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Krishna Nand Vs. Commissioner of Wealth-tax and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberC.M.W. No. 37 of 1978
Judge
Reported in(1979)8CTR(All)179; [1983]139ITR756(All)
ActsWealth Tax Act, 1957 - Sections 14, 15, 16, 17A, 18(1) and 18B
AppellantKrishna Nand
RespondentCommissioner of Wealth-tax and ors.
Appellant AdvocateBharatji Agrawal, Adv.
Respondent AdvocateAshok Gupta, Adv.
Excerpt:
- - the commissioner held that there was nothing on record to substantiate this contention and the assessee's failure to file return prior to 1965-66 smacked of lack of an element of good faith in making the disclosure. 4. the learned counsel for the petitioner submitted that phrases 'good faith' and 'true and full disclosure' occurring in section 18b of the w. since the only feature which affected the case of the petitioner was the lack of good faith in not filing his returns for the earlier years and since we do not know as to what happened previously because of which the assessee did not file his returns for the earlier years, we feel that his prayer for time to file the returns even now, should be favourably considered......the assessee was liable to wealth-tax for the assessment years 1956-57 to 1964-65 he did not file returns for these years. the assessee's contention was that this matter was discussed with the previous commissioner and then as a result of some understanding between him and the earlier commissioner he did not file returns for these years. the commissioner held that there was nothing on record to substantiate this contention and the assessee's failure to file return prior to 1965-66 smacked of lack of an element of good faith in making the disclosure. it also amounted to making only a partial disclosure. on these findings, the application for waiver of penalties was rejected.4. the learned counsel for the petitioner submitted that phrases 'good faith' and 'true and full disclosure'.....
Judgment:

Satish Chandra, C.J.

1. The applicant-HUF filed returns under the W.T. Act for the years 1965-66 to 1973-74 on July 8, 1974. The net wealth returns were accepted by an assessment order dated July 27, 1974. The WTO, Kanpur, after accepting the returns, assessed the wealth-tax. The tax demanded was paid in due course,

2. The WTO under Section 18(1)(a) of the W.T. Act can impose penalties for the delayed filing of returns. After hearing the assessee, he imposed penalties for various years as follows :

Asst. year

Penaltyimposed

Rs.

1965-66

1,69,497

1966-67

1,86,585

1967-68

1,84,358

1968-69

1,87,338

1969-70

1,87,521

1970-71

1,47,756

1971-72

1,01,018

1972-73

74,411

1973-74

28,691

Total

12,67,175

3. The assessee made an application which was treated to be under Section 18B of the W.T. Act, The Commissioner dismissed that application by an order dated January 21, 1978. He refused to waive the penalty on the ground that the assessee was not making a full and true disclosure of his assets. He held that although the assessee was liable to wealth-tax for the assessment years 1956-57 to 1964-65 he did not file returns for these years. The assessee's contention was that this matter was discussed with the previous Commissioner and then as a result of some understanding between him and the earlier Commissioner he did not file returns for these years. The Commissioner held that there was nothing on record to substantiate this contention and the assessee's failure to file return prior to 1965-66 smacked of lack of an element of good faith in making the disclosure. It also amounted to making only a partial disclosure. On these findings, the application for waiver of penalties was rejected.

4. The learned counsel for the petitioner submitted that phrases 'good faith' and 'true and full disclosure' occurring in Section 18B of the W.T. Act, on a proper construction, implied that the conduct of the assessee in so far as it was relevant for the assessments, for the years for which the returns were filed, alone was capable of being considered. His conduct in relation to the previous assessment years was neither material nor can it be taken notice of. The Commissioner was hence in error in considering the fact that the assessee had not filed his returns for the assessment years prior to 1965-66.

5. In the alternative, the learned counsel submitted that the assessee was prepared even now to file his returns for the earlier years and thus wanted to mitigate the shortcomings. Learned counsel stated that the petitioner is prepared to file his returns for the earlier years and pay the tax due within a week. Since the only feature which affected the case of the petitioner was the lack of good faith in not filing his returns for the earlier years and since we do not know as to what happened previously because of which the assessee did not file his returns for the earlier years, we feel that his prayer for time to file the returns even now, should be favourably considered. Section 17A permits an assessment order to be made under Section 16 of the Act up to a period of four years commencing from April 1, 1975, or one year from the date of the filing of a return or a revised return under Section 15 of the Act, whichever is later. This shows that now wealth-tax returns can be filed at any time even after the expiry of the time fixed under Section 14 of the Act. If a return is filed, the WTO has jurisdiction to complete the assessment within a year of the date of its filing. There is hence no legal bar to the assessment of wealth-tax for the previous years, provided the return is filed voluntarily. The learned counsel has stated that the assessee-petitioner is prepared to file his returns for those years, i.e., 1957-58 to 1964-65.

6. There is another aspect of the matter. We find that though the Commissioner found that the assessee had not filed the returns for the earlier years, he did not invite the assessee to do so.

7. Considering the above facts, we are of the opinion, that it would be fit and proper that the petitioner files returns for the earlier years in question and pays the tax due on it within a month from today. If the assessee does so, the application made for the waiver of penalty will be considered by the Commissioner afresh. In this view, the impugned order of the Commissioner is liable to be set aside.

8. We, therefore, direct that the petitioner will file the returns under the W.T. Act, for the years 1957-58 to 1964-65, within a month and pay the wealth-tax due thereon within a fortnight from the date of service of the notice of demand. In that event, the impugned order dated January 21, 1978, passed by the Commissioner shall stand set aside. The Commissioner will pass a fresh order on the application for waiver moved by the assessee, in accordance with law. In the circumstances, the parties will bear their own costs. In case the assessee fails to file the returns and pay the tax demanded within the time mentioned above, this writ petition shall stand dismissed with costs.


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