SHAREEF AHMAD Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THIS is a petition under Article 226 of the Constitution of India for quashing the order of the CWT dated 6th March, 1975, passed under Section 18(2A) of the W.T. Act, 1957 (hereinafter referred to as "the Act").

(2.) THE petitioner is an individual assessee. He filed the wealth-tax returns for the assessment years 1969-70, 1970-71, 1971-72 and 1972-73 on February 28, 1973. According to the case of the petitioner, although he was being assessed under the I.T. Act for a very long time, as he was bona fide under the belief that his wealth was below the taxable limit, he did not submit the return of the wealth-tax of the aforesaid years. THE assessments for the aforesaid years were by four different orders made on the same date, i.e., 4th August, 1973. While determining the market value of the machinery held by the firm, M/s. Sayeed Bhai and Company, the WTO added 10 per cent. over the book written down value by way of appreciation in the value of assets. This resulted in an addition of Rs. 3,526 for the first year and the same amount for the subsequent three years. THE WTO also added certain amount in the wealth of the petitioner out of dharmada account from the balance-sheet of the firm in which the petition was a partner. THE WTO while making the assessments of these years directed a notice to be issued to the petitioner under Section 18(l)(a) of the Act for imposing penalty for late filing of returns. THEreafter, the petitioner on 25th September, 1974, moved the CWT, Kanpur, under Section 18(2A) of the Act for waiving the penalty of wealth-tax. In his application dated 5th September, 1974, the petitioner alleged that he had filed the returns of the aforesaid assessment years voluntarily declaring full particulars of the wealth even before the notice under, Section 18(2) was served upon him. It was prayed that as the case of the petitioner was fully covered by Section 18(2A) of the Act, the Commissioner may waive the penalty. THE petitioner received a letter dated February 18, 1975, from the office of the CWT informing that as the petitioner had not shown the appreciation in the cost of the machinery in the assessment years 1969-70 to 1972-73, and has also not disclosed the dharmada account maintained in the firm, M/s. Sayeed Ahmad Sharif Ahmad, therefore, the Commissioner intended to reject the application. It, however, gave an opportunity to the petitioner to appear before the Commissioner on February 25, 1975, with a written reply to the points mentioned above. THE petitioner submitted the reply on February 18, 1975, stating, inter alia, that he had acted bona fide and that he was not guilty of a conduct which could deprive him of the benefit of waiver of the tax provided by Sub-section (2A) of Section 18. THE petitioner also asserted that he was not guilty of the charges mentioned in the letter of the CWT dated February 18, 1975. It, however, appears that the CWT, being not satisfied with the explanation offered by the petitioner, rejected the application filed on March 6, 1975, on the ground that the petitioner had not made complete disclosure of his wealth. In this view of the matter, the Commissioner found that the petitioner's good faith or bad faith was not relevant as other conditions mentioned in Section 18(2A) had not been satisfied. Aggrieved by the aforesaid order, the petitioner has filed the present writ petition.

(3.) IT would be seen from the aforesaid section that the power to reduce or waive the amount of minimum penalty imposable on a person can be exercised by the Commissioner if he is satisfied that such person had filed the return voluntarily and in good faith and had made full disclosure of his net wealth. 'In the instant case, it will be seen that the application filed by the petitioner for the waiver of the amount of penalty was rejected by the Commissioner on two grounds, the same being that the petitioner had not shown in the assessment years 1970-71 and 1971-72, the appreciation in the cost of the machinery in the assets of Messrs. Habib Oil Industrial Corporation and that he had not disclosed his share in dharmada account maintained in the firm. As mentioned above, the value of the machinery shown by the petitioner in the return filed was enhanced by Rs. 3,526. This was done by the WTO under Sub-section (2) of Section 7 of the Act. In his opinion, the value shown in the return by the petitioner was not correct. The fact that the petitioner had shown the machinery itself as his property in the wealth-tax return is not in dispute. He put the valuation of the machinery which he thought was proper and correct. If the WTO took another view of the matter and held that the same was liable to be increased by Rs. 3,526, it would not necessarily mean that the petitioner was guilty of having not made a full disclosure of the assets. This could be a case of an honest difference of opinion between the petitioner and the WTO. The petitioner had given the details which were not wanting in essential quality. Hence, the view of the WTO that the petitioner had not disclosed the full value of the assets by having not mentioned the same figure which ought to have been put, according to the WTO, could not be a ground to hold that the petitioner had not made full disclosure of his net wealth.