Law: Wealth Tax Act, 1957

Section: 18(1)(a),15,14(1),17(1)

Wealth tax------Penalty---Failure to file returns in time ---HUF---Finding in income-tax " assessment proceedings that a certain amount did not belong to HUF--­ Finding upheld by High Court---Penalty could not be levied for failure to file wealth tax returns in respect of such an amount---Indian Wealth- Tax Act 1957, S.18(1)(a). The assessee was a Hindu undivided family. It claimed in. the ''J', income-tax proceedings that there was a partition on September 24, 1961, and a firm was constituted and the source for the investment in the firm had come from the assets partitioned in the assessee's family. The Income-tax Officer initially accepted the claim of the assessee as to the source of the investment, in the partnership firm, but, subsequently, on the basis of the directions of the Commissioner of Income-tax cancelled the earlier assessment and held that the assessee's family on the date of partition did not have any money and the source of investment in the firm could not be the assets of the family. This was confirmed by the Tribunal. The order of the Tribunal came up for consideration before the Madras High Court and the said Court-in the case of B. Viswanathiah & Co. v. CIT (1993) 201 ITR 53 (Mad.), held that the finding of the Appellate Tribunal that the assessee did not possess the. sum of Rs.14,35,000 or even any part thereof on September 24, 1961, was arrived at on the basis of the available material and the said finding rendered by -the Appellate Tribunal was a pure question of fact. The Appellate Tribunal in the appeal preferred against the levy of penalty under .the Wealth Tax Act came to the conclusion that the Income-tax Officer himself did not believe the availability or the existence of the cash of Rs.14,35,000 and, therefore, the question of failure to submit the return did not arise and cancelled the penalty levied under section 18(1)(a) of the Wealth Tax Act, 1957. On x reference: Held, that when the assessee had pointed out the source for the investment in the firm, as having come from the assessee's family, it was rejected by the Department and the logical consequences of the finding was that the firm had the money and not the assessee.…

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