Prithipal Singh (Dead) Through Lrs. vs Commissioner Of Wealth Tax
- SCC(1998) 5 SCC 328
- AIRAIR 1999 SC 353
Ratio decidendi
The rule this decision rests on
Where an assessee has failed to furnish a wealth tax return within the prescribed time but has voluntarily filed the return prior to the issuance of notice under Section 14(2) and made full disclosure of net wealth, and the delay is attributable in part to procedural matters such as obtaining valuations, the Commissioner exercising discretion under Section 18-B to refuse any reduction of penalty imposed under Section 18(1)(a) is an exercise of discretion that may be found to be harsh and unreasonable; in such circumstances, the penalty should be reduced rather than wholly sustained, with the reduction calibrated by reference to the assessee's cooperation, the nature of the default, and the quantum of tax at stake relative to the penalty imposed.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
1. Leave has been granted in the present appeal in respect of the question of penalty imposed on the appellant under Section 18(l)(a) of the Wealth Tax Act, 1957 which was not waived and/or reduced under Section 18-B of the Wealth Tax Act by the Commissioner.
2. The assessment years involved are 1972-73 up to 1975-76. For Assessment Year 1971-72, this Court has declined leave. Hence, we are not concerned with Assessment Year 1971-72. Penalty has been imposed under Section 18(l)(a) on account of the appellant's failure to furnish a return of wealth tax within the time allowed in the relevant assessment years. The delay ranges from 10 months to 34 months. The penalty which is levied has been calculated on the basis of half per cent for every month of delay. The total amount of penalty levied for these assessment years comes to Rs. 28,366.
3. In his petition under Section 18-B the assessee contended that penalty should be waived because he had voluntarily and in good faith made full disclosure of his net wealth by filing the wealth tax returns for the relevant assessment years prior to issuance of any notice under Section 14(2). He had also cooperated in the enquiry relating to the assessment proceedings for the said assessment years. The Commissioner, in this connection, has observed that the assessee had obtained several adjournments on various grounds, some of which related to obtaining a valuation report. Looking to the series of adjournments, the Commissioner felt that the assessee had failed to cooperate with the Department. In view of the facts and circumstances of the present case, and the conduct of the assessee as set out in the Commissioner's order, the Commissioner was perhaps a little too harsh in not reducing the amount of penalty; specially when the total tax involved in all these assessment years was only about Rs. 7000. The assessee had voluntarily filed the wealth tax returns before the issuance of any notice under Section 14(2). Looking to all the circumstances, this is a fit case where penalty should have been reduced to 50 per cent of what has been levied. It is ordered accordingly. The appeal is thus allowed. There will, however, be no order as to costs.
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