RADHAKRISHNA Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) IN these petitions, the petitioner is challenging the order made by the CWT, Karnataka-II, Bangalore, or September 6, 1974, rejecting the application filed by the petitioner under s. 18(2A) of the Wealth-tax Act, 1957 (to be hereinafter referred as "the Act"), for waiver of penalty imposable under s. 18(1)(a) of the Act, in relation to the assessment years 1966-67 to 1971-72.

(2.) THE return for the assessment year 1966-67 was filed on April 6, 1972, and the assessment order was made on April 12, 1972. THE returns for the other assessment years had been filed on or about March 22, 1972, and the assessments were completed on March 28, 1972. THE returns were due to be filed by 30th of June of 1966 and of the subsequent years, and obviously the returns had been filed belated. THE WTO, (Assessment-7), Circle-1, Bangalore, had issued notices to show cause why penalty should not be imposed under s. 18(1)(a) of the Act. THE assessee had sent a reply thereto. He also filed an application on August 14, 1972, before the CWT, under s. 18(2A) of the Act. It transpires that the WTO imposed penalties by his orders made on March 14, 1974. THE order of the CWT is subsequent thereto. THE CWT was of the opinion that good faith had not been established and accordingly rejected the prayer for waiver of penalty for all the six years.

(3.) THE other two cases above referred to are decisions of the Allahabad High Court. In Hasan Ahmad Khan's case [1975] 99 ITR 414, the High Court of Allahabad, while considering the scope of s. 18(2A) of the Act held that what the Commissioner has to be satisfied about was that while disclosing his net wealth fully, the assessee had acted in good faith. What had happened in that case was that the wealth of the assessee had been assessed at a higher value than what had been disclosed by the assessee. THE contention on behalf of the department in that case was that as the full disclosure of the net wealth had not been made, it could not be said that the return had been filed in good faith. This contention was not accepted by the Allahabad High Court, and it was observed that the expression "in good faith made full disclosure of his net wealth" merely means that the assessee should have honestly described all his assets and liabilities which go to constitute his net wealth, along with their estimated value, and the mere fact that the estimated value given by the assessee was ultimately not accepted by the assessing authority would not result in the assessee being treated as having acted in bad faith. In Jakhodia's case [1978] 115 ITR 61 (All), the provision for consideration was s. 273A of the I.T. Act, 1961. In that case, the CIT had come to the conclusion that the disclosure made by the petitioner was not in good faith. THE Allahabad High Court held that this was wrong and observed thus (p. 67) :