Govinda Bhat, C.J.
1. This is a batch of five writ petitions preferred by a common assessee under the Wealth-tax Act, 1957, hereinafter called 'the Act'. The writ petitions relate to the assessment years 1964-65 to 1968-69. The petitioner did not file his returns on the due dates, but he filed the same of 16th December, 1969, pursuant to notices issued to him under section 17(2) in respect of the first four assessment years and under section 14(2) for the assessment year 1968-69. His returns were accepted and he was assessed to tax ranging from Rs. 469 to Rs. 637. The net wealth assessed by the petitioner (sic). The petitioner preferred revision petitions against the net wealth, but the same were dismissed.
2. The Wealth-tax Officer initiated proceedings for imposition of penalty under section 18 of the Act. By separate orders made on August 22, 1970, he imposed penalties ranging from Rs. 3,986 to Rs. 5,191. The total amount of penalty levied was Rs. 21,590. The total amount of tax for the five assessment years amounted to Rs. 2,570.
3. Before the Wealth-tax Officer, in response to notice issued under section 18(2) of the Act, the petitioner offered his written explanation to show that the belated returns were not without reasonable cause. His explanation was that he was not aware that he is liable to tax taking into consideration the value of the properties at their original cost. The Wealth-tax Officer rejected and explanation on the ground that the assessee himself has admitted the total wealth and, therefore, he had no reasonable cause for filing a belated return. Against the order imposing penalty, the petitioner preferred five revision petitions in W. T. L. R. Ps. Nos. 530, to 534/70 C. I. T. under section 25 of the Act. Before the Commissioner, the petitioner urged two grounds. Firstly, that the related returns were not without reasonable cause; secondly, he urged that relief could be given to him under section 18(2A) of the Act and that he satisfied the conditions prescribed by the said sub-section. The Commissioner rejected both the contentions and dismissed the revision petitions. Aggrieved by the said orders, the petitioner has approached this court for relief under article 226 of the Constitution.
4. The Commissioner refused to grant relief under section 18(2A) of the Act on the ground that the Commissioner's power under the said sub-section has to be invoked by the assessee before the penalties were levied and not after the penalties were levied. This view of the law taken by the Commissioner is clearly erroneous. It was not disputed by the learned counsel for the department, Sri S. R. Rajasekhara Murthy, that the power under the sub-section could be invoked either before or after the imposition of penalty. Though the view taken by the Commissioner with regard to his power under section 18(2A) is plainly erroneous, it is unnecessary to direct the Commissioner to consider the question of exercise of his power under the same as the petitioner clearly does not satisfy the conditions laid down for exercise of that power. In order to obtain relief under section 18(2A) of the Act, one of the essential pre-requisite conditions is that the assessee should have voluntarily filed his returns. The counter-affidavit filed on behalf of the Commissioner states that notices were issued to the petitioner either under section 14(2) or section 17(2), as stated earlier, on March 10, 1969, and the returns were filed in response to the said notices on December 16, 1969. Sri Rajasekhara Murthy placed before us the original records from which it is seen that the notices were actually issued to the petitioner and that he has acknowledge receipt of the notices. Therefore, the petitioner cannot obtain any relief under section 18(2A) of the Act.
5. On the first question, however, the order of the Commissioner cannot be supported as he has failed to consider the scope of section 18(1)(a) of the Act. The said sub-section which empowers the levy of penalty provides that :
'If the Wealth-tax Officer in the course of any proceedings under this Act is satisfied that any person -
(a) has without reasonable cause failed to furnish the return which he is required to furnish under sub-section (1) of section 14 or by notice given under sub-section (2) of section 14 or section 17, or has without reasonable cause failed to furnish it within the time allowed and in the manner required by sub-section (1) of section 14 or by such notice, as the case may be : or.......
he may by order in writing, direct that such person shall pay by way of penalty......'
6. It is clear from a perusal of the above provision that the Wealth-tax Officer has to satisfy himself that the assessee has without reasonable cause failed to furnish the return which he is required to furnish under the Act. It means that the department must decide that the assessee had no reasonable cause for not filing the return within the time. While considering the nature of the penalty under the Orissa Sales Tax Act, the Supreme Court in Hindustan Steel Ltd. v. State of Orissa has stated thus :
'...... 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 penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute.'
7. The above principle laid down by the Supreme Court in a sales tax matter was applied to the case of penalty under section 271(1)(a) of the Income-tax Act, 1961, by the Kerala High Court in P. V. Devassy v. Commissioner of Income-tax.
'Shri A. Raghavendra Rao, chartered accountant, attended on behalf of the assessee. He argues that the return for wealth-tax for all the years 1964-65 to 1968-69 were filed on December 16, 1969. The delay in filing the returns of wealth for all the year as, it is claimed, was due to the fact that the assessee honestly felt that he was not liable to pay wealth-tax. It is urged that his liability to wealth-tax primarily arose as the properties owned by the assessee were valued at 20 times the net rental income instead of at the market value. In support of this claim, Shri Raghvendra Rao points out that the assessee had appointed an approved valuer to value the Bombay property of the assessee. The value of this property for each of the wealth-tax assessment years was determined by the approved valuer at Rs. 48,090 as against Rs. 94,040 declared by the petitioner for 1968-69 on the basis of 20 times the net annual value. This wide variation in the valuations, it is urged, has also occurred in respect of the other properties and, therefore, it is urged, that if all the properties had been valued by an approved valuer the aggregate value of all the properties owned by the assessee would be below the taxable limit and the assessee would not have been liable to wealth-tax.
The above contentions of the assessee are untenable. The revision petitions are against the penalty order and not against the quantum of wealth assessed. The Wealth-tax Officer has levied that statutory minimum penalties strictly as prescribed under the Act. There is, therefore, no scope for any reduction.'
8. The circumstances urged by the petitioner before the Commissioner were for the purpose of showing that there was no deliberate failure on his part to file the returns in time. The Commissioner entirely misconstrued the object of the circumstances set out by the assessee. They were not intended for the purpose of showing that the quantum of the net wealth assessed was excessive, but for the purpose of showing that the failure was not without reasonable cause. It is relevant to state that the Wealth-tax Act came into force in the year 1957. The petitioner was not assessed for the years prior to 1964-65, and for the first time notice was issued to him to file the returns on March 10, 1969, in respect of the years commencing from 1964-65. It is also relevant to state that the net wealth assessed in the instant case ranges around rupees two lakhs, and the tax assessed, as stated earlier, ranges from Rs. 469 to Rs. 637. Having regard to the circumstances, it is for the Commissioner to decide whether the petitioner has failed to submit the returns without sufficient cause in the light of the statement of law made by the Supreme Court in Hindustan Steel Ltd's case. The order of the Commissioner is vitiated by his failure to consider the circumstances urged by the petitioner for his failure to submit his returns under the Act and, therefore, cannot be supported.
9. In the result, for the reasons stated above, these writ petitions are allowed, the impugned order of the 1st respondent made in W. T. L. R. Ps. No. 530 to 534/70-CIT dated November 3, 1970, is hereby iquashed, and we further direct the 1st respondent to re-hear the revision petition in the light of this order. It is ordered accordingly.
10. No costs.