Law:

Section:

Section 18B of the Wealth-tax Act, 1957 - Penalty - Waiver/reduction of - Assessment years 1972-73 and 1973-74 - Whether, while disposing of an application under section 18B, Commissioner has to examine whether assessee had made full disclosure of his net wealth or not, and it is not to be looked at with reference to net wealth as ultimately determined by WTO - Held, yes FACTS For the assessment years 1972-73 and 1974-75, the assessee filed his returns belatedly disclosing, inter alia, the value of agricultural property owned by him at Rs. 80,000 by applying the rate of Rs. 400 per bigha. The WTO, however, did not accept the aforesaid valuation and valued the same at Rs. 1,50,000 which was reduced to Rs. 1,08,000 on appeal and became final. On the ground that the assessee had not filed his returns within the prescribed period, penalties under section 18 were imposed which too became final. The Commissioner rejected the assessee's application under section 18B for waiver or reduction of penalty on the ground that there was much variation between the returned and assessed wealth and, as such, the disclosure of wealth could not be treated to be full and true. On writ: HELD In the case of Hasan Ahmad Khan v. CWT [1975] 99 ITR 414 (All), the Court had held that the requirement of full and true disclosure in good faith is a single condition and what it means is that the Commissioner has to be satisfied that while disclosing his net wealth fully, the assessee has acted in good faith. It was held that if the assessee honestly thought that he had fully disclosed the net wealth, although the disclosure made by him is ultimately found to be inaccurate, it would not be possible to say that he did not act in good faith. The angle from which the matter has to be examined is whether the assessee made full disclosure of his net wealth or not; it is not to be looked at with reference to the net wealth as ultimately evaluated by the WTO. Following the aforesaid decision, in the instant case, the Commissioner was not justified in rejecting the assessee's application under section 18B merely on the ground that there was much variation between returned and assessed wealth. The writ…

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