Srinivasa Iyengar, J.:— The applications filed by the petitioner under s. 18(2A) of the Wealth-tax Act, 1957 (hereinafter referred to as “the Act”), having been dismissed by the CWT, Mysore, Bangalore, in respect of the assessment years 1967–68, 1968–69 and 1969–70, by his order dated March 14, 1974, these writ petitions have been filed challenging the said orders as untenable and for quashing the same and directing the Commissioner to pass fresh order in accordance with law.
2. It is contended by the petitioner that the order of the Commissioner which has been filed as Ex. E does not refer to any facts or circumstances justifying a conclusion that the returns had not been filed voluntarily and the conclusion is arbitrary and untenable and the rejection of the applications on this ground is unjustified.
3. The facts that are not in controversy are the following:
For the assessment years 1967–68, 1968–69 and 1969–70 and also for the subsequent two years the assessee had filed returns under the W.T Act in the status of an individual. The assessments for the years under consideration in that status had also been completed. Thereafter, notices had been issued under s. 17 of the Act in respect of those assessments and the said notices had been served on January 23, 1971. Thereafter, the assessee filed returns in the status of an HUF on August 26, 1971, for the said assessment years and subsequent assessment years also. In the covering letter with which those returns were submitted it was explained that due to some mistake the returns had been submitted in the status of an individual while the correct position was that the wealth belonged to an HUF and returns had to be filed in that status and accordingly they were being filed. It also transpires that in response to the notices under s. 17(1) of the Act, returns showing nil as the wealth in respect of the individual had been filed. The WTO in due course accepted the plea of the assessee that the correct status was that of an HUF and on the basis of the returns filed in that status completed the assessments accordingly. However, as the returns in that status had been filed beyond the prescribed time, proceedings were taken to impose penalty under s. 18(1)(a) of the Act. It may be mentioned here that penalties were imposed for the belated filing of the returns and ultimately the matter had been taken to the Tribunal wherein it had been held that the assessee had reasonable cause for not filing return up to April 26, 1971, and would be liable to the penalty only for the subsequent period.
4. When the matter was pending before the Tribunal, the assessee preferred the applications under s. 18(2A) of the Act on April 24, 1972. The fact that the assessee had filed returns in the status of an individual, but later filed returns in the status of an HUF and assessments were completed in that status accepting the plea of the assessee have been accepted by the Commissioner in his order.
5. The Commissioner rejected the application on the ground that the returns were not filed voluntarily. The portion of the order is as follows:
“The assessee's claim as to the status of ‘Hindu undivided family’ was accepted and the assessments for the assessment years 1967–68 to 1971–72 were completed on 25-2-1972. For the delay in filing the returns of wealth in the status of HUF, the Wealth-tax Officer initiated proceedings under section 18(1)(a) of the W.T Act. The assessee's prayer is for waiver of these penalties leviable under section 18(1)(a). The facts stated above clearly show that the filing of the returns in the status of HUF for the assessment years 1967–68 to 1971–72 on 26-8-1971 was not voluntary.”
6. The Commissioner referred to the notices that had been issued under s. 17 and came to the conclusion that the returns filed were not “voluntary” in the background that the notices had been issued. It is obvious that the Commissioner has missed the crucial fact that the waiver of penalty was in regard to the returns filed in the status of HUF and the notices under s. 17 of the Act were not to the HUF and were only in regard to the assessment as an individual and it is undisputed that the assessment as an individual was not correct and actually no such assessment exists. The returns filed in the status of HUF and which have been accepted and acted upon were not pursuant to the notices under s. 17 or any notice under s. 14(2) of the Act. They were not filed under any compulsion, but they were filed by the assessee of his own accord. This view finds support from the observations in the case reported in [1976] 103 ITR 649 at page 652 (Shankara Apaya Swami v. WTO). Venkataramiah J. observed therein:
“The expression ‘voluntarily’ means ‘without compulsion’ and ‘good faith’ means ‘with due care and caution’. Hence, if the return filed by the assessee does not show that he has deliberately furnished wrong particulars about his wealth or deliberately omitted to include all the items of taxable wealth then he should be considered as having satisfied the above condition.”
7. In [1975] 98 ITR 359 (Kundan Lal Behari Lal v. CWT), the Allahabad High Court held that if an assessee has filed returns before the issue of a notice under s. 17 of the Act he is entitled to invoke the jurisdiction of the Commissioner under s. 18(2A) of the Act. The High Court took the view that issue of a notice meant actual service of the notice under s. 17 of the Act and this view was confirmed by the Supreme Court in the case reported in [1975] 99 ITR 581 (CWT v. Kundan Lal Behari Lal). It is, therefore, clear that the notice under s. 17 of the Act must relate to the particular return in regard to which penalty for failure to file it within time, is imposed. No counter-affidavit has been filed in this case and it is not the case of the Commissioner either that any notice under s. 17 or under s. 14(2) of the Act had been issued to the petitioner in the status of HUF. Accordingly, it cannot be said that the filing of the return was anything but “voluntary”. The view taken by the Commissioner cannot be supported on the facts in the case.
8. Accordingly, the order of the Commissioner is set aside with a direction that he shall dispose of the application filed by the petitioner under s. 18(2A) of the Act on the basis that the returns were filed voluntarily. No costs.
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