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Mrs. Sudershan Sondhi Vs. Wealth-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Delhi
Decided On
Judge
Reported in(1984)10ITD298(Delhi)
AppellantMrs. Sudershan Sondhi
RespondentWealth-tax Officer
Excerpt:
.....for a long time. it was, therefore, claimed that there was a reasonable cause for the delay in filing the return which was filed voluntarily. however, the wto found that the assessee had not filed any application for extension of time. she also found that although the assessee's daughter died in november 1975, the return was filed on 3-3-1979. therefore, she held that the default on the part of the assessee was quite clear and a patent one. accordingly, she imposed a penalty of rs. 9,988 for the delay of 44 months.3. in appeal, the learned aac found that the assessee had filed her revised income-tax return for the assessment year 1975-76 on 11-1-1978 and, therefore, she held that there was a reasonable cause for the assessee for not filing the return of wealth only till 11-1-1978......
Judgment:
1. These cross-appeals arise out of the order dated 1-1-1983 of the learned AAC.2. For the assessment year 1975-76, in question, the due date for filing the wealth-tax return was 30-6-1975, but it was filed by the assessee only on 3-3-1979 after a delay of 44 months. Therefore, penalty proceedings were initiated by the WTO, against the assessee under Section 18(1)(a) of the Wealth-tax Act, 1957 ('the Act'). In the explanation dated 12-11-1982, the assessee stated that the return could not be filed due to the illness of her elder daughter, Kumari Shalini Sondhi, who was suffering from 'Lymphoblastic Leukemia' since 1973. She was initially admitted in the All India Institute of Medical Sciences (AIIMS), New Delhi and since there was no treatment in the country, she was treated at the Mount Sinai Hospital, New York, from 6-9-1973 till the end of December 1973. Thereafter, she was looked after by the AIIMS, New Delhi. She had a relapse in the beginning of June 1975 which necessitated her confinement to the hospital till the end of July 1975 and was treated in consultation with US doctors. She had off and on to be admitted in the hospital for blood transfusion in September, October and November 1975 and she expired on 30-11-1975 in the Holy Family Hospital, Okhla, New Delhi. According to the assessee, she was not in a fit mental state of affairs during the illness of her daughter and even thereafter for a long time. It was, therefore, claimed that there was a reasonable cause for the delay in filing the return which was filed voluntarily. However, the WTO found that the assessee had not filed any application for extension of time. She also found that although the assessee's daughter died in November 1975, the return was filed on 3-3-1979. Therefore, she held that the default on the part of the assessee was quite clear and a patent one. Accordingly, she imposed a penalty of Rs. 9,988 for the delay of 44 months.

3. In appeal, the learned AAC found that the assessee had filed her revised income-tax return for the assessment year 1975-76 on 11-1-1978 and, therefore, she held that there was a reasonable cause for the assessee for not filing the return of wealth only till 11-1-1978. She held that for the period subsequent to 11-1-1978, no reasonable cause had been explained or proved. Accordingly, the WTO was directed to recalculate the penalty on the basis of default for the period from 11-1-1978 to 3-3-1979.

4. The assessee is aggrieved and has come up in appeal before us, insofar as the imposition of the penalty has been upheld for the period from 11-1-1978 to 3-3-1979, whereas the department is aggrieved since the penalty imposed by the WTO has been reduced. Shri Hardatta Sharma, the learned counsel for the assessee, placing reliance on the assessee's reply dated 12-11-1982 and the papers relating to the illness of the assessee's daughter, submitted that there was reasonable cause for the delay in filing the return for the entire period. He, therefore, argued that no penalty should have been sustained by the learned AAC. He also submitted that the mere failure to file the return within the time allowed, did not make the assessee liable to penalty and that there had to be contumacious or deliberate default. He also argued that the onus was on the department to establish that the assessee had no reasonable cause for not filing the return within time.

Reference in this connection, was made by him to the following decisions : Shakuntla Mehra v. CWT [1976] 102 ITR301 (Delhi), Jagannath Singh v. CWT [1980] 122 ITR 114 (Pat.) and Rani Indra Devi v. CWT [1983] 15 Taxman 159 (All.). He also referred to the decision of the Supreme Court in CH-T v. Suresh Seth [1981] 129 ITR 328 for the proposition that the failure to file the return on the due date was not a continuing wrong and that the quantum of penalty had to be determined on the basis of the law, in force, on the last date on which the return had to be filed. He also argued that the learned AAC had erred in not considering the assessee's submission that the value of quota rights should not have been included in the wealth for penalty purposes.

5. On the other hand, Shri S.K. Bansal, the learned departmental representative, strongly supported the penalty order, passed by the WTO. He submitted that since original return of income-tax could be filed by the assessee on 3-9-1975 even during the illness of the assessee's daughter, the wealth-tax return could as well, have been filed by the assessee by the due date, i.e., 30-6-1975. He also submitted that the details of travelling expenses filed by the assessee during the assessment proceedings on the income-tax side, showed that the assessee did business in Bombay during the period in question and, therefore, there was no reasonable cause for the delay. He also referred to the Full Bench decision of the Hon'ble Punjab and Haryana High Court in CIT v. Patram Dass Raja Ram Beri [1981] 132 ITR 671, for the proposition that deliberate defiance of law need not be proved for levy of penalty for delay in filing the return. In reply, Shri Sharma, for the assessee, submitted that even though the wordings of Section 271(1)(a) of the Income-tax Act, 1961 ('the 1961 Act') and Section 18(1)(a) of the 1957 Act were in pari materia, no decision had been cited on behalf of the revenue specifically with reference to Section 18(1) (a).

6. We have considered the rival submissions as also the various decisions referred to above. The first question which arises for consideration is whether the doctrine of metis rea is attracted in the case of proceedings under Section 18(1)(a). No doubt, the Hon'ble Delhi High Court held in the case of Shakuntla Mehra (supra) that there had to be contumacious or deliberate default under Section 18(1)(a) and the view expressed by the other High Courts in the following cases, appeared to be similar- V. L. Dutt v. CIT [1976 1103 ITR 634 (Mad.), Addl. CIT v. I.M. Patel and Co. [1977] 107 ITR 214 (Guj.) (FB) and Rani Indra Devi's case (supra). However, a contrary view has been expressed by the High Courts of Madhya Pradesh, Kerala and Punjab and Haryana, in the following cases, respectively-Nemichand Ganeshmal v. CIT [1980] 124 ITR 438, CIT v. Gujarat Travancore Agency [1976] 103 ITR 149 (FB) and Patram Dass Raja Ram Ben's case (supra). However, the controversy can be taken to stand resolved on account of the clear decision of the Supreme Court in R.S. Joshi v. Ajit Mills Ltd. AIR 1977 SC 2279. It has been held in that case that mens rea is not a necessary ingredient of all penalty proceedings in taxing statutes. This decision of the Supreme Court has been noticed in the Full Bench decision of the Hon'ble Punjab and Haryana High Court in the case of Patram Dass Raja Ram Beri (supra) and, therefore, before imposition of a penalty under Section 18(1)(a) what is required is that the assessee had without reasonable cause failed to furnish the return. What is 'without reasonable cause' is a matter which has to be determined on the facts and in the circumstances of each case.

7. The next point relates to the burden of proof. In the case of Shakuntla Mehra (supra), it was held by the Hon'ble Delhi High Court that the onus is on the department to establish that the assessee had no reasonable cause for not filing the return within time. In the case of CIT v. Gangaram Chapolia [1976] 103 ITR 613 (Ori.) (FB), it was held that the burden of proof of reasonable cause is on the assessee as the matter is within his personal knowledge and that this burden can be discharged by a preponderance of probabilities as in a civil case and not necessarily by proof beyond reasonable doubt. In the case of I.M.Patel and Co. (supra), it was held that it is for the revenue to establish as an ingredient that the failure in the particular case was without reasonable cause and that once this initial burden, which may be slight, has been discharged, it is for the assessee to show as in a civil case on a balance of probabilities, that he had reasonable cause for failing to file the return within the time specified. In the case of Rani Indra Devi (supra), the Hon'ble Allahabad High Court held that the initial burden is always on the department and that it is only after its burden is discharged that the assessee is required to prove the facts which are in his special knowledge. In the present case, on the facts, as they existed, the initial burden in the above sense can be said to have been discharged by the department and, therefore, thereafter the burden of establishing the facts which were specially in the knowledge of the assessee regarding the reasonable cause, shifted to the assessee. In any case, since all the material is already on the record, we have only to see as to whether on the basis of the material on the record, there was a reasonable cause for the delay in filing the return and, if so, for what period.

8. Reference may also be made to the decision of the Supreme Court in Suresh Seth's case (supra) since reference was made to it on behalf of the assessee. In that case, it was held by the Supreme Court that the non-performance of any of the acts, mentioned in Section 18(1)(a), gives rise to a single default and to a single penalty, the measure of which, however, is geared up to the time-lag between the last date on which the return had to be filed and date on which it is filed. It was held that the default, if any, committed, is committed on the last date allowed to file the return and the default cannot be one committed every month thereafter. The words 'for every month during which the default continued' were held to indicate only the multiplier to be adopted in determining the quantum of penalty and did not have the effect of making the default in question a continuing one. However, the reference to the law applicable being that in force on the last date on which the return had to be filed, was made with reference to the computation of penalty and not with reference to the levy or leviability of penalty.

9. We may, therefore, now examine the material on the record regarding the existence of the reasonable cause for the default. The material on the record clearly shows that from August 1973, the assessee's eldest daughter remained continuously and seriously ill which necessitated her hospitalisation at the AIIMS, New Delhi and in the Holy Family Hospital, Okhla, New Delhi which ultimately resulted in her death on 30-11-1975. Thus, there can be no doubt that there was reasonable cause for the delay up to 30-11-1975. For the period, thereafter, the case of the assessee was that she was mentally disturbed and could not attend to her business and other affairs. So far as this point is concerned, we find that though the assessee had filed her original income-tax return for the assessment year 1975-76 on 3-9-1979, it was filed on estimated basis only. That return was not accompanied by a statement of accounts, such as profit and loss account and balance sheet, etc., because due to the circumstances beyond the control of the assessee, mentioned above, the account books could not be finalised. The assessee had filed her revised income-tax return for the assessment year 1975-76 on 11-1-1978. There was a covering letter attached to that revised return, copy of which has been placed on the paper book. That letter states that as the assessee was busy looking after her eldest daughter, she could not attend to the business affairs and, accordingly, a return on estimate basis had been originally submitted. The letter mentions that the revised return was based on finalised accounts. Thus, if the revised income-tax return could be filed on 11-1-1978, it stands to reason that the wealth-tax return could also have been filed on 11-1-1978 as the only material which would have been required for filing the same, would have been the information contained in the income-tax return. There is nothing on the record to show as to what was the other material which the assessee could not collect up to 11-1-1978 for filing the wealth-tax return. Therefore, in our view, the learned AAC was fully justified in holding that the reasonable cause for the delay in filing the return was established only up to 11-1-1978 and not thereafter. In this connection it may also be mentioned that the contentions raised on behalf of the revenue that the assessee was visiting Bombay for the purposes of business on 26-4-1976, 26-5-1976, etc., or that she was in a position to file her return are not established. We, therefore, uphold the finding of the learned AAC that though penalty was leviable against the assessee under Section 18(1)(a), the period of delay with reference to which the penalty was to be calculated was the period after 11-1-1978 and up to 3-3-1979 when the return was filed.

11. In the result, the appeal filed by the assessee as well as the appeal filed by the department, both fail and are dismissed.


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