VELAPPAN N Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) At the instance of the assessee, the Income Tax Appellate Tribunal has referred the following question of law, for the decision of this Court:

(2.) The matter arises under the Wealth Tax Act. The applicant is an assessee to Wealth Tax. The respondent is the Revenue. The matter involved herein relates to the levy of penalty under S.18(1)(a) of the Wealth Tax Act, for the years 1973-74 and 1974-75. Return was due from the assessee under S.14(1) of the Wealth Tax Act, for the year 1973-74 on 31-7-1973. and for the year 1974-75 on 31-7-1974. In conformity with the said statutory obligation, the assessee did not file the returns. However, the Wealth Tax Officer issued notices under S.14(2) of the Wealth Tax Act. In response to the said notices, the assessee filed the return for the year 1973-74 on 6-3-1974 and for the year 1974-75 on 23-6-1975. For the failure or default to file the returns, as enjoined by S.14(1) of the Wealth Tax Act, the Wealth Tax Officer initiated penalty proceedings under S.18(1)(a) of the Act. By order dated 19-3-1979, he levied a penalty of Rs. 10,248/- for the each assessment year. It was confirmed in appeal by the Appellate Assistant Commissioner and in second appeal, by the Appellate Tribunal. Thereafter, at the instance of the assessee, the question of law, formulated herein above, has been referred by the Appellate Tribunal, for the decision of this Court.

(3.) We beard counsel for the applicant/assessee Mr. S. A. Nagendran, as also counsel for the Revenue. It is common ground that S.14(1) of the Wealth Tax Act imposes an obligation on the assessee to file the return of wealth tax within the statutory period. For both the years the assessee did not comply with the said requirement. There was failure on the part of the assessee to file the returns. Subsequently, the Wealth Tax Officer issued notices under S.14(2) of the Act. The assessee filed returns in obedience to the said notices. The plea of the assessee is, that once the returns are filed in pursuance to the individual notices issued under S.14(2) of the Act, if wipes out the earlier default incurred by non filing of the returns as enjoined in S.14(1) of the Act. The short question that arises for consideration is, whether the issue of a notice under S.14(2) of the Act will have the effect of wiping out or condoning the earlier default which occurred or aroset in not filing the returns as per S.14(1) of the Act. The Income Tax Appellate Tribunal held that the mere fact that the returns were filed in response to the notices issued under S.14(2) of the Act will not wipe out or obliterate the earlier default incurred for failure to file the returns under S.14(1) of the Act. We are of the view that the conclusion of the Appellate Tribunal is justified in law. The Punjab and Haryana High Court in C.W.T. v. Daljit Singh (133 I. T. R.385) and the Madhya Pradesh High Court in Mohd. Shafi Khan v. C. W. T. (144 ITR. 489) have taken the said view. Eventhough the returns were filed in pursuance to the notices issued under S.14(2) of the Wealth Tax Act, the default that was committed and the liability incurred for failure to file the returns as enjoined by S.14(1) of the Act will continue. The levy of penalty for failure to file the returns as enjoined in S.14(1) of the Act will be proper and authorised. Substantially similar provisions in the Income Tax Act, namely S.139(1) and (2) read with S.271(1)(a) of the Act, came up for consideration before the several High Courts. The Courts have held that failure to furnish the return within the time prescribed under sub-section (I) of S.139 is liable to attract S.271(1)(a) of the Income Tax Act even if the assessee files a return for the assessment year in question under S.139(2) of the Income Tax Act. (See Law of Income Tax by Sampath Iyengar, Vol. V, page 4726). The decisions of the Andhra Pradesh, Allahabad, Delhi, Gujarat. Kerala, Madras and Rajasthan High Courts, are relevant in this context. -- 99 ITR. 448, 128 ITR. 259, 86 ITR. 657, 94 ITR. 269, 126 ITR. 202, 105 ITR. 674, 87 ITR. 71, 121 ITR. 767 and 79 ITR. 702. The Appellate Tribunal was justified in sustaining the penalty levied for both the years for default incurred by non filing of the returns under S.14(1) of the Wealth Tax Act.