to register as a dealer was justified. In answering this question, Shah, Acting C.J., observed as follows : " Under the Act penalty may be imposed for failure to register as a dealer : section 9(1) read with section 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct, contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalt....
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....n the statements to be made by them of their income for the purposes of surtax, a reasonable part of its actual income, the Commissioners may direct that, for purposes of assessment to surtax, be deemed to be the income of the members. Lord Atkin observed (p. 60 of 11 ITR (suppl.)) : " The section is highly penal and I feel no doubt that the onus is originally and remains on the revenue to show that the company acted unreasonably in withholding part of its income from distribution. " Lord Wright, in the same case, also observed that the section being penal in character, the onus was on the Crown to prove its right to impose penalty and it was for the Crown to establish facts necessary to show want of reasonableness on the part of the company. Observations to that extent were also made by Lord Macmillan. From what I have stated above, it seems that under s. 18(1)(a) of the W.T. Act, failure, without reasonable cause, to furnish the returns within the time prescribed is necessary before penalty can be imposed ; and what is without reasonable cause is a matter which has to be determined on the facts and in the circumstances of each case. The question that still remains to ....
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.... filed his return for a number of years within the prescribed time and when notices to show cause were issued, the only explanation that he gave was that he filed the returns when he came to know about the liability. I am, therefore, of the view that, in the instant case, the Tribunal was justified in holding that the delay by the assessee in filing the return was without reasonable cause and, in the circumstances of the case, the inference was that the delay was the result of wilful or gross negligence on the part of the assessee. On behalf of the assessee, it was urged that as there was no finding by the Tribunal of any mens rea, the imposition of the penalty was invalid. In support of this contention certain decisions were cited to which I shall refer. Although it is settled law that penalty proceedings are in the nature of quasi-criminal proceedings it cannot be said that all the principles of a criminal trial are imported in such proceedings. To initiate the proceedings, as I have said above, it is not enough that there has been a default in furnishing the return. There should be some material to show that the default is without reasonable cause. In the case of CIT v. Gujar....