The main legal point established in the judgment is the need for exercising the power to waive or reduce penalties under Section 18(2A) of the W.T. Act judiciously and considering all relevant factors.

Srinivasa Iyengar, J.—The petitioner who has been assessed to wealth-tax in the status of HUF has challenged in these writ petitions, the order of the CWT made on the application filed by him under Section 18(2A) of the W.T. Act, 1957, in relation to the penalties imposed under Section 18(1)(a) of the W.T. Act for the assessment years 1966-67, 1967-68 and 1969-70 to 1972-73. The Commissioner reduced the penalties that had been imposed by the WTO.

2. The petitioner filed the returns on February 22, 1973, and the assessment was completed by the WTO virtually accepting the wealth that had been disclosed, by his order dated March 15, 1973. As the return had been filed beyond the time prescribed, the WTO issued notice under Section 18(1)(a) of the W.T. Act to show cause why penalty for late submission of wealth-tax returns should not be imposed.

3. The petitioner filed a petition before the Commissioner seeking waiver of penalty on the ground that he had disclosed the wealth voluntarily and fully and had co-operated in finalisation of the assessment and had also paid up the taxes. It would appear that the petitioner appraised the WTO of having filed before the Commissioner a petition for waiver of penalty. The WTO, without waiting or affording an opportunity of personal hearing to the petitioner, made an order imposing penalty on March 11, 1975. The Commissioner's order reducing to some extent the penalty was made on March 21, 1975.

4. The following tabular statement gives the details of the wealth returned, wealth assessed, wealth-tax imposed and the penalty imposed by the WTO and the penalty as reduced by the Commissioner :

Asst. year

Wealth returned

Wealth assessed

Tax

Penalty levied by WTO

Penalty as per order of CIT

1966-67

2,63,746

2,64,170

321

14,920

5,000

1967-68

2,50,477

2,50,830

354

11,800

3,000

1969-70

2,44,288

2,44,290

222

9,520

2,000

1970-71

2,41,816

2,41,820

210

6,480

1,500

1971-72

2,18,165

2,18,170

181

1,730

1,000

1972-73

2,16,707

2,16,510

1639

500

200

5. In these writ petitions, it has been contended that having regard to the facts of the case, penalty should have been waived and the order made by the Commissioner without giving an opportunity to the petitioner to be heard is untenable. About 4 odd acres of agricultural land inherited had been retained by the petitioner and his brothers in common as association of persons and after litigating with the trust board, a layout was formed under its supervision for disposal of sites. As the association of persons was not liable for wealth-tax no return had been filed. Only in 1972-73 when accounts were made up with the help of chartered accountants they were advised that the petitioner should include for wealth-tax, the value of the share pertaining to his branch and in these circumstances the returns came to be filed.

6. This court has held that the penalty to be imposed for filing the return beyond the prescribed time without reasonable cause is on the basis of the law as in force on the date of default, viz., the last date by which the return was due to be filed [vide Commissioner of Wealth-tax, Mysore Vs. C.S. Manvi and Others, (1978) 114 ITR 417 KAR. In the instant cases, the return was due to be filed on 30th June of 1966 and the subsequent years. From the tabular statement given above, it is seen that for one year, the net wealth computed was about Rs. 200 less than what had been shown in the return and for three years, the net wealth computed was only by way of rounding up of the amount and in the other two years, the difference between wealth returned and that computed did not exceed even Rs. 500. In the light of the decision in Commissioner of Wealth-tax, Mysore Vs. C.S. Manvi and Others, (1978) 114 ITR 417 KAR the maximum penalty that could have been levied by the WTO himself for the first two assessment years would be about Rs. 160 and Rs. 180. Therefore, it is clear that the penalty as had been imposed by the WTO was not correct. The amounts fixed as penalty by the Commissioner are not based upon