WEALTH-TAX OFFICER v. DHARMENDRA DEOL
[Citation -1987-LL-0114-3]

Citation 1987-LL-0114-3
Appellant Name WEALTH-TAX OFFICER
Respondent Name DHARMENDRA DEOL
Court ITAT
Relevant Act Wealth-tax
Date of Order 14/01/1987
Assessment Year 1970-71, 1975-76
Judgment View Judgment
Keyword Tags imposition of penalty • late filing of return • extension of time • net wealth
Bot Summary: 1970-71, assessee had filed wealth tax returns on 27th July, 1971, while it was due on 30th June, 1970 wealth tax return was filed showing net wealth of Rs.2,30,973 which was revised twice to Rs. 3,64,695 on 20th Dec, 1973 and net wealth of Rs.7,51,770 on 9th Dec, 1975. Assessee had filed extension application on 27th June, 1970, 30th Sep, 1970 and 31 Dec, 1970 seeking extension upto 30th Sep, 1970, 31st Dec, 1970 and 31st Dec, 1971on the ground that the income tax return had not been filed and therefore, the wealth tax return could not be filed. In view of the aforesaid decisions of Bombay and Gujarat High Courts, we uphold the AAC order that the assessee has reasonable cause upto 31st March, , 1971 upto which he has applied for extension of time for filing I.T. return for asst. We have further noted that there is no evidence for filling application on 15th March, , 1971 asking for extension upto 30th June, 1971, nor had been told of any reasons why the wealth tax return could not be filed after the income-tax return had been filed. Under these circumstances, we hold that assessee had no reasonable cause for delay of 3 months in filing wealth tax return for asst. While the first two applications the reason given was the delay in filing the income tax return, in the last application filed on 1st Jan, 1976 the reason given was that necessary details were yet to be collected to compel to the return of wealth. 1975-76 as assessee had applied for extension of time till 30th Jan, 1976 when he filed the WT return.


RAJENDRA, A.M. Revenue is aggrieved against orders of AAC cancelling penalties levied by WTO under s. 18(1)(A) of Rs.40,040 for asst. yr. 1970-71 and Rs.28,315 for asst. yr. 1975-76 for late filing of wealth tax returns for two years. In asst. yr. 1970-71, assessee had filed wealth tax returns on 27th July, 1971, while it was due on 30th June, 1970 wealth tax return was filed showing net wealth of Rs.2,30,973 which was revised twice to Rs. 3,64,695 on 20th Dec, 1973 and net wealth of Rs.7,51,770 on 9th Dec, 1975. assessed wealth as reduced by AAC stood at Rs. 7,67,380. Assessee had filed extension application on 27th June, 1970, 30th Sep, 1970 and 31 Dec, 1970 seeking extension upto 30th Sep, 1970, 31st Dec, 1970 and 31st Dec, 1971on ground that income tax return had not been filed and therefore, wealth tax return could not be filed. WTO did not reply to these extension applications. income tax return was filed on 31st March, , 1971. It is claimed that another extension application was filed on 15th March, 1971 seeking extension upto 30th June, 1971. However, no evidence of having filed said application was produced either before WTO nor before AAC nor before us. We will, therefore, ignore said claim. In this background , WTO levied penalties for asst. yr. 1970-71 & 1975-76 on ground that extension applications were signed by different persons. We had asked assessee to produce evidence that such persons were authorised by assessee but no evidence of this point could be produced by counsel for assessee despite our giving him time for this purpose. AAC, however , accepted assessee's contention that these applications were signed by different employees of applicants, authorised representatives M/s B.K. Sekhri & Associates, AAC further accepted assessee's contention that once assessee has filed application for extension, then it is WTO's duty to intimate to assessee if extension is not allowed, otherwise assessee can presume that presumption has been allowed. Reliance was placed on Lachman Chaturbuj Iava vs. R.G. Nitsare (1981) 132 ITR 631 (Bom) where it was held that when assessee made application for extension of time for filing returns, it was duty of WTO to reply and time was deemed to have been granted if no reply was sent to assessee. Similar are observations of Gujarat High Court in CIT vs. Govardhanbhai Jethabhai (1982) 31 CTR (445) 244; (1983) 142 ITR 84 (Guj) where it was further observed that in case application was defective, it was for ITO to intimate defect rejection to assessee. We also find that under s. 14 of WTA no application for extension of time for filing return has been prescribed as was observed in CWT vs. Sitaram Singhania (1979) 120 ITR 154 (Pat). Thus, non-signing of extension application by assessee is not fatal and is only irregularity. In view of aforesaid decisions of Bombay and Gujarat High Courts, we uphold AAC order that assessee has reasonable cause upto 31st March, , 1971 upto which he has applied for extension of time for filing I.T. return for asst. yr. 1970-71. We have already noted that income tax return was filed on 3rd March, , 1971. We have further noted that there is no evidence for filling application on 15th March, , 1971 asking for extension upto 30th June, 1971, nor had been told of any reasons why wealth tax return could not be filed after income-tax return had been filed. No new assets had been acquired by assessee in asst. yr. 1970-71. Under these circumstances, we hold that assessee had no reasonable cause for delay of 3 months in filing wealth tax return for asst. yr. 1970-71, i.e., from 1st April, 1971 to 27th July, 1971 when return was filed. For asst. yr. 1975-76, return was filed on 30th Jan., 1976 declaring net wealth of Rs. 13,57,600. return was due on 30th June, 1975 under s.14(1). However notice under s. 14(2) was issued on 12th June, 1975 asking assessee to file return within 30 days. In response to penalty notice, assessee claimed to have filed extension applications on 30th June, 1975, 27th Sep, 1975 and 1st Jan, 1976 seeking extensions upto 30th Sep, 1975, 31st Dec, 1975 and 31st March, 1976 respectively. While first two applications reason given was delay in filing income tax return (which was filed on 28th Oct, 1975), in last application filed on 1st Jan, 1976 reason given was that necessary details were yet to be collected to compel to return of wealth. We also note details were yet to be collected to compel to return of wealth. We also note that actuarial valuation of annuity policies was made by valuer on 18th Nov, 1975. Here again, WTO levied penalty for same reasons as in asst. yr. 1970- 7 1 , namely, that applications were not signed by assessee, AAC following his order for asst. yr. 1970-71, held that as assessee did not receive any reply, assessee had reasonable cause for presuming that extension of time had been allowed. In view of aforesaid decisions of Bombay and Gujarat High Courts referred to in para 6 above, we uphold order of AAC cancelling penalty for asst. yr. 1975-76 as assessee had applied for extension of time till 30th Jan, 1976 when he filed WT return. A. next controversy is rate at which penalty is to be levied for three months default in asst. yr. 1970-71 for which return was filed on 27th July, 1971. ld counsel for assessee relied on Mayarani Panj vs. CIT (1986) 50 CTR (SC) 191; (1986) 157 ITR 330 (SC) where controversy was whether for asst. yr. 1961-62 penalty should be levied under s. 271 (1)(a) of IT Act 1922 and Supreme Court considered provisions of s. 297(2)(g) which laid down that proceeding for imposition of penalty in respect of asst. yr. 1961-62 or any earlier year, which is completed on or after 1st April, 1962, will be initiated and any such penalty may be imposes under 1961 Act. While following Jain Bros. & Ors. vs. Union of India & Ors. (1970) 77 ITR 107 (SC), Supreme Court held that penalty in Punj's case (supra) for asst. yr. 1961-62, for which return was filed on 3rd May, 1962, may be imposed under 1951 Act . In that context, they overruled their decision in CWT vs. Suresh Seth (1981) 21 CTR (SC) 349:(1981) 129 ITR 328 (SC) held that there is continuing default in late filing of return . At p. 340, Supreme Court noted that Jain Bros. (Supra) was with reference to IT Act, 1961 and provision of s. 18(1)(a) of WT Act, as amended, brought in similar provision and sum equal to 2per cent of tax for every month during which default continued becomes payable. Supreme Court further observed that question of imposition of penalty would arise only after assessment to tax is made and therefore amended provision would become applicable. In light of aforesaid observation of Supreme Court and noting that assessment for asst. yr. 1970-71 was completed only on 30th Dec., 1980, we direct that penalty for three months' default should be computed according to law as it stood at time of completion of assessment for asst. yr. 1970-71, i.e. on 31st Dec., 1980. In result, Revenue's appeal for asst. yr. 1975-76 is dismissed, while its appear for asst. yr. 1970-71 is partly allowed. *** WEALTH-TAX OFFICER v. DHARMENDRA DEOL
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