Law:

Section:

I. Section 21AA, read with section 3, of the Wealth-tax Act, 1957 - Association of persons - For assessment years 1980-81 to 1983-84, assessee club had filed return of wealth in status of association of persons and claimed that it was not liable for payment of wealth-tax - Assessment when assets are held by - Assessment years 1980-81 to 1983-84 - Commissioner (Appeals) allowed assessee‘s appeals for assessment year 1980-81 by holding that assessee could not be treated as an entity assessable to wealth-tax but disallowed appeals for assessment years 1981-82 to 1983-84 in view of provisions of section 21AA which came into effect from 1-4-1981 - Whether conclusion reached by Commissioner (Appeals) was correct - Held, yes II. Section 18(1)(a) of the Wealth-tax Act, 1957 read with Karnataka Societies Registration Act, 1960 - Penalty - For late filing of return - Assessment years 1981-82 and 1982-830 - Whether where assessee-club filed its wealth-tax returns belatedly under a bona fide belief that club was an Association of Persons and not exigible to wealth-tax, penalty imposed by WTO under section 18(1)(a) for belated filing of wealth-tax returns was to be deleted - Held, yes FACTS-I The assessee was a club registered under the Karnataka Societies Registration Act, 1960. For the assessment years 1980-81 to 1983-84, the assessee club had filed the return of wealth in the status of Association of Persons and claimed that it was not liable for payment of wealth-tax. However, the WTO had assessed the wealth of the assessee in the status of individual and charged wealth-tax. The Commissioner (Appeals) allowed the assessee‘s appeals for the assessment year 1980-81 by holding that the assessee could not be treated as an entity assessable to wealth-tax but disallowed the appeals for the assessment years 1981-82 to 1983-84 in view of provisions of section 21AA which came into effect from 1-4-1981. On further appeal, the Tribunal allowed the appeals on the ground that the assessee was an entity not susceptible to be assessed for its wealth. On reference : HELD-I For the assessment year 1980-81 the first appellate authority had given the relief to the assessee by cancelling…

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