COMMISSIONER OF WEALTH TAX Vs. R K DEO

JUDGEMENT

(1.) ON applications being made under S. 27(3) of the WT Act of 1957 (hereinafter referred to as "the Act") by the Revenue, this Court by order dt. 6th Feb., 1979, directed the Wealth -tax Tribunal to state a case and refer the following common question for opinion of the Court :

(2.) ASSESSEE is an individual being the ex -zamindar of Jeypore in the district of Koraput. Under the provisions of S. 14(1) of the Act, returns should have been filed on or before 30th Sept., 1967, 30th Sept., 1968 and 30th Sept., 1969, for the corresponding asst. yrs. 1967 -68, 1968 -69 and 1969 -70, respectively. When the assessee did not file returns the WTO served notices under S. 17 of the Act in July, 1972, for the three years under consideration. Returns became due in August, 1972, but the assessee actually filed the returns for all the three years on 13th Sept., 1972. The WTO was of the opinion that the assessee had committed default and started proceedings for penalising him under s, 18(1) of the Act. When notices were issued, the assessee took the stand that he had lost his mental balance and was under medical treatment between 1967 and 1972 and was not in a position to attend to normal business. When he received the notices under S. 17 of the Act, he knew that returns had not been filed and took immediate steps for complying with the notices. In short, his stand was that the delay was on account of sufficient cause and under unavoidable circumstances and, therefore, the proceedings should be dropped.

(3.) THE assessee appealed to the AAC and produced certain material in support of his stand of mental illness. It was contended on his behalf that he was relying upon a power -of -attorney -holder who was none other than his wife and she on account of her social circumstances depended upon a paid employee for managing the taxation affairs of the assessee. It was further contended that the assessee was entitled to huge refunds from the Department and in these circumstances there could be no occasion for an intentional or contumacious avoidance of the statutory obligation. The AAC did not dispute the plea of illness, but found that the power -of -attorney -holder and the employees were negligent in fulfilling the statutory requirements and the consequences of their negligence bad to be suffered by the assessee. He concluded that the assessee was liable to penalty but reduced the quantum to the basic minimum in terms of the law as it stood at the relevant time. As a result of the appellate Order for the first two years the penalty amounts stood at Rs. 7,63,000 and Rs. 6,51,263 respectively. There was no reduction in the last year's penalty amount.