Income Tax Appellate Tribunal - Allahabad
Rajjan Lal Misra vs Income-Tax Officer on 15 January, 1988
Equivalent citations: [1988]25ITD573(ALL)
ORDER
Ram Swarup, Judicial Member
1. This appeal by the assessee is directed against the AAC's order dated 23-8-1983, relating to the assessment year 1969-70, whereby he confirmed the penalty for 41 months and directed the "WTO to re-compute the amount of penalty. The assessee has taken the following grounds in this appeal :
1. The learned AAC of Wealth-tax was wrong in law and on facts in sustaining the penalty for 41 months under Section 18(1)(a) of the Wealth-tax Act for the assessment year 1969-70.
2. The learned AAC while sustaining the penalty has failed to appreciate the following facts, inter alia :
(a) That since the return of wealth was filed within the time allowed by the learned WTO, no penalty under Section 18(1)(a) was called for.
(b) That in any case and without prejudice there was a reasonable and sufficient cause on account of which return could not be filed earlier.
(c) That till the filing of the return of wealth, the case of the assessee was not represented by Shri Indrajit Jain, Advocate.
(d) That there was no mala fide or deliberate intention to make any default or non-compliance.
3. In any case and without prejudice to the above grounds the quantum of penalty sustained by the learned AAC is much too high and excessive.
4. The order of the AAC is against facts, law and principles of natural justice.
2. The authorised representative for the assessee contended before us that he purchased Himalaya Hotel in 1957 for a sum of Rs. 40,000 and after renovation the value was estimated at Rs. 86,120 and he was under a bona fide belief that the property income of the assessee was below taxable limit and he was not required under law to file the return. Proceeding further, it was contended that the assessee got the property valued by two different valuers, one of them is Shri M.S. Bapat and the other is Shri Murtaza Hussain. They have valued this property for the assessment year 1969-70 at Rs. 2,03,300 and Rs. 1,12,472 respectively. He challenged the action of the Valuation Officer in not passing the order under Section 16A(4) on the basis of the notice issued by him on 21-11-1973. The authorised representative for the assessee further challenged the basis of valuation adopted by the Valuation Officer. It was contended that the assessee received notice under Section 17 of the Wealth-tax Act on 15-10-1972 and he was required to file' the wealth-tax return within the time stipulated in the notice. Since details were not available to the assessee and he requested the WTO to allow two months' time to file the return. The time sought for was allowed and the return was filed within one month of the expiry of the time allowed. Since the WTO had allowed time for the last two months, the earlier period of 41 months should also be treated as reasonable and penalty should not be imposed. In support of this contention the authorised representative for the assessee had placed reliance on the decision of Hon'ble Supreme Court in the case of CIT v. M. Chandra Sekhar [1985] 151 ITR 433. According to the authorised representative for the assessee in this case, their Lordships of the Supreme Court held as under :
Held accordingly, affirming the High Court and the Tribunal, (i) that, in the ordinary course of things, the ITO could have extended the date only upon being satisfied that there was good reason for doing so and that would have been on the grounds pleaded by the assessee and that in the circumstances of this case a presumption could validly be raised that all that was done :
(ii) that, on the facts, the extension was a matter falling within Section 139(1) and the returns furnished by the assessee must be attributed to that provision ; they were not returns furnished within the contemplation of Section 139(4) ;
(iii) that, therefore, the penalty provisions did not come into play at all.
On the strength of this decision, it was contended that since the WTO had condoned the delay of two months sought for by the assessee, therefore, the earlier delay of 41 months stood condoned. The authorised representative for the assessee specifically drew our attention to the following observation of the Hon'ble Supreme Court in the aforesaid case, which appears on page 440 :
Therefore, where the ITO extends the date, then all the time up to that date is the time allowed for furnishing the return....
Reference was also made to the Full Bench decision of the Hon'ble Orissa High Court in the case of CIT v. Gangaram Chapolia [1976] 103 ITR 613 relevant at page 616.
3. On the other hand, the Senior Departmental Representative contended before us that the order of the AAC is perfectly in order and no interference in the matter is required. He has further relied upon the following- decisions- CIT v. Sheo Kumari Debi [1986] 157 ITR 13 (Pat.) (FB), Smt. Kamla Vati v. CIT [1978] 111 ITR 248 (Punj.
& Har.), CIT v. Patram Dass Raja Ram Beri [1981] 132 ITR 671 (Punj. & Har.) (PB), CIT v. Gujarat Travancore Agency [1976] 103 ITR 149 (Ker.) (FB) and Nemichand Ganeshmal v. CIT [1980] 124 ITR 438 (MP). The departmental representative further contended before us that the legal advice was available to the assessee and on receipt of second valuation report, he should have filed the return as per legal advice available to him. It was next contended that the exemption limit of Rs. 1,00,000 was not available to the assessee because he was running a hotel and the exemption was only available in regard to the residential building. The Senior Departmental Representative further contended before us that the facts of the Supreme Court's decision in the case of M. Chandra Sekhar (supra) are distinguishable because in that case the WTO has not extended time under Section 14(1) of the Wealth-tax Act and as such the ratio of the decision of the Hon'ble Supreme Court is not on all fours for the reason that the WTO had only extended time under Section 17(1) of the Wealth-tax Act and he recorded reasons for making assessment or re-assessment which had escaped assessment and as such the time allowed to file return for two months is not fatal. He supported the order of the AAC contending that the legal advocate was available to the assessee of the Senior Advocate Shri Indrajeet Jain and the assessee for the reasons best known to him obtained two valuation reports that goes to show that the assessee did not file return in good faith and no bona fides were involved. Therefore, the authorities below were perfectly justified in confirming the penalty. In reply, the authorised representative for the assessee contended that notice under Section 17(1) of the Wealth-tax Act was issued on 5-10-1972 and the same was received on 17-10-1972 and the period of last two months was allowed. This order of the WTO extended all the time up to that date, so, penalty was not leviable.
4. We have considered the submission of the parties and have gone through the orders of the authorities below. After having gone through the facts in the case of M. Chandra Sekhar (supra), we are of the opinion that the facts of the instant case are different. In the instant case, the WTO had recorded a finding that on account of omission or failure on the part of the assessee to make a return under Section 14(1) his next wealth chargeable to tax had escaped assessment. The WTO after recording such finding issued a notice. It was then that the assessee appeared before the WTO and showed his inability to file the return within the time allowed in the notice. The WTO considered the circumstances and allowed time to file the return as sought for. This order of the WTO in the aforesaid circumstances does not in any way lead us to the conclusion that he had allowed time or condoned the entire delay up to that date. In facts, he had only allowed time for 2 months. The WTO had recorded reasons under the statutory powers granted under Section 17(1) of the Wealth-tax Act and he could overstep those powers merely by granting time. The observation of the Hon'ble Supreme Court in the case of M. Chandra Sekhar (supra), "therefore, where the ITO extends the date, then all the time up to that date is the time allowed for furnishing the return" appearing at page 440 in M. Chandra Sekhar's case (supra) have to be read in the context of the issue involved in that case. If the entire paragraph appearing at page 440 is read as a whole then it is clear that the Hon'ble Court was referring to the condonation of only "additional period" allowed for filing the return. The Court was not called upon to consider the condonation of any period concerned under Section 14(1) of the Act in the course of proceeding under Section 17(1) of the Act which is the case before us. The ease of Hon'ble Supreme Court is thus, distinguishable on facts. Reliance is also placed on Laxmi & Co. v. CIT [1981] 128 ITR 259 (All.) and Kashiram Tea Industries Ltd. v. ITO [1981] 132 ITR 783 (Cal.). We therefore, do not agree with the submission of the authorised representative for the assessee in this regard. It is also a fact that the assessee was running a hotel and legal advice of Senior Advocate, Shri Indrajeet Singh was available to him. In this way, it cannot be said that the assessee was under a bona fide belief that his net wealth was below taxable limit. Therefore, the return should have been filed within the period allowed by the Act. On the basis of these facts, we fully agree with the finding of the AAC that there was no reasonable cause for late filing of the return. We do not also subscribe to the contention of the authorised representative for the assessee that the latter had failed to file the return under a bona fide belief for the reason that the legal advice was not available to him that exemption was not available to a hotel. There was, thus, no reason for the assessee not to file the return within the time allowed under Section 14(1) of the Act. Having considered the entire facts and circumstances of the case, we are of the opinion that the penalty was rightly confirmed for the default of 41 months and we accordingly uphold the finding of the AAC.
5. The result, the appeal is dismissed.
Dissenting decision given vide my separate order of date.
Bishambhar Nath, Accountant Member
1. I have not been able to agree with the views of the learned Judicial Member on the issue involved. Judicial Member has held in his order that there was no reasonable cause for the default of the assessee in not. filing the return of wealth-tax voluntarily. The assessee pointed out before the authorities below as also before us that the assessee had only the immovable property and he was under a bona fide impression that his net wealth would be below taxable limit. In this connection, he also was under an impression that normal exemption up to Rs. 1 lakh in respect of one property of any assessee would be available to him as well. He did not know that for this year this exemption was not available to him as the said property was not used wholly for the purposes of residence. The net wealth of the assessee has been finally computed as mentioned by the WTO in his penalty order, at Rs. 2,53,042. The wealth-tax on this amount would be a very small figure, below Rs. 1,000. Penalty for alleged delay in filing the return has been levied by the WTO at a high figure of Rs. 32,895. The AAC has held that since the last two months of the alleged default of the assessee were the time allowed by the WTO himself for furnishing the return, no penalty should be levied for default of the last two months. The facts are that the assessee did not file the return of wealth voluntarily under Section 14(1). Later, when the WTO felt that the assessee had taxable wealth, he issued notice under Section 17. On receipt of the notice under Section 17, the assessee approached the WTO with a request of extension of time for filing the return as he had to collect details and he had also to get the report of his valuer to whom the matter was referred. The WTO being convinced of the request made by the assessee, granted time for filing the return and eventually the assessee filed the return within the time so allowed by the WTO. There is no dispute on these facts. Thus, the assessee did not commit any delay in the filing of the return in response to notice under Section 17. The only alleged default on the part of the assessee is that no return was filed voluntarily by the assessee. The assessee's explanation has been consistently that he had only one immovable property and he was under a bona fide impression that his net taxable wealth would be below the taxable limit after taking into account the exemption in respect of property, which was available to any person owning an immovable property. This explanation of the assessee was not accepted by the WTO and the AAC on the ground that the assessee was represented by Shri Indrajeet Jain, Advocate and thus, the assessee had technical advice available to him and he could not have been under an impression that his net wealth was not taxable or that he would be entitled to the exemption meant for immovable property up to the limit of Rs. 1 lakh. The case of the assessee is that the assessee was not represented by Shri I.J. Jain, Advocate earlier. He engaged Shri Jain only after filing the return in response to the notice under Section 17. Thus, the assessee's plea is that the technical and professional advice of Shri Jain was not available to him before the filing of the return in response to notice under Section 17. He engaged the service of Shri I.J. Jain only thereafter. In the absence of professional guidance and advice, the assessee as a common man, was under an impression that his net wealth was below the taxable limit, as per facts mentioned above.
2. In the course of arguments at the time of hearing before us, Shri Jain, the assessee's counsel, confirmed that he was engaged only when the assessee had to file the return in response to notice under Section 17. When the assessee received the notice under Section 17, he tried to collect the details and also he referred the issue of valuation of property to valuers. The two valuers to whom the issue was referred gave different reports, one valuer, Mr. Murtuza Hussain gave the valuation at Rs. 1,12,472 only. However, the matter was also referred for valuation to another valuer by the assessee to be on safe side and the other valuer, Mr. Ahuja made the valuation at Rs. 2,03,300. It was argued before us, as has been mentioned even in the penalty order passed by the WTO, that the assessee was under a bona fide impression that the net wealth was not taxable and his impression was also supported by the report of the earlier valuer, who had valued his property only at Rs. 1,12,472.
3. The authorities below have held that there was no reasonable cause which prevented the assessee from filing the return voluntarily in response to notice under Section 14(1), as the assessee was assisted by the advice of Shri I.J. Jain, Advocate. This fact is denied by the assessee. The assessee's case, as mentioned above, is that Shri I.J. Jain was engaged only when the return was filed in response to notice under Section 17. Shri Jain, who. appeared before us in the course of hearing of this appeal, also confirmed this version,of the assessee. Shri Jain argued that the assessee did not have any motive for not filing the return voluntarily, as the tax burden involved was nominal.. The wealth-tax on the net wealth finally assessed is less than Rs, 1,000. It would not sound to reason that anybody would not, file a return only for evading wealth-tax of Rs. 765, when he would expose himself to a heavy penalty of Rs. 32,895. No person would take this chance by which he would render himself liable to pay heavy penalty of this amount only to save payment of wealth-tax of a few hundred rupees. The assessee bonafidely was under an impression that his wealth would not exceed taxable limit. Even as it is, the net wealth finally assessed has exceeded the taxable limit only marginally and even here the exemption meant for one property could not be available to the assessee due to the condition which was there during this year under appeal (this limitation has been abolished with effect from 1-4-1972) that the property should have been exclusively used for purpose of residence before this exemption could be allowed. The assessee being a layman was unaware of these limitations and the technical provisions. Further the representative of the assessee relied upon in this connection, the decision of Lordship of the Supreme Court in the case of M, Chandra Sekhar (supra). It has been held in that case as under :
.... Therefore where the ITO extends the date, then all the time up to that date is the time allowed for furnishing the return....
It was argued that the WTO had allowed extension of two month's time at the request of the assessee for filing the return. These were the last two months before filing the return. According to the decision of the Supreme Court, no penalty could be levied up to the period time was allowed for filing the return by the ITO/WTO. As the, WTO had allowed time till the return was filed under Section 17, no penalty could be levied and the whole of the period up to that time should be taken to have been available to the assessee for the purpose of filing the return. It was thus, argued on the basis of the said decision of the Supreme Court that there was no lapse on the part of the assessee for which the assessee could be validly penalised. Further, it was argued that even looking from another angle, the reasons on account of which the assessee could not file the return during the last two months which the WTO accepted as correct and due to which the WTO allowed extension of two months' time were there even in the earlier period during which return was not flled voluntarily. The details were not with the assessee nor the valuation report. The same reasons on account of which the WTO allowed extension of time of two months for filing the return were present even during the earlier period for which default penalty has been levied. It was thus, argued that there was reasonable cause for the default and even otherwise according to the decision of the Supreme Court in M. Chandra Sekhar's case (supra), there was no default of the assessee at all taking the extension of time allowed by the WTO into account.
4. I have given my careful consideration to the rival viewpoints and have also very carefully gone through the order of learned Judicial Member. Judicial Member has held that the said decision of the Supreme Court was on different facts and is not relevant here. He has also held that there was no reasonable cause for the delay in filing the return voluntarily. I have not been able to agree with the views of the Judicial Member. In my opinion, there was reasonable cause which prevented the assessee for filing the return voluntarily. The assessee bonafidely felt that his income was below taxable limit. He was all the time under the impression that the exemption meant for property would be available to him as well. He did not have the technical or professional advice of Shri I.J. Jain, Advocate, before he filed the return" in response to the notice under Section 17. At least, there is no evidence to hold that the services of Shri Jain were available to him even before he received the notice under Section 17. In the absence of any evidence it cannot in my opinion, be held that Shri Jain was engaged by the assessee even before he received the notice under Section 17. I, therefore, am of the opinion that the services of Shri Jain were not available to the assessee and the assessee had not engaged Shri Jain before the receipt of notice under Section 17. Being a layman, he was under a bona fide impression that his net wealth would be below the taxable limit and he was not expected to file the return voluntarily. Even otherwise, had he known that his net wealth would exceed taxable limit he would not have taken the risk of being subjected to such a heavy penalty only for not filing the return voluntarily within time. No reasonable man would take such a chance or risk. It is further stated that the said property of the assessee has been settled on a public charitable trust on 14-11-1969. The Orissa High Court has held in the case of Gangaram Chapolia (supra) as under :
Held, (i) that the taxing authorities must be satisfied that failure to furnish the return in time was without reasonable cause. The burden of proof of reasonable cause under Section 271(1)(a) is on the assessee as the assessee as the matter is within his special knowledge. This burden can be discharged by a preponderance of probabilities as in the civil case and not necessarily by proof beyond reasonable doubt.
Thus, it has been held that the onus of proving the existence of a reasonable cause for not filing the return within time can be discharged by a preponderance of probabilities as in a civil case and not necessarily by proof beyond reasonable doubt. Here, in my opinion, preponderance of probabilities is there that the assessee was under a bona fide impression that his net wealth was not taxable. All the circumstances in my opinion, go to establish this fact. Further, the said decision of the Supreme Court also lays down that when the ITO/WTO extends the date then all the time up to that date is the time allowed for furnishing the return. It is true that this decision was given by the Supreme Court in a different context, but it can be reasonably held that when a later period is covered by the time allowed the earlier period can reasonable be held to explained when the obstacles in the way of filing the return which were there in the later period were obviously there in the earlier period. Taking the totality of the facts and reasons into account, I am of the opinion that the levy of this disputed penalty was not justified and it should be quashed.
STATEMENT UNDER Section 255(4) OF THE INCOME-TAX ACT, 1961 Since there has been difference of opinion in the above case and, therefore, we proceed to state the points of difference as follows :
(i) Whether there was reasonable cause on the part of the assessee for the delay in submission of the return before the issuance of notice under Section 17(1) of the Wealth-tax Act, 1957 ?
(ii) Whether such delay could be treated as condoned in the light of the Supreme Court decision in the case of CIT v. M. Chandra Sekhar [1985] 151 ITR 433 and the decisions of the Allahabad. High Court in Laxmi & Co. v. CIT [1981] 128 ITR 259 and the Calcutta High Court in the case of Kashiram Tea Industries Ltd. v. ITO [1981] 132 ITR 783 ?
And
(iii) Whether, in the facts and circumstances of the case, the penalty under Section 18(1)(a) of the Wealth-tax Act has been correctly sustained by the Appellate Assistant Commissioner ?
2. We refer the above matter to the President of the Tribunal so that the same may be decided by referring to one or more of the other Members of the Tribunal.
THIRD MEMBER ORDER T. Venkatappa, Vice President
1. This matter has come up before me by way of a Third Member Case to express my opinion on the following points of difference of opinion that arose between the learned Members of Allahabad Bench-A, who heard this appeal :
(i) Whether there was reasonable cause on the part of the assessee for the delay in submission of the return before the issuance of notice under Section 17(1) of the Wealth-tax Act, 1957 ?
(ii) Whether such delay could be treated as condoned in the light of the Supreme Court decision in the case of CIT v. M. Chandra Sekhar [1985] 151 ITR 433 and the decisions of the Allahabad High Court in Laxmi & Co. v. CIT [1981] 128 ITR 259 and the Calcutta High Court in the case of Kashiram Tea Industries Ltd. v. ITO [1981] 132 ITR 783 ?
And
(iii) Whether, in the facts and circumstances of the case, the penalty under Section 18(1)(a) of the Wealth-tax Act has been correctly sustained by the Appellate Assistant Commissioner ?
2. This matter relates to the levy of penalty under Section 18(1)(a) of the Wealth-tax Act, 1957. The due date for filing the return was 30-6-19.69. But it was not filed Subsequently, the Wealth-tax Officer issued a notice under Section 17 in pursuance of which the return was filed on 1-2-1973 showing a total wealth of Rs. 2,53,042 out of which the value of the building was shown at Rs. 2,03,300. For filing the return under Section 17 the assessee sought extension of time, which the Wealth-tax Officer granted by two months. The Wealth-tax Officer issued a notice to show cause why penalty should not be levied for the delay in filing the return. In response to the said notice the assessee filed a reply stating that he was under a bona fide belief that his wealth was below the taxable limit and hence return was not filed in time and his belief is supported by Approved Valuer's report, namely, Shri Murtaza Hussain, who valued the property at Rs. 1,12,472. The Wealth-tax Officer did not accept the assessee's explanation. He levied penalty of Rs. 32,895 under Section 18(1)(a) of the Act. On appeal, the Appellate Assistant Commissioner held that there is no reasonable cause for late filing of the return. But no penalty is leviable for two months' delay, which was allowed by the Wealth-tax Officer. Thus, the penalty for 41 months was upheld.
3. The assessee appealed to the Appellate Tribunal, which was heard by Allahabad Bench-A, consisting of the learned Judicial Member Shri R. Swarup and the learned Accountant Member Shri B. Nath. The learned Judicial Member held that the penalty was rightly levied for the default of 4.1 months. The learned Accountant Member did not agree with that view. He held that the levy of the disputed penalty was not justified and it should be quashed.
4. The learned counsel for the assessee strongly urged that the assessee was under a bona fide belief that his wealth is below the taxable limit and this view is supported by the first report of the approved valuer who valued the property at Rs. 1,12,000. Thus, there was a reasonable cause for the delay in filing the return. Further, the very fact that the Wealth-tax Officer has extended the time by two months for filing the return would show that the earlier delay has been condoned and as such no penalty is leviable. He further urged that the assessee is not guilty of conduct contumacious or dishonest and. no penalty is leviable. The probabilities of the case have to be taken into consideration in the penalty proceedings. He relied on the decisions in M. Chandra Sekhar's case (supra), Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 (SC) and Gangaram Chapolia's case (supra). He further urged that in the ground floor two shops are let out and the other portion is run as a restaurant and the rest of the building is used as hotel. Even though it is used as a hotel, any commercial building also could come within the description of 'house'.
5. The learned Departmental Representative justified the levy of penalty. He urged that the very fact that the assessee has obtained the Approved Valuer's report, would show that his belief that his wealth was below taxable limit, it is not a bona fide one. The returned wealth itself is Rs. 2,53,000. Thus, the assessee's explanation cannot be accepted and there was no reasonable cause for the delay. Thus, penalty is leviable. He submitted that the decisions relied upon by the assessee's counsel have no application to this case.
6. I have gone through the orders of the learned Judicial Member and the 'learned Accountant Member and considered the submissions of the learned counsel for the assessee and the learned Departmental Representative. I agree with the conclusion of the learned Accountant Member that penalty under Section 18(1)(a) is not leviable. The assessee's plea is that he was under a bona fide belief that his wealth was below taxable limit. In the first report of the Approved Valuer, namely, Shri Murtaza Hussain, the value of the building was determined at Rs. 1,12,472. No doubt, the second Valuer has valued it at Rs. 2,03,300, which was accepted in the assessment appeal by the Tribunal. But [the question that still remains to be considered is whether the assessee was under bona fide belief that the building in which hotel business was carried on is a 'house' and the wealth was below taxable limit. In WTO v. Mootha Gopalakrishnan [1987] 20 ITD 199, the Hyderabad Bench A of the Tribunal, to which I am a party, has held that godown would come within the description of 'house'. In Tata Engg. & Locomotive Co. Ltd. v. Gram Panchayat AIR 1976 SC 2463, the Supreme Court held that the word 'house' extends to a building, which is used for business and should not be restricted to a mere dwelling house. The CBDT in its circular dated 24-7-1973, F. No. 317/23/73-WT (see Taxmann's Direct Taxes Circulars, Vol. 1, 1985 edn., p. 1429) stated that the exemption to house provided under Section 5(1)(iv) is available even for houses used for commercial purposes. In view of the above decision, I hold that the assessee was under a bona fide belief that the building which is used for the hotel business would come within the meaning of 'house' and as such he was under the belief that his wealth was below taxable limit. Further the first report of the Valuer, Shri Murtaza Hussain determined the value of the property at Rs. 1,12,472. If the building in which the hotel is run by the asses-see is considered as 'house', the assessee's belief that his wealth was below taxable limit on account of the exemption of Rs. 1 lakh could be a valid one. Thus, there was reasonable cause for the delay in filing the return. Hence, no penalty is leviable under Section 18(1)(a). In the view I have taken it is not necessary to consider question No. 2 referred to me for my opinion. Even if it is considered, I hold that the decision of the Supreme Court in the case of M. Chandra Sekhar (supra), the decision of the Allahabad High Court in Laxmi & Co.'s case (supra) and the decision of the Calcutta High Court in the case of Kashiram Tea Industries Ltd. (supra) have no application to the present case. The decision in M. Chandra Sekhar's case (supra) does not relate to reassessment proceedings. Thus, I hold that penalty levied under Section 18(1)(a) of the Wealth-tax Act, 1957 is not justified and it should be cancelled.
7. The matter will now go back before the regular Bench for decision according to the majority opinion.
Ram Swarup, Judicial Member
1. This appeal by the asses-see is directed against the order of the Appellate Assistant Commissioner dated 20-9-1976 relating to the assessment year 1969-70.
2. Briefly stated the facts of the case are that the due date for filing the return was 30-6-1969. But it was not filed subsequently, the Wealth-tax Officer issued a notice under Section 17 of the Wealth-tax Act, 1957 in pursuance of which the return was filed on 1-2-1973 showing a total wealth of Rs. 2,53,042 out of which the value of the building was shown at Rs. 2,03,300. For filing the return under Section 17, the assessee sought extension of time, which the Wealth-tax Officer granted by two months. The Wealth-tax Officer issued a notice to show cause why penalty should not be levied for the delay in filing the return. In response to the said notice, the assessee filed a reply stating that he was under a bona fide belief that his wealth was below the taxable limit and hence return was not filed in time and his belief was supported by Approved Valuer's report, namely, Shri Murtaza Hussain who valued the property at Rs. 1,12,472. The Wealth-tax Officer did not accept the assessee's explanation. He levied penalty of Rs. 32,895 under Section 18(1)(a) of the Act. On appeal, the Appellate Assistant Commissioner held that there was no reasonable cause for late filing of the return. But no penalty is leviable for two months' delay, which was allowed by the Wealth-tax Officer, Thus, the penalty for 41 months was upheld,
3. The assessee appealed to the Appellate Tribunal, which was heard by A-Bench. Allahabad consisting of R. Swarup, Judicial Member and Shri B. Nath, learned Accountant Member. The Judicial Member held that the penalty was rightly levied for the default of 41 months. The learned Accountant Member did not agree with that view. He held that the levy of the disputed penalty was not justified and it should be quashed. In view of the difference of opinion, the matter was referred to the President under Section 255(4) of the Income-tax Act, 1961. The President of the Income-tax Appellate Tribunal nominated the Third Member, who vide his order dated 15-1-1988, held that there was reasonable cause for delay in filing the return and, therefore, no penalty is leviable under Section 18(1)(a) of the Act. Thus, he agreed with the finding of the Accountant Member. In conformity with the majority opinion, therefore, we hold that the penalty under Section 18(1)(a) of the Act is not leviable on the assessee and the orders of the authorities below imposing/sustaining penalty under Section 18(1)(a) are quashed.
4. In the result, the appeal is allowed.