1. R. C. MANKAD, J.-The W. T. O. Issued a notice under section 14(2) of W. T. Act, 1957 (hereinafter referred to as "the Act"), calling upon the assessee to furnish return of wealth for each of the assessm ent years 1973-74 and 1974-75. The assessee, however, failed to furnish the return. The W. T.
2. O. Proceeded tinder section 16 (5) of the Act and determined the assessee's not wealth at Rs.
3. 1,70,000 in each of the assessm ent years 1973-74 and 1974-75 and initiated penalty proceedings under section 18 (1) (a) of the Act. The assessee did not submit any explanation or reply to the show-cause notice issued to her by the W.T.O. The N'.T.O. Levied penalty of Rs. 15,400 and Rs. 11,200 for the assessm ent years 1973-74 and 1974-75, respectively, under section 18(1)(a) of the Act. In the appeals preferred by the assessee, the A. A. C. Set aside the orders levying penalty on the ground that the assessee's wealth was not taxable in each of the years under reference. Revenue went up in appeal before the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal") and challenged the orders of the A. A. C. The Tribunal did not go into the question whether or not the asses see had without any reasonable cause failed to furnish a return of her wealth in each of the said years in response to the notice under section 14(2) of the Act. According to the Tribunal, a failure to furnish the returns in response to the notice under section 14 (2), by itself, attracted penalty. 1n the result, it set aside the orders passed by the A. A. C. And restored the orders of W. T. O.
4. Levying penalty as stated above.
5. It is in the background of the above facts that at the instance of the assessee the following questions have been referred to us for our opinion under section 27(1) of the Act "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee was bound to file the return of wealth in response to the notice under section 14(1) of the Act even though she had no taxable wealth?"
6. "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in setting aside the order of the Appellate Assistant Commissioner and restoring the orders of the Wealth-tax Officer levying penalty under section 18(1)(a) of the Act in each of the assess--ment years 1973-74 and 1974-75?"
7. The question whether or not the assessee's not wealth in each of they assessment years under reference was taxable has an important bearing on the question of levy of penalty. Penalty under section 11 (1)(a) of the Act is leviable provided and only provided it is established that the assessee has, without reasonable cause, failed to furnish the return which he or she was required to furnish in response to a notice given under subsection (2) of section 14. If the assessee's not wealth was not taxable, it would be open to the assessee to contend that the failure to furnish a return could not) said to be without reasonable cause. The Tribunal, however, has not addressed itself to the correct question. The A. A. C. Found, as a matter of fact, that the assessee's not wealth for each of the assessm ent years under reference was not taxable and it was, therefore, that he set aside the orders levying penalty passed by the W. T. O. It would, therefore, appear that, though not expressed in so many words, the A. A. C. Came to the conclusion that failure to furnish return of wealth by the assessee was not without reasonable cause. In view of the finding recorded by the A. A. C., the Tribu--nal ought to have examined whether or not the assessee's not wealth was taxable to the light of the provisions contained in section 5 (1) (xxxii). If there was not enough material to come to the conclusion whether the pro--visions of section 5(1) (xxxii) were attracted, the Tribunal could have re--manded the matter either to the A.A.C. Or to the W.T.O to ascertain and verify the relevant facts. In a penalty proceeding, it is open to the assessee to Con--tend that his not wealth was not within the taxable limits and consequently the failure on his part to file a return in response to a notice tinder section 14(2) could not be said to be without reasonable cause. In our opinion, therefore, the Tribunal ought to have examined the plea of the assesser on merits. We, therefore, decline to answer the question as reframed by us and remand the matter to the Tribunal for deciding it afresh in accordance with law and in the light of the observations made above. It would be open to the Tribunal to remand the matter either to the A. A. C. Or to the W. T. O. To make further investigation into the facts. Both the sides will be at) liberty to place such evidence and material on record as they may think proper.
8. M. Z. M.