- (1.) UNDER Section 27(1) of the Wealth-tax Act, 1957, the Income-tax Appellate Tribunal has referred the following four questions : "1. Whether, on the facts and circumstances of the case, the Hon'ble Tribunal was justified in holding that the penalty proceedings under Section 18(2) were validly initiated ? 2. Whether, on the facts and circumstances of the case, the Hon'ble Tribunal was correct in holding that there was no defect in the notice issued by the Wealth-tax Officer under Section 18(2) ? 3. Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that penalty could be imposed for default under Section 14(1) of the Wealth-tax Act although proceedings were started under Section 18(2) only ? 4. Whether, on the facts and circumstances of the case, the Tribunal was justified in imposing the penalty without affording an opportunity of being heard in spite of a specific request ?"
(2.) THE assessee is an individual. THE assessment year concerned is 1971-72. THE return was due on or before June 30, 1971. It was actually filed on February 28, 1973. For this delay in filing the return, proceedings were initiated under Section 18(1)(a) of the Wealth-tax Act for levy of penalty. THE assessee submitted his explanation after considering which the Wealth-tax Officer levied the penalty. The assessee preferred an appeal. The appeal was allowed by the Appellate Assistant Commissioner. He held that there was reasonable cause for the assessee in not filing the return in time. The Department carried the matter in appeal to the Tribunal. The Tribunal reversed the judgment of the Appellate Assistant Commissioner and held that there was unexplained delay commencing from the inception of the year 1972 and that accordingly, the penalty proceedings were not illegal. Thereupon, the present reference is obtained. The contention of the assessee is that the proceedings under Section 18(2) were invalid inasmuch as there was a valid explanation for the delay. It is pointed out that the assessee was a partner in a firm, that there were disputes between the partners with respect to the dissolution of the firm and settlement of accounts which remained unresolved for a long time. It is in those circumstances that the assessee said that he could not file his return in time. But the Tribunal found as a fact that the accounts of the firm were settled before the end of 1971 and there was no reason why the assessee could not file the return by the end of that year. It also pointed out that another partner of the same firm has filed the return at the end of 1971. This is a finding of fact and we see no reason to disturb or doubt the correctness of the said finding. We may mention that the firm was dissolved on August 31, 1966, and that its accounts were settled towards the end of year 1971. The return in this case was filed only in February, 1973. The delay of fourteen months has remained unexplained. Question No. 1 is, accordingly, answered in the affirmative, i.e., in favour of the Revenue and against the assessee.
(3.) THE second question relates to the alleged defect in the notice issued under Section 18(2). THE argument is that the notice does not specify whether the default was under Sub-section (1) or (2) of Section 14. We do not think that the notice can be termed as invalid or void on the ground. Learned counsel relies on a decision of the Kerala High Court in N. N. Subramania Iyer v. Union of India [1974] 97 ITR 228, but, as rightly pointed out by the Tribunal, the contents of the notice concerned in that case are different from the contents of the notice in this case. In that case, the notice contained several alternative grounds and the irrelevant grounds were not scored out. THEre is no such defect in the notice in this case nor is it shown that the assessee has suffered any prejudice or handicap on that account. It cannot, therefore, be said that either the notice was defective or that the order passed in pursuance thereof is illegal on that ground. Question No. 2 is, accordingly, answered in the affirmative, i.e., in favour of the Revenue and against the assessee. Question No, 3 is such an obvious question that it does not require a detailed discussion. The default in not filing the return in pursuance of Section 14(1) is not effaced by the issuance of a notice under Section 14(2). The default remains a default. Learned counsel for the assessee relies on a decision of the Patna High Court in Addl. CIT v. Bihar Textiles [1975] 100 ITR 253. The said decision has, however, been overruled later as pointed out fairly by learned counsel for the assessee himself. On the other hand, we are supported by the decisions in CIT v. Chandulal [1985] 152 ITR 238 and Srinivasa Pitti and Sons v. CIT [1989] 173 ITR 306 (AP). This question is, accordingly, answered in the affirmative, i.e., in favour of the Revenue and against the assessee.;