H.N. Seth, J. - (1.) BY this petition under Article 226 of the Constitution, the petitioner prays that the order dated February 17, 1973, passed by the Commissioner of Income-tax, Lucknow, rejecting his prayer for waiving the penalty for late submission of wealth-tax return be quashed.
(2.) THE petitioner filed his wealth-tax returns for the assessment years 1964-65 to 1969-70, beyond the time prescribed in Section 14(1) of the Wealth-tax Act, but before any notice under Section 14(2) of the Act could be issued to him. In those returns the petitioner stated the estimated value of his immovable properties and computed his net wealth accordingly. However, at the time of assessment, in respect of each year, the Wealth-tax Officer determined the total value of the petitioner's immovable property at a higher amount, and, consequently, his net wealth in each year also was computed and taxed at a higher figure. While completing these assessments, the Wealth-tax Officer further directed that notices under Section 18(1)(a) of the Act be issued to the petitioner to show cause why penalty as required by the Act be not imposed upon him. THE petitioner then moved the Commissioner under Section 18(2A), and prayed that the amount of penalty imposable upon him, under Section 18(1)(a), be waived. THE Commissioner rejected this application on the ground that, as the value of the assets shown by the assessee, in various returns filed by him, was much less than their assessed value, the case did not fall under Section 18(2A), as one of the conditions for exercising jurisdiction under that section was absent. THE petitioner has now come up before this court and the main point raised on his behalf is that the Commissioner was wrong in holding that in a case where the assessed net wealth was more than that disclosed in the return, the jurisdiction to waive the penalty under Section 18(2A) could not be exercised. Relevant portion of Section 18(2A) reads as follows : " 18. (2A) Notwithstanding anything contained in Clause (i) or Clause (iii) of Sub-section (1), the Commissioner may, in his discretion-- (i) reduce or waive the amount of minimum penalty imposable on a person under Clause (i) of Sub-section (1) for failure, without reasonable cause, to furnish the return of net wealth which such person was required to furnish under Sub-section (1) of Section 14, or (ii) reduce or waive the amount of minimum penalty imposable on a person under Clause (iii) of Sub-section (1), if he is satisfied that such person-- (a) in the case referred to in Clause (i) of this sub-section has, prior to the issue of notice to him under Sub-section (2) of Section 14, voluntarily and in good faith, made full disclosure of his net wealth... " It is the case of both the parties that the penalty in this case is being sought to be imposed merely for late filing of wealth-tax return and for no other reason and that the petitioner's claim for waiver of penalty was to be considered under Clause (i) of Section 18(2A). Under this clause, the Commissioner has been empowered to reduce or waive the amount of minimum penalty imposable for late filing of return only when he is satisfied that the assessee had, prior to the issue of notice to him under Sub-section (2) of Section 14, voluntarily and in good faith made full disclosure of his net wealth and had complied with certain other conditions as well. There is no dispute that, in this case, the assessee had voluntarily made a disclosure of the particulars of his assets before any notice under Sub-section (2) of Section 14 was issued to him. Only question, therefore, that remained to be considered was whether, in the circumstances, it could be said that the assessee had in good faith made full disclosure of his net wealth.
(3.) THE Commissioner did not go into the question whether the disclosure made by the assessee was in good faith or not. He took the view that as, in this case, the value of the assets disclosed by the assessee was below that determined at the time of final assessment, which had become final, the assessee had not made full disclosure about his net wealth. As making a full disclosure of net wealth is one of the conditions precedent for exercising jurisdiction under Section 18(2A)(i), the penalty imposable on the assessee could not be waived. Learned counsel appearing for the Commissioner supported the conclusion arrived at by him and contended that the requirement of Section 18(2A) that the assessee should, in good faith, have made full disclosure of his net wealth, in substance amounts to this that while disclosing his net wealth the assessee must have acted in good faith and further that the disclosure of net wealth made by him was in fact full. If any of the two conditions is missing, one of the conditions precedent for exercising jurisdiction under Section 18(2A) would be lacking and the Commissioner would have no jurisdiction to accede to the request made by the assessee. THE expression "net wealth " has been defined in clause(m) to Section 2 of the Wealth-tax Act, which reads as follows : "(m) ' net wealth ' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than..." Keeping this definition in mind, it becomes obvious that in this case the assessee did not disclose the entire amount which went to constitute his net wealth, i.e., he did not make a full disclosure of his net wealth.;