The power to levy penalty is not obligatory and an assessee is visited with penalty when his conduct is contumacious or there is a wilful disregard of legal obligations.

JUDGMENT :

R.N. Misra, C.J. - In terms of a direction given by this court u/s 27(3) of the W.T. Act at the instance of the revenue, the Cuttack Bench of the Wealth-tax Appellate Tribunal has stated these cases and has referred the following common question for the opinion of the court:

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the imposition of penalty in each of the years in question ?"

2. We are concerned with assessment years 1965-66 to 1971-72. For all these years, the assessee filed his return on November 2, 1972, although he had been served with notices u/s 17 of the Act for the three latter assessment years out of these, namely, 1969-70 to 1971-72. Proceedings for the imposition of penalty were initiated for the non-filing of returns and as the assessing officer was not satisfied about the existence of any reasonable cause on the basis of the explanation offered, he imposed various amounts of penalties for these years.

3. The assessee's appeals before the AAC were dismissed. He came to hold that the delinquency committed by the assessee was a continuing one and, therefore, the law as it stood on the date of imposition of penalty was applicable for the computation of penalty and accordingly the various demands of penalties were confirmed.

4. In second appeals, the assessee pleaded before the Tribunal that a reasonable explanation had been furnished before the AAC for the delay in the filing of the returns and the same should have been accepted. The Tribunal held :

"In this case, the assessee had offered no explanation before the Wealth-tax Officer. Therefore, he (the WTO) had no occasion to consider whether there was reasonable cause or not. Before the Appellate Assistant Commissioner the assessee's case was that he was not at all aware of his legal obligation for filing the wealth-tax returns in terms of Section 14(1) of the Act. This explanation did not find favour with the Appellate Assistant Commissioner because he was of the opinion that the assessee, having been assessed to Income Tax from a long time back and having the benefit of regular advice from the taxation lawyer was definitely aware of the obligation cast upon him u/s 14(1) of the Wealth-tax Act and, accordingly, the assessee was liable to penalty for consciously disregarding that obligation. But in consideration of the facts of the case, we are of the opinion that the conclusion of the Appellate Assistant Commissioner was based on m re guess-work. The normal presumption is that almost all the assessees are completely dependent upon their lawyers or advisers for the highly technical taxation affairs, involving change almost in every year and sometimes more than once within one year and, consequently, they cannot comply with the terms of the Act unless they are advised by their taxation lawyers. It is not the case of the Appellate Assistant Commissioner that the assessee had not filed his wealth-tax returns although he was advised to file the same by his lawyer. The fact that the assessee's wealth became taxable in the year 1964 was within the knowledge of his taxation lawyer cannot be denied because that wealth consisted of mainly his interest in two concerns--M/s. Ramniklal & Co. and M/s. Venilal & Co., the incomes from which were used to be returned by the assessee year after year for his Income Tax assessment. We were told by the learned departmental representative that excepting one assessment year the assessee was never penalised for delayed submission of his Income Tax returns. We are unable to accede to the submission of the learned departmental representative to the effect that the assessee was liable to penalty for negligence of his lawyer who was his agent in accordance with law. The reason is that the facts of this case are peculiar. The assessee was not hitherto assessed to wealth-tax. These were the first assessments to wealth-tax. The assessee was being advised by a lawyer who admittedly adv