Decided on December 13,1994



B.S. Saluja, Member - (1.) THE assessee has filed the present appeals against the separate orders of CWT (Appeals), Bareilly dated 31-5-1990 mainly on the ground of levy of penalties under Section 18(1)(a) of the WT Act, 1957.
(2.) The assessee-company filed the returns of wealth for both the assessment years on 29-8-1985. The valuation dates in this case were 31-7-1983 and 31-7-1984 respectively. The assessee had sought extension of time for furnishing the wealth-tax return in relation to assessment year 1984-85 up to 31-10-1984 vide applications dated 1-6-1984 and 29-9-1984. No further extension for filing the return was sought by the assessee. In reply to the show-cause notice the assessee filed written submissions on 13-2-1989 and stated that the levy of wealth-tax was reintroduced by Section 40 of the Finance Act, 1983 for the first time and the assessee-company came to know of it only through the auditors when they pointed out that the return had to be filed. Therefore, the delay in filing of the return was on account of the said factual position. The assessee also relied on the decision of the Hon'ble Supreme Court in the case of Motilal Padampat Sugar Mills Co. Ltd. v. State of UP [1979] 118 ITR 326, wherein the Hon'ble Supreme Court had observed that "there is no presumption that every person knows the law. It is often said that every one is presumed to know the law, but that is not the correct statement : there is no such maxim known to the law". The Assessing Officer observed that the facts were not identical as per arguments advanced by the assessee, as the assessee was fully aware regarding the introduction of Section 40 relating to charging of wealth-tax on closely-held companies which was introduced by the Finance Act, 1983. He further observed that these facts were confirmed with the documents and that the assessee-company had itself sought extension of time for furnishing wealth-tax returns. He, therefore, held the assessee to be in default in not filing the return of wealth under Section 14(1) of the WT Act, 1957 and accordingly levied a penalty of Rs, 4,266 for delay of 9 months in the assessment year 1984-85. On similar grounds, penalty of Rs. 456 was levied for a delay of one month in the assessment year 1985-86. On appeal before the CWT(Appeals) the learned counsel for the assessee contended that the very fact that the assessee had been periodically applying for extension of time be considered as explaining the existence of a reasonable cause and the penalty be dropped. The CWT (Appeals) observed that extensions had been sought up to 31-10-1984 and the Assessing Officer did not impose any penalty up to the period of extension allowed and thereafter no application for extension of time had been made and the assessee continued to be in default up to 29-8-1985. He accordingly dismissed this plea of the learned counsel. Another plea taken by the learned counsel was that the assessee should not be penalised as there was no deliberate or dishonest intention of assessee to file the return late. The assessee had acted bona fide and had reasonable cause for filing the return late. In this connection the CWT (Appeals) analysed the statement of facts filed by the learned counsel and noted that the only reason attributed to the late filing of the return was ignorance of the assessee about the amended provisions relating to wealth-tax in the case of closely-held companies. He also noted that similar plea had been taken by the assessee before the Assessing Officer. After considering the applications filed for extension of time and the submissions made by the learned counsel, the CWT (Appeals) observed that "it is, therefore, proved to be hilt that the plea taken before the Assessing Officer as well as before me of ignorance of the amended provisions of law is thoroughly misleading. In view of what has been discussed above, it is held that the penalty has been imposed by the Assessing Officer on a very sound footing and it is fully established that the appellant had committed default under Section 18(1)(a) without any reasonable cause". Aggrieved, the assessee has filed the present appeals.
(3.) THE learned counsel for the assessee, Shri K.S.V.S. Manian submitted that the Finance Act, 1983, had revived the levy of wealth-tax in the case of closely-held companies and Section 40 of the Finance Act, 1983 was a complete code in so far as levy of wealth-tax in the case of closely-held companies was concerned. He laid emphasis on the provisions of Sub-section (1) of Section 40 and Sub-section (5) of Section 40 for the proposition that the new provisions introduced by the Finance Act, 1983 only related to the levy of wealth-tax and that the penalty provisions of Section 18 are not attracted in this case. THE contention of the learned counsel was that the words "the levy of wealth-tax", as used in Sub-section (5), will not cover the penalty provisions under which penalty has been imposed on the assessee, i.e., Section 18(1)(a) of the WT Act. He also referred to Clause (a) of Sub-section (5) which had specifically made certain provisions of the WT Act, 1957 inapplicable in the case of levy of wealth-tax on the closely-held companies. THE Bench invited the attention of the learned counsel to the provisions of Sub-section (7) which specify that "this section shall be construed as one with the WT Act". However, the learned counsel reiterated that the expression "levy of wealth-tax" will not cover penalties. He relied on the decision of the Hon'ble Supreme Court in the case of Associated Cement Companies Ltd. v. Director of Inspection C & CE [1985] 153 ITR 322. He also invited our attention to page 4 of the letter dated 21-5-1988 written to CWT(Appeals), Bareilly, where he had mentioned that the words "this Act", as used in Section 18(1)(a) will not cover Section 40 of the Finance Act, 1983 and will only relate to the main WT Act, 1957. 4.1 In addition to the legal issue raised by the learned counsel, he referred to the fact that the provisions of new Section 40 of the Finance Act, 1983 were not known to the assessee as the assessment year 1984-85 was the first assessment year and the assessee had a reasonable cause in late filing of the returns. In this connection he again relied on the decision of the Hon'ble Supreme Court of India in the case of Motilal Padampat Sugar Mills Co. Ltd. (supra) and submitted that a liberal view may be taken. 4.2 He also mentioned that the assessee cannot be penalised for the lacuna in law and penalty cannot be charged unless the Act is suitably amended. 4.3 THE learned counsel also stated that the penalty imposed for the assessment year 1985-86 is for a period of one month and the same should not have been levied.;

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