1977 (4) TMI 56 - AT - Income Tax

Summary

Issues:
1. Imposition of penalties under section 18(1)(a) of the Wealth Tax Act, 1957 for delayed filing of returns.
2. Contention regarding mistake by the assessee's counsel in declaring wealth at a higher figure.
3. Confirmation of penalties by the Appellate Assistant Commissioner.
4. Reiteration of contentions before the Appellate Tribunal.
5. Assessment of whether penalties are exigible due to delayed filing of returns.

Analysis:
1. The judgment pertains to penalties imposed under section 18(1)(a) of the Wealth Tax Act, 1957 for delayed filing of returns. The penalties of Rs. 9,210 and Rs. 4,790 were imposed for the assessment years 1969-70 and 1970-71, respectively. The returns, due on June 30 of the respective years, were filed on April 13, 1972, leading to the imposition of penalties by the Wealth Tax Officer.

2. The Appellate Assistant Commissioner confirmed the penalties, citing that the returns disclosed wealth well above the taxable limits, and the delay in filing was not justified. The counsel for the assessee contended that there was a mistake in declaring the wealth at a higher figure, as the actual wealth was below the taxable limit. However, the penalties were upheld by the Appellate Assistant Commissioner.

3. Upon appeal, the Appellate Tribunal considered the unusual facts of the case. Despite the returns being filed beyond the due date and exceeding the exempted limit, it was noted that the actual wealth of the assessee was significantly lower than the declared wealth. The Tribunal acknowledged the mistake by the assessee's counsel in artificially inflating the wealth, leading to the penalties.

4. The Tribunal found that the failure to file returns within the prescribed time was due to a reasonable cause, i.e., the bonafide belief of the assessee that the total wealth was below the taxable limit. The mistake by the counsel did not warrant penalties under section 18(1)(a) as the actual wealth was lesser than the exempted limit. The Tribunal allowed the appeal, deleting the penalties imposed by the Wealth Tax Officer.

5. In conclusion, the Appellate Tribunal held that the penalties were not exigible due to the reasonable cause of the bonafide belief of the assessee regarding the total wealth being below the taxable limit. The mistake by the counsel in declaring a higher wealth figure did not justify the imposition of penalties, and the appeal was allowed in favor of the assessee.