JUDGMENT Rajes Kumar, J.
1. Income-tax Appellate Tribunal, Allahabad has referred the following question under Section 27(1) of the Wealth Tax Act (hereinafter referred to as "Acf") for opinion of this Court, which relates to the assessment year 1975-76 to 1982-83 relating to the penalty under Section 18(1)(a) of the Act.
". Whether on the facts and in the circumstances of the case, Tribunal was justified i holding that the ratio of the decision in the case of Ambika Cements, reported in 1987 S.T.D., 1 was not applicable and that the penalty under section 18(1)(a) of the Act was exigible ?"
2. The brief facts of the case are follows:
The applicant (hereinafter referred to as "Assessee") was carrying on money lending business. The business and residential premises of the assessee were searched on 29.07.1975 during the emergency by the police and all account books etc. were seized which were handed over to the sales-tax department and later on requisitioned by the Income-tax department. The applicant was also put under detention and was released in the year 1977. Thereafter, a second search was conducted by the Income-tax department on 10.08.1983 when some more books etc. were seized by the Income-tax department which adversely affected the business and this fact had been taken into account by the Income-tax Officer while framing the income-tax assessment for the assessment years 1976-77 to 1978-79. Due to these abnormal circumstances, the Income-tax returns were also filed delayed and could be filed on 06.01.1983.
Assessee filed wealth tax return for the assessment years 1975-76 to 1982-83 on 09.11.1984. On the basis of the return1 the assessments wer0 Completed by consolidated order on 24.10.1985. Wealth Tax Officer had also initiated the penalty proceedings under Section 18(l)(a) of the Act for late filing of return and subsequently, levied the penalty.
Assessee filed appeal before the Deputy Commissioner of Income-tax (Appeals). Deputy Commissioner of Income-tax (Appeals) allowed the appeal in part for the assessment year 1975-76 and allowed the appeals for the assessment years 1976-77 to 1982-83 and set aside the penalty. Deputy Commissioner of Income-tax (Appeals) held that the assessee was prevented by sufficient cause from filing the wealth tax return upto 06.01.1983 and accordingly, directed the assessing authority to take the default for the assessment year 1975-76 only for the period 01.02.1983 to 31.10.1984 for 21 months. Penalty for the assessment year 1976-77 to. 1982-83 was deleted following the decision of the Tribunal in the case of Ambika Cements Product as there being over laping period of delay. Against the order of Deputy Commissioner of Income-tax (Appeals) assessee has not filed any appeal before the Tribunal. However, the revenue filed the appeal before the Tribunal. Tribunal allowed the appeal of the revenue with the certain directions. Tribunal held as follows:
"We have gone through these cases and we find that the facts of those cases relied on by the learned counsel for the assessee are distinguishable from the facts available in the case before us. In the case before us, the hard fact is that but for the search carried out by the department, the return on wealth which was admittedly taxable, would not have been filed. It cannot be said that the returns filed by the assessee on 9.11.1984 were voluntary in the rue sense of the term. The learned counsel for the assessee relied on the Madras High Court decision in 114 I.T.R. 370, but in this very case, their Lordships have held that in certain circumstances the delay in finalising one's income-tax returns might by itself be a just reason for delay in filing the same person's wealth tax return, but in this case before us, we are not convinced that there existed any just reason for delay in filing the income-tax Or wealth-tax returns. Therefore, the facts of the case before us are distinguishable from the facts in 114 ITR 370. We also do not find any substance in the contention that Interest reduced by the C.I.T. should be construed to mean that there was reasonable or sufficient cause. At the end, it was argued by the learned Departmental Representative that the existence of sufficient or reasonable cause prevented the assessee from filing the wealth-tax returns in any of the eight years under consideration was not established by the assessee. On a perusal of all the case laws and on an appraisal of the facts surrounding this case, we find force in the contention raised by the learned Departmental Representative before us. We set aside the orders of the learned D.C. (Appeals0 and restore the order of the W.T.O. With the following variations:-
"Upto 31.03.1976, penalty should be imposed with reference to the quantum of wealth @ 4% of the wealth and for the period after 1.4.1976, penalty should be imposed with reference to the assessed tax (a) 2% per month."
Heard Sri Shakeel Ahmad, learned counsel for the assessee and Sri A.N. Mahajan, learned Standing Counsel appearing on behalf of the revenue.
3. Learned counsel for the assessee submitted that the question referred is in two parts One relating t6 the applicability of the decision of the Tribunal in the case of Ambika Cements Products, 1987 S.O.T. and second part of the question is whether on the facts and circumstances penalty under Section 18(l)(a) of the Act is exigible. He submitted that so far as the first part of the question is concerned, he has not much to say in view of the decision of the Gujarat High Court in the case of CIT v. J.L. Trivedi & Sons, reported in (1993) 119 Taxation, 82 Gujarat, in which it has been held that penalty imposable for the delay in filing the return can not be equated with an offence. Penalty is in the nature of civil liability and not for the punishment of an offence. Thus the principle of double jeopardy does not apply and the second default is independent. However, he submitted that in second part of the question referred it has to be examined that on the facts ana circumstances there was a reasonable cause in filing the return beyond time. He submitted that the first appellate authority has held that the assessee was prevented from sufficient cause from filing the return of wealth upto 06.01.1983, the date on which the return of income was filed and the penalty was held leviable for the period 01.02.1983 to 31.10.1984 for the period of 21 months He submitted that Tribunal without considering the finding recorded by the first appellate authority restored the order of penalty for all assessment years. He submitted that the books of account were finally returned as per the direction of this Court in Writ Petition No. 433 of 1981 on 28.05.1982 and Tribunal has deleted the penalty for late filing of return under the Income-tax Act vide order dated 30.08.1985 for all assessment years treating the reasons given for filing the return beyond time as reasonable cause. He submitted that the aforesaid reasons for delay in filing the return under the Act is reasonable cause and therefore, penalty could not be levied for the period upto 06.01.1983. Learned Standing Counsel submitted that the Tribunal has recorded the finding that there existed no just reason for delay in filing the income or wealth return is finding of fact. He further submitted that the question which has been referred only relates to the applicability of the decision of the Tribunal in the case of Ambika Cement (supra) in which the penalty for the subsequent assessment years on account of over laping period has been held to be illegal and in the question referred the issue relating to the reasonable cause can not be considered.
4. We have given our anxious considerations to the submission made by learned counsel for the parties. We find force in the submission of learned counsel for the assessee. Common question stated above has been referred for the assessment years 1975-76 to 82-83. In case if question referred relates to the applicability of the decision of the Tribunal in the case of Ambika Cement (Supra) only said question would not have been referred by the Tribunal for the assessment year 1975-76 because the issue relating to the over laping of the period and the decision of the Tribunal in the case of Ambika Cement (supra) was only relevant for the assessment year 1976-77 onward and not for the assessment year 1975-76. Perusal of the question referred shows that it is in two parts; 1) Whether on the facts and circumstances of the case, Tribunal was justified in law in holding that the ratio of the decision in the case of Ambika Cement (supra) was not applicable and 2) Whether on the facts and circumstances of the case Tribunal was justified in law in holding that the penalty under Section 18(l)(a) of the Act was exigible.
5. So far as the first part is concerned, learned counsel for the assessee has very fairly submitted that the principle of double jeopardise does not apply to the penalty under Section 18(l)(a) of the Act. The liability under Section 18(l)(a) of the Act is a civil liability and not punishment for an offence. It can not be equated with the offence nor proceedings contemplated under the section can be regarded as prosecution for an offence and, therefore, Article 20 of the Constitution of India is not applicable. Moreover, when a default which is continuing default, is committed and again similar default is committed, the subsequent default can not be said to be same default it being as independent default committed subsequently. Each year is an independent year and each order is an independent order. Thus the ratio laid down by the Tribunal in the case of Ambika Cement (supra) does not laid down the correct law. The above view is also supported by the decision of Gujarat High Court in the case of CIT v. J.L. Trivedi & Sons, reported in 1993 119 Taxation Laws 82 and of Apex Court in the case of Gujarat Travancore Agency v. CIT, Kerala, reported in 177 ITR, 455. The Apex Court held that penalty under Section 271(1)(a) of the Act is a civil obligation. It held as follows:
"In our opinion, there is nothing in Section 271(l)(a) which requires that mens rea must be proved before penalty can be levied under that provision. We are supported by the statement in Corpus Juris Secundum, Volume 85, page 580, paragraph 1023:
"A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws."
6. Now coming to the second part of the question, we are of the opinion that the view taken by the Tribunal can not be sustained. Perusal of the order of Tribunal shows that it has not examined the fact of the case in its entirety while' coming to the conclusion that the late filing of the return under the Income Tax Act can not be a reasonable cause. In the present case, business and residential premises of the assessee were searched on 29.07.1975 when all the books of account were seized, which were handed over to the sales tax department and later on requisitioned by the income tax department. Assessee was also put under detention and was released in the year 1977. Thereafter, a second search was conducted by the income tax department on 10.08.1983 when some more books etc. were seized. Thus, from 1975 to onward accounts book were in possession of the income tax department and has adversely effected the business and due to these abnormal circumstances, the income tax returns were also delayed and could be filed on 06.01.1983. Unless the profit and loss account and balance sheet are prepared and the inconie tax return are finalised, the proper wealth can not be worked out. Thus we are of the opinion that the | view of the first appellate authority that the assessee was prevented from reasonable cause from filing the return of wealth till the date of filing of the return of income tax, i.e. 06.01.1983 is justified. In the case of Additional Commissioner of Wealth Tax, Madras v. Babulal K. Shah and Anr., reported in 114 ITR, 370. Division Bench of Madras High Court has held the delay in furnishing of return of income as reasonable cause for furnishing the return for the wealth tax.
7. In the case of Commissioner of Wealth-tax v. S.L. Khunnah, reported in 180 ITR, 340, the case of the assessee was that on account of death of senior most partner of the firm, serious disputes arose among the members of the family of the deceased partner which were referred to arbitration and the assessee was able to predicate his wealth only after the award of the arbitrator. This reason for the delay has been held to be reasonable cause by the first appellate authority and by the Tribunal. This Court upheld the order of the Tribunal. This Court further held as follows:
"A thing is generally considered as reasonable if it is not actuated by bad faith, dishonesty or false grounds. If the conduct of an assessee could be that of a reasonable man, the Appellate Assistant Commissioner could not be held to have erred in believing the same and cancelling the penalty. No hard and fast rule can be laid down for governing or deciding as to when a certain ground would be considered as reasonable and when it would not be so held.
There is no rigid method capable of being prescribed in this regard. Each case has to be decided on its own merits and facts by the authority. If the decision is based on relevant grounds by the authority which has power to condone the default, the appellate court cannot interfere with the same. The power of the appellate court to interfere arises when the exercise of discretion is arbitrary, perverse or capricious. In a matter of condonation, what an authority has to keep in mind is that it should not be based on unjustified sentiments and too vague and unregulated benevolence. The authority has to exercise the discretion informed by traditions, methodical by analogy and disciplined by system. Those who exercise discretion will remember that:
"An appeal to a judge's discretion is an appeal to his judicial discretion. The discretion must be exercised not in opposition to, but in accordance with, established principles of law."
Consequently, our view is that discretion must be exercised not in opposition to, but in accordance with, the established principles of law."
8. It may be mentioned here that since the assessee has not filed any appeal against the order of Deputy Commissioner of Income-tax (Appeals), therefore, reasonable cause before the period of 06.01.1983 can not be considered.
9. In view of the foregoing discussions, we answer the question referred hereinabove partly in favour of the assessee and partly in favour of the revenue. Tribunal is directed to compute the penalty in the light of the view taken by us. There shall be no order as to costs.