1. The following three question have been referred to this court for its opinion at the instance of the Revenue :
'(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the period of delay for the purpose of levy of penalty under section 18(1)(a) of the W.T.Act should be computed from November 2, 1966, and, accordingly, cancelling the penalty of Rs. 4,816 for the assessment year 1965-66
(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the period of delay for the purpose of levy of penalty under section 18(1)(a) of the W.T.Act should be computed from February 18, 1967, and, accordingly, reducing the penalty levied for the assessment year 1966-67
(3) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the period of delay for the purpose of levy of penalty under section 18(1)(a) of the W.T.Act should be computed from March 2, 1968, and accordingly, reducing the penalty levied for the assessment year 1967-68 ?'
2. A look at the three question will indicate that all the questions involve the same issue as to whether the Appellate Tribunal was right in directing the re-computation of the period of delay in filing the wealth-tax, returns the assessment year 1965-66, 1966-67 and 1967-68.
3. The assessee filed his returns under s. 14(1) of the W.T.Act (hereinafter referred to as 'the Act'), belatedly. For the filing of the delayed returns, penalty was levied under the Act by the WTO. The date on which the returns was due under s. 14(1) of the Act, the date on which the return was filed, the period of delay in filing the return and the penalties levied for all the period of delay in filing the return and the penalties levied for all the three assessment years referred to above are given bellow :
__________________________________________________________________Assessment years___________________________1965-66 1966-67 1967-68__________________________________________________________________Date of which return wasdue under section 14(1) 30-6-65 30-6-66 30-6-67Date on which returns ofwealth was filed 2-11-66 31-3-69 31-3-69Period of delay 16 months 33 months 21 monthsPenalty levied Rs.4,816 Rs.1,787 Rs.997
4. The assessee contended before the WTO that he filed a disclosure petition under the Scheme of the Finance Act, 1965, in May, 1966, and the disclosure settlement was finalised in August, 1966, and that the above circumstance contributed to the delay in the submission of the wealth-tax returns. This plea was, however, rejected by the WTO on the ground that the settlement was arrived at in August, 1966, and the pendency of the said disclosure petition could, if at all, constitute reasonable cause only for the assessment year 1965-66 and since the assesses has failed to show any reasonable cause for the delayed submission of the wealth-tax returns for the other years, penalties have been levied for all the assessment years. The levy of penalty was also confirmed by the AAC. The matter was taken to the Tribunal by the assessee contending that the income-tax returns was filed on November 2, 1966, for the assessment year 1965-66, on February 18, 1967, for the assessment year 1966-67 and on March 2, 1968, for the assessment year 1967-68 and without finalising the income-tax returns, he was not in a position to file the wealth-tax returns. The said contention of the assessee has been accepted by the Tribunal. The Tribunal took the view that unless there is a finalisation of the income-tax returns, the assessee will be handicapped in filing the wealth-tax returns and, therefore, the non-filling of the wealth-tax returns till the filing of the income-tax returns can be taken to be a reasonable cause for not filing the wealth-tax returns. The Tribunal, therefore, took the dates of filing the income-tax returns as the basis for computating the delay in filing the wealth-tax returns for the purpose of imposition of penalty under s. 18. Since the income-tax return was filed by the assessee on November 2, 1966, for the assessment year 1965-66, on February 18, 1967, for the assessment year 1967-68, the Tribunal directed the recomputation of the delay on the basis of the above dates on which the assessee filed the income-tax returns. Aggrieved by the decision of the Tribunal, the Revenue has sought and obtained this reference on the three questions set out above.
5. We are of the view that no interference is called for on the facts and in the circumstances of this case with the view expressed by the Tribunal. Section 18 enables the various authorities in the proceedings before them to levy of penalty for failure to furnish the returns. Section 18(1)(a) provides for the levy of penalty if there has been a delay in the filing of the return under s. 14 of the Act. But the section contemplates the levy of penalty for the delay in filing the return without reasonable cause. That means, wherever the assessee is able to establish that the delay was due to reasonable cause, the penalty is not contemplated under that section. In this case, the Tribunal felt that the assessee could file the wealth-tax returns only after the finalisation of his income-tax returns and, therefore, the entire delay in the filing of the returns for the various years cannot be said to be without reasonable cause and that portion of the delay before the filing of the income-tax returns should not be taken into account for the levy of penalty under s. 18(1)(a). Though the Tribunal refers to the fact that the assessee had paid penalty for the delayed filing of income-tax returns, it cannot be a relevant factor for the purpose of the application of s. 18(1) of the Act. However, the Tribunal appears to take the view that the assessee could not file the wealth-tax returns before he finalised the income-tax returns and, therefore, the delay after the filing the income-tax return should alone be taken for the purpose of s. 18(1)(a).
6. It cannot be said that s. 18(1) creates an absolute liability to pay penalty for delayed filing of returns. The section, as already stated, penalises only the delays which are not for reasonable cause. Therefore, discretion is given to the authorities under s. 18(1) to find out whether the delay is due to reasonable cause and, if the assessee establishes that the delay is for a reasonable cause, not to levy penalty. As a matter of fact, this court in V. L. Dutt v. CIT : 103ITR634(Mad) which, in turn, referred to Hindustan Steel Ltd. v. State of Orissa : 83ITR26(SC) :
'Penalty will not 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 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. In that case, the court further pointed out that the levy of penalty under s. 271(1)(a) of the I.T. Act, 1961, is not a mere concomitant of a delay in filing the return and, therefore, even if there is any delay in filing the return, the assessee is not liable to be penalised unless the Department established that he had acted in deliberate disregard of his statutory obligations and that his conduct is contumacious.
8. Having regard to the opinion expressed in the above case, we find that the Tribunal has properly exercised its discretion in treating a portion of the period of delay as being for a reasonable cause and excluding that portion for the computation of the penalty. The Tribunal's decision, therefore, does not call for any interference. The question are, therefore, answered in the affirmative and against the Revenue. There will, however, be no order as to costs.