Wealth tax---

----Penalty---Waiver of---Delayed returns filed for several assessment years on different dates---Levy of penalty for delay in filing returns and for concealment of wealth---Commissioner waiving penalty for some years---Commissioner rejecting application for waiver of penalty for other years on grounds that delayed returns filed year after year and that a single application filed for waiver for several years which showed lack of good faith---Not justified-- Matter remanded.

The assessee filed delayed returns of wealth for the assessment years 1973-74 to 1976-77 on October 20, 1978, for the assessment year 1977-78 on February 24, 1979, for the assessment years 1978-79 to 1981-82 on October 21, 1981, and for the assessment year 1982-83 on September 22, 1983. The Wealth tax Officer imposed penalties on the assessee for delayed filing of returns and for concealment of wealth under sections 18(1)(a) and 18(1)(c), respectively, of the Wealth Tax Act, 1957. The assessee filed before the Commissioner a single application under section 18-B for waiver of the penalties. However, by the time the petition came before the Commissioner for hearing, many of these penalties were set aside in other proceedings and only penalties under section 18(1)(a) for the assessment years 1973-74, 1974-751976-77 and 1978-79 to 1982-83 survived. The Commissioner waived the penalties for the years 1973-74, 1974-75 and 1976-77, but rejected the claim for waiver of penalty for the other years on the grounds that the assessee filed delayed returns on different dates for these assessment years knowing full well of his obligation to file the return every year within the prescribed time, that he could have returned to the path of rectitude by filing all the returns voluntarily at one point of time and seeking immunity from penalty, that he could not be allowed to go on repeating the defaults year after year and in respect of accumulated defaults for a number of years make a single petition for reduction or waiver of penalty and that the conduct of the assessee showed lack of good faith in filing the petition for waiver. On a writ petition against the order of the Commissioner:

Held, that merely because the assessee filed his returns on different dates, there was no ground for inferring lack of good faith. Good faith was essentially a question of fact and not a question of law. There was nothing wrong in the petitioner making one application for waiver for all the years. In the light of the fact that the obligation to file the return lies on every person whose wealth exceeds the maximum amount not chargeable to wealth-tax by virtue of section 14(1) of the Indian Wealth Tax Act, 1957 the distinction made was not justified as a rule of law. In other words, what is a question of fact cannot be converted into a question of law.

[Matter remanded to Commissioner for reconsideration in the light of the observations contained in the judgment].

JUDGMENT

B.P. JEEVAN REDDY, C.J.---This writ petition is filed against an order of the Commissioner of Wealth-tax dismissing the petitioner's application made under section 18-B of the Wealth-tax Act, 1957, in part. A few relevant facts need be stated.

The petitioner filed his wealth-tax returns for the assessment years 1973-74, 1974-75, 1975-76 and 1976-77, on a single day, namely. October 20, 1978. For the assessment year 1977-78, he filed the return on February 24, 1979. Again, for the next four years, i.e. 1978-79, 1979-80, 1980-81 and 1981-82, he filed the return on October 21, 1981. For the assessment year 1982-83, he filed the same on September 22, 1983. Assessments were made and proceedings for imposing penalties were also taken. Penalties were imposed on different dates under sections 18(l)(a) and 18(1)(c) for all these years. It is then that the petitioner made a single application under section 18-B for waiver of the penalties imposed under section 18(1)(a) as well as section 18(1)(c). However, when the petitioner came before the Commissioner for hearing, many of these penalties were set aside in other proceedings as is set out in paragraph 2 of the Commissioner's order, which para is not to be repeated here. Suffice it to say that the petition survived only in respect of the penalties under section 18(l)(a) for the, assessment years 1973-74, 1974-75, 1976-77 and 1978-79 to 1982-83. It was these penalties that were dealt with by the Commissioner in the impugned order. The Commissioner found that the petitioner's plea of good faith is acceptable with respect to the assessment years 1973-74, 1974-75 and 1976-77 but not with respect to the other years. Accordingly, he waived the penalties for the above three years but refused to waive the penalties with respect to other years. The Commissioner's reasoning runs thus:

"This is not a case where the assessee filed the returns for all the concerned assessment years at once. In one case, it could be presumed that the assessee may return to the path of rectitude. From the fact that the petitioner filed his returns on different dates for these assessment years, it is evident that the petitioner was aware of his obligation to file the return every year and yet he failed to do so within the time prescribed. According to subsection (3) of section 18-B, the power under section 18-B can be exercised only when it is for a year but in this case since the petitioner has committed default for year after year, this is not in good faith for subsequent years."

An important part of the reasoning of the Commissioner is to be found in the following extract from his order:

"In my view, the concession available as hold by the Hon'ble Allahabad High Court in the case (supra) was to facilitate voluntary disclosure of the concealed income/wealth by holding out temptation to the business (sic) of giving relief against penalties and interest. But, as is laid down in subsection (3) thereof, such relief is available only once in a lifetime of the assessee. In other words, the assessee who has not filed returns for a number of years can return to the path of rectitude by filing all the returns voluntarily at one point of time, and, thus, can ask for immunity. But he cannot be allowed to go on repeating the defaults year after year and in respect of accumulated defaults for a number. of years, make a common petition for waiver or reduction of interest and penalty under section 18-B. To allow exemption in such case would. be going beyond the spirit of the provisions which, though vests the Commissioner with wide power, yet are to be interpreted fairly and reasonably."

We are not satisfied that the Commissioner is right in holding that merely because the assessee filed returns on different dates, there is no room for inferring good faith. Good faith is essentially a question of fact and not a question of law. There was nothing wrong in law in the petitioner making one application for waiver for all the ten concerned years. It was one explanation for all the years. In the light of the fact that the obligation to file the return lies on every person whose wealth exceeds the taxable limit by virtue of section 14(1), the distinction made does not appear to be wholly justified as a rule of law. In other words, what is a question of fact cannot be converted into a question of law.

We, therefore, hold that the matter requires reconsideration by the Commissioner.

Accordingly, the writ petition is allowed and the impugned order is set aside in so far as it pertains to the assessment years 1978-79 to 1982-83. The matter is sent back to the Commissioner for reconsideration and disposal according to law. No costs.

M.BA./1580/TPetition allowed.