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1982 Supreme(Cal) 4
High Court Of Calcutta
SABYASACHI MUKHERJI, SUHAS CHANDRA SEN
TARAK NATH PAUL - Appellant
Versus
COMMISSIONER OF WEALTH-TAX - Respondent
Matter 1313 Of 1979
Decided On : 01/13/1982
A.N.BHATTACHARYA, P.K.PAL, R.N.Dutt, S.K.DUTTA
Headnote:
WEALTH TAX - Penalty - Default in filing return - Whether the Appellate Tribunal was justified in allowing a partial relief instead of quashing the penalty order and in holding that the mens rea is not required to be established by the Department in imposing penalty for late submission of returns - Whether, on the facts and in the circumstances of the case, the imposition of penalty was at all justified without proper consideration of the press note dated 2nd June, 1969, issued by the Ministry of Finance, Department of Revenue and Insurance, Govt. of India, referred to in the Tribunal's order - Held, yes.
Fact of the Case:
The assessee, a beneficiary of a trust, failed to file the wealth-tax returns for the assessment years 1966-67 to 1969-70 within the time stipulated under Section 14 of the Wealth-tax Act, 1957. The Wealth-tax Officer (WTO) imposed penalties under Section 18(1)(a) of the Act for the delay. The assessee appealed to the Appellate Assistant Commissioner (AAC) and the Income-tax Appellate Tribunal (ITAT). The ITAT, while agreeing with the WTO that the assessee was liable to pay the penalty, held that the assessee was prevented by reasonable cause from filing the returns within the proper time up to 31st December, 1970, and therefore, the penalty should be computed only for the period after 31st December, 1970. The Revenue filed an application for reference to the High Court on the following questions: (1) Whether, on the facts and in the circumstances of the case, the ITAT was justified in allowing a partial relief instead of quashing the penalty order and in holding that the mens rea is not required to be established by the Department in imposing penalty for late submission of returns? (2) Whether, on the facts and in the circumstances of the case, the imposition of penalty was at all justified without proper consideration of the press note dated 2nd June, 1969, issued by the Ministry of Finance, Department of Revenue and Insurance, Govt. of India, referred to in the Tribunal's order?
Finding of the Court:
1. The ITAT was justified in allowing a partial relief instead of quashing the penalty order because the assessee had proved that there was reasonable cause for non-filing of the returns up to December, 1970. 2. The ITAT was justified in holding that the mens rea was not required to be established by the Department in imposing penalty for late submission of returns because the language of Section 18(1)(a) of the Wealth-tax Act, 1957, does not require the establishment of mens rea. 3. The imposition of penalty was justified because the assessee failed to file the returns within the time stipulated under Section 14 of the Wealth-tax Act, 1957, without any reasonable cause. 4. The press note dated 2nd June, 1969, issued by the Ministry of Finance, Department of Revenue and Insurance, Govt. of India, was not relevant in the facts and circumstances of the case.
Issues: 1. Whether the ITAT was justified in allowing a partial relief instead of quashing the penalty order? 2. Whether the ITAT was justified in holding that the mens rea is not required to be established by the Department in imposing penalty for late submission of returns? 3. Whether the imposition of penalty was at all justified without proper consideration of the press note dated 2nd June, 1969, issued by the Ministry of Finance, Department of Revenue and Insurance, Govt. of India, referred to in the Tribunal's order?
Ratio Decidendi: 1. The requirement of Section 18(1)(a) of the Wealth-tax Act, 1957, is that the authority concerned must be satisfied that the assessee has failed without reasonable cause to furnish the returns. Whether in a particular case reasonable cause to file the returns within the time stipulated in Section 14 is there or not would depend on the facts and circumstances of each case. 2. The language of Section 18(1)(a) of the Wealth-tax Act, 1957, does not create any absolute liability and there has to be an examination of the mental element involved in the sense that there is absence of sufficient cause.
Final Decision: Both the questions are answered in favour of the Revenue. Parties will pay and bear their own costs.
( 1 ) IN this reference under Section 27 (3) of the W. T. Act, 1957, two questions have been referred to this court which are as follows :"1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in allowing a partial relief instead of quashing the penalty order and in holding that the mens rea is not required to be established by the Department in imposing penalty for late submission of returns ? 2. Whether, on the facts and in the circumstances of the case, the imposition of penalty was at all justified without proper consideration of the press note dated 2nd June, 1969, issued by the Ministry of Finance, Department of Revenue and Insurance, Govt. of India, referred to in the Tribunal's order ?"
( 2 ) THIS reference relates to four assessment years, viz. , assessment years 1966-67, 1967-68, 1968-69 and 1969-70, and the assessee is one of the beneficiaries of a trust called " Puma Chandra Paul Trust" with 1/5th share. 90% of the assessee's wealth-tax was from the said trust and the remaining 10% was from some movable properties. The returns for those assessment years under reference were filed after a long delay and for this default the WTO imposed penalties under Section 18 (1) (a) of the W. T. Act, 1957. Being aggrieved by the of oresaid order of the WTO, the assessee went up in appeal before the AAC and the AAC agreed with the WTO and affirmed the imposition of penalties.
( 3 ) THEREAFTER the assessee filed appeals before the Income-tax Appellate Tribunal. The Tribunal noted the facts in great detail. It appears, as we have mentioned hereinbefore, four years were involved, the first valuation date was 31st of March, 1966 and the returns in respect of the first assessment year was due to be filed on 30th of June, 1966 and the other valuation dates were 31st of March for the subsequent years and the returns were to be filed on the 30th of June, of the subsequent years. It appears that the wealth-tax returns were filed for the first two years, viz. , 1966-67 and 1967-68, on 9th of August, 1971, and for the next two years, viz. , 1968-69 and 1969-70, on 9th of February, 1973.
( 4 ) THE assessee had become liable to pay wealth-tax for the first time for the assessment year 1964-65. As we have mentioned before, the assessee was entitled to 1/5th share of the trust property and the other beneficiaries, being four brothers, one of whom, Dr. Bhola Nath Paul, was in the U. K. at the relevant time. The trust estate consisted of 20 immovable properties and land. The properties were situated at different places in and around Calcutta and one of these was at Varanasi. For the assessment year 1964-65 and 1965-66, the returns were filed on the basis of the valuation of the trust properties adopted for the purpose of a civil suit for partition filed in the High Court at Calcutta which was disposed of in 1956 but for later years the beneficiaries thought it fit to have the properties valued by an approved valuer and appointed M/s. Hope Johnstone and Co. for this purpose. The valuation report was received in September, 1970. Meanwhile, the assessee had filed an application for extension of time for the assessment years 1966-67 to 1968-69 on 29th August, 1968, for two months and again on 31st October, 1968, for another two months and on 10th January, 1969, for an indefinite period. No application for extension of time was, however, made for 1969-70. Before the WTO, the Tribunal had noted, it was pleaded that the belated filing of the returns was due to delay in the valuation of the properties by the approved valuer but the WTO rejected this plea. In the appeal before the AAC, apart from emphasising the delay in the valuation of the properties by the approved valuer, it was mentioned that the levy of the penalties was against the spirit of the press note dated 2nd June, 1969, of the Ministry of Finance, Dept. of Revenue and Insurance, inasmuch as the assessee had filed the w
