High Court Of Allahabad
Commissioner Of Wealth Tax vs. Smt. Radhadevi Kela
Section WT 18(1)(a)
Asst. Year 1973-74, 1974-75
R.K. Agrawal & Vikram Nath, JJ.
WT Ref. No. 139 of 1990
16th November, 2006
Counsel Appeared : Shambhu Chopra, for the Revenue
JUDGMENT
By the court :
The Tribunal, Allahabad has referred the following two questions of law under s. 27(3) of the WT Act, 1957, hereinafter referred to as ‘the Act’ for opinion to this Court :
“(i) Whether, on the facts and in the circumstances of the case, there was evidence before the Tribunal to come to the conclusion that the assessee was under a bona fide belief that she was not assessable to wealth-tax and no return was required to be filed by her ?
(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in cancelling the penalty of Rs. 4,900 under s. 18(1)(a) as sustained by the AAC of WT ?”
The present reference relates to the asst. yrs. 1973-74 and 1974-75. Briefly stated, the facts giving rise to the present reference are as follows :
The assessee is an individual. In respect of asst. yrs. 1973-74 and 1974-75 her wealth-tax returns were due on 15th Aug., 1973 and 31st July, 1974 respectively, but the returns were filed by the assessee on 12th Nov., 1981 in respect of both the aforesaid assessment years, declaring wealth of Rs. 2,39,200 for asst. yr. 1973-74 and Rs. 2,61,330 for asst. yr. 1974-75 whereon tax due was Rs. 2,500 and Rs. 2,640 respectively. As the said returns had been filed late by 98 months in the case of asst. yr. 1974-75, penalties under s. 18(1)(a) of the Act were imposed on the assessee as follows, as in the opinion of the WTO, there was (sic–no) reasonable cause for the late submission of the returns in question : The assessee appealed against the aforesaid orders to the AAC of WT and submitted before him, inter alia, that the returns in question were filed by the assessee voluntarily, that earlier the assessee could not file the returns in time, because she was under a bona fide belief that her wealth was below the taxable limit as most of her investments consisted of National Savings Certificates, which, in her opinion, were exempt from wealth-tax as income therefrom was, in any case, exempt from income-tax. That in the previous year relevant for the asst. yr. 1973-74, National Savings Certificates of Rs. 1,86,280 had been encashed by the assessee and the realisation was lying with the agent for investment, who had also made investment without the knowledge of the assessee; that, in any case, without prejudice to the above submissions, the law governing the imposition of penalty stood modified w.e.f. 1st April, 1977 and according to the law, penalty was to be calculated with reference to tax and not with reference to the wealth and that, therefore, necessary relief should be granted to the assessee. The AAC, however, rejected the above submissions of the assessee.
The assessee appealed against the aforesaid order to the Tribunal and the same pleas which were taken by the assessee before the AAC and the WTO were reiterated before the Tribunal and it was pointed out to the Tribunal by the assessee’s learned counsel that in identical circumstances, the Tribunal had deleted the penalties in WT Appeal No. 187. The Tribunal had deleted the penalty with the following observation : “…The question now remains whether the explanation given by the assessee before the WTO was sufficient to hold that the assessee was under a bona fide belief that her income was below taxable limit. In this connection, the statement of the assessee recorded after the search is very relevant. In reply to question No. 9, the assessee stated that she did not disclose the income and investment because from 1960 to 1969 the same was exempt from tax. The Departmental Representative candidly stated that a judicial notice of this fact can be taken. Moreover, in the asst. yr. 1975-76, in the similar circumstances, penalty imposed under s. 18(1)(c) of the Act was deleted and in the subsequent assessment years i.e. 1977-78 and 1979-80, the penalties were cancelled by the AAC and the Department accepted the said decision. The aforesaid facts are manifest and lead us to the conclusion that the assessee was under a bona fide belief that the investment made in the National Savings Certificates out of the disclosed income was less than the taxable limit and was not required to file the wealth-tax returns. Besides, the contents of the affidavit filed by the assessee before the WTO were also not controverted by the Department. In the case of Rani Indra Devi vs. CWT (1984) 38 CTR (All) 118 : (1983) 15 Taxman 159 (All), it was held that even if the assessee’s explanation was unacceptable, Department has to produce material to show that late filing of the return was deliberate and the initial burden was always on the Department and only after this burden was discharged that the assessee was required to prove the facts which are in his special knowledge. In our opinion, the Department has failed to discharge its burden in this case.
The finding of the Tribunal in the asst. yr. 1975-76 cancelling penalty imposed under s. 18(1)(c) of the Act is indicative of the fact that the assessee was prevented by reasonable cause on the basis of bona fide belief in filing belated returns for the assessment years under appeal. The issue in controversy is, in our opinion, squarely covered by the decisions of the Tribunal dt. 4th Dec., 1986 in WTA Nos. 263 and 264/All/1984–Shri Balram Prasad vs. WTO, WTO vs. Swatamber Dass (1985) 23 TTJ (Del) 55 and other decisions, copies of which appear in the assessee’s paper book from pp. 6 to 10. The assessee was under the bona fide belief that she was not assessable under the WT Act and no return was required to be filed for the assessment years under appeal. Thus, in our opinion, the delay in filing the belated returns is explained and the delay was on account of bona fides and no case for levying penalties under s. 18(1)(c) is made out in this case. We, therefore, hold that the AAC was not at all justified in partly sustaining the penalties imposed by the WTO and accordingly quash his order. The amounts of penalty, if already paid, are directed to be refunded to the assessee.” We have heard Sri Shambhu Chopra, learned standing counsel for the Revenue and have perused the order of the Tribunal.
We find that the Tribunal has recorded a categorical finding of fact that the respondent assessee was under a bona fide belief that the investment made in National Savings Certificates was exempt from wealth-tax and that it was below the taxable limit. In this view of the matter she had not filed return; moreover the penalties imposed under s. 18(1)(c) of the Act in respect of the asst. yrs. 1975-76, 1977-78, and 1979-80 have been cancelled, which orders have become final. We do not find any legal infirmity in the order of the Tribunal and it was justified in deleting the penalty. In view of the aforesaid discussion, we answer both the questions referred to us in the affirmative i.e. in favour of the assessee and against the Revenue. However, there shall be no order as to costs.
[Citation : 296 ITR 404]
