Commissioner of Wealth Tax vs Sitaram Singhania

The Patna Bench "B" of the Income Tax Appellate Tribunal has sought the opinion of this court u/s 27(1) of the W.T. Act (Act 27 of 1957), on the under-mentioned question, which is common to all the assessment years in question. The question referred for opinion of this court is :

" Whether, on the facts and in the circumstances of this case, the Income Tax Appellate Tribunal was correct in law holding that the period of default for non-filing of the wealth-tax returns was up to January 13, 1967, and not till the date of filing the returns ? "

The facts giving rise to the aforesaid question are as under :

The assessment years concerned are 1964-65, 1965-66 and 1966-67. The returns of wealth for the respective years were due on 30th June. 1964, 30th June, 1965, and 30th June, 1966. No return had been filed by the assessee-respondent u/s 14(1) of the Act till 12th December, 1966. Consequently, the WTO issued notice u/s 17 of the Act on the 12th of December, 1966, itself. The returns for the respective years, however, were filed on 6th October, 1969. The WTO then called upon the assessee to show cause as to why he should not be penalised u/s 18(1)(a) of the Act. The cause shown by the assessee was not accepted and accordingly penalty was imposed for the delay in filing the return, for each of the respective assessment years. The WTO calculated the penalty imposable for the assessment year 1964-65 at Rs. 54,060, (or the assessment year 1965-66 at Rs. 88,968 and for the assessment year 1966-67 at Rs. 30,240. The said amounts of penalty were accordingly imposed upon the assessee for the respective assessment years. In fact, penalty had also been imposed upon the assessee for the assessment year 1967-68, but we are not concerned with this assessment year, because the penalty imposed was wholly remitted by the Appellate Assistant Commissioner.

Before the AAC, it was urged by the assessee that he had filed petitions before the WTO requesting for extension of time to file the return. Since, however, no reply was received from the WTO, the assessee thought that the extension prayed for had been allowed. In support of such contention the assessee produced certain receipts indicating that petitions for extension of time to file the returns had in fact been filed by the assessee before the WTO. The AAC had, on examining the receipts, found that the receipts pertained to the period starting from 13th January, 1967, up to 26th June, 1969. He further found that the receipts had been signed by the office staff of the WTO. He, therefore, held that the assessee had a reasonable cause for the default in filing the returns for the period after 13th January, 1967. The WTO was directed to calculate the penalty accordingly.

The department being aggrieved by the decision of the AAC, appealed to the Tribunal and it was urged that the AAC was not justified in deleting the penalty for the period after 13th January, 1967. According to the department, the assessee had no right to file an application for extension of time after the expiry of the due date for the filing of return. It was, therefore, urged by the department that the applications filed on 13th January, 1967, were invalid and, therefore, they could not be taken into consideration by the AAC for interfering with the order of penalty. The Tribunal, while dismissing the appeals, observed that the assessee could not be debarred from applying for extension of the date for filing the returns after the expiry of the statutory date. The Tribunal further found that the AAC had come to the conclusion that the assessee was prevented by reasonable cause in filing the returns after the period beginning from 13th January, 1967.

It is on these facts that the aforementioned question has been referred to this court for opinion.

I may straightaway observe that on the facts, as stated, the question on which the opinion of this court is sought, assumes the nature of a question of fact. If what is asked from this court is to give its opinion as to whether there was reasonable cause for the default in filing of the wealth-tax returns after the 13th of January, 1967, the answer can only be that it being a question of fact, on which the AAC and the Tribunal both had applied their mind, this court need not answer such a question. The Tribunal, on going through the order passed by the AAC, had given a clear finding of fact, that on the basis of the materials available on the record, the conclusion was inevitable that the assessee had a reasonable cause for not filing the return from 13th January, 1967, up to the date on which the returns were filed.

If, however, the question is to be understood in the light as had been argued before the Tribunal that the assessee was debarred from applying for the extension of date for filing the returns of wealth after the expiry of the statutory date, we think, here again, the question will assume a mere academic importance, because if the assessee had a reasonable cause for default in filing the returns 6f wealth for a certain period, whether the law permitted him to file an application for extension of time or not, will be irrelevant. But even if it be assumed for the sake of argument that the application had been filed for extension of time beyond the statutory period, we do not think there is any law which debars an assessee from praying for extension of time for filing return of wealth after such statutory date.

Learned counsel for the department has cited before us two decisions, one of the Andhra Pradesh High Court and the other of the Gauhati High Court to support his argument that the assessee was debarred from filing his return of wealth after the expiry of the statutory due date, but those decisions do not lay down any such proposition which is sought to be supported by citing them. The decision of the Andhra Pradesh High Court is in the case of T. Venkata Krishnaiah and Co. Vs. Commissioner of Income Tax, . It has been observed in this decision thus (page 301) :

" The assessee under the present Act has a statutory duty and obligation to furnish a voluntary return of his total income on or before the 30th July or 31st December, as the case may be. However, the proviso to Subsection (1) to section 139 empowers the Income Tax Officer to extend the date for furnishing the return of income if an application thereof has been made in the prescribed manner by the assessee. The aforesaid power vested in the Income Tax Officer is discretionary. He is, therefore, not bound to exercise his discretion invariably in favour of the assessee as the word used is ''may'' but not ''shall''. "

Further on, their Lordships observed (at page 306) :

" It admits of no doubt that whether to grant or refuse to grant extension of time for filing the return of any person is within the discretion of the Income Tax Officer. This view of ours gains support from the very use of the words ''in his discretion'' in the proviso to sub-section (1) to section 139. This discretion vested in the Income Tax Officer, being a statutory one, must be exercised fairly, reasonably and objectively but not arbitrarily or with malice or caprice. There is no provision in the Act or the Rules made thereunder which requires the Income Tax Officer to pass an order on an application filed by an assessee subsequent to the time given to him for filing his return pursuant to a notice under Sub-section (2) to Section 139. The Income Tax Officer has to apply his mind to the facts and circumstances of each case and decide whether it was a fit case to grant extension of time or not. There is no hard and fast rule of universal application."

This case, therefore, is not at all an authority for the proposition set up by learned counsel for the department, that an assessee is debarred from seeking extension of time for filing return of wealth after the due date has expired. The Gauhati High Court in the case of Assam Frontier Veneer and Saw Mills Vs. Commissioner of Income Tax, has relied upon the aforesaid decision of the Andhra Pradesh High Court. While doing so, however, their Lordships have observed thus (at page 484) ;

" On the other hand, we also do not see that the Income Tax Officer would cease to have any power, under this proviso, to exercise his discretion to grant extension of time upon a belated application, provided it is filed before the assessment order."

According to this decision, therefore, an application for extension of time could be filed till the order of assessment is made. This decision also, therefore, does not support the contention made on behalf of the department. In fact, to our mind, there is no law in the Wealth-tax Act, which debars an assessee from seeking extension of time to file its return of income (sic) at any time until the assessment is completed. Be that as it may, I have discussed this issue only in an academic manner, because in the instant case this question did not require to be answered. The question, as framed, merely requires this court to give its opinion, as to whether the Tribunal was correct in law in holding that the period of default for non-filing of the wealth-tax returns was up to 13th of January, 1967, and not till the date of filing of the returns. Now, so far as this aspect of the matter is concerned, we have already expressed our opinion that the Tribunal''s finding is one of fact, that the assessee had a reasonable cause for not being able to file the wealth-tax returns from 13th January, 1967, up to the time he filed the returns of wealth. We, accordingly, answer the question in the affirmative and against the department. The assessee will be entitled to costs and hearing fee of Rs. 300.