H.N. Seth, J.
1. By this petition under Article 226 of the Constitution, the petitioner prays that the order dated February 17, 1973, passed by the Commissioner of Income-tax, Lucknow, rejecting his prayer for waiving the penalty for late submission of wealth-tax return be quashed.
2. The petitioner filed his wealth-tax returns for the assessment years 1964-65 to 1969-70, beyond the time prescribed in Section 14(1) of the Wealth-tax Act, but before any notice under Section 14(2) of the Act could be issued to him. In those returns the petitioner stated the estimated value of his immovable properties and computed his net wealth accordingly. However, at the time of assessment, in respect of each year, the Wealth-tax Officer determined the total value of the petitioner's immovable property at a higher amount, and, consequently, his net wealth in each year also was computed and taxed at a higher figure. While completing these assessments, the Wealth-tax Officer further directed that notices under Section 18(1)(a) of the Act be issued to the petitioner to show cause why penalty as required by the Act be not imposed upon him. The petitioner then moved the Commissioner under Section 18(2A), and prayed that the amount of penalty imposable upon him, under Section 18(1)(a), be waived. The Commissionerrejected this application on the ground that, as the value of the assets shown by the assessee, in various returns filed by him, was much less than their assessed value, the case did not fall under Section 18(2A), as one of the conditions for exercising jurisdiction under that section was absent. The petitioner has now come up before this court and the main point raised on his behalf is that the Commissioner was wrong in holding that in a case where the assessed net wealth was more than that disclosed in the return, the jurisdiction to waive the penalty under Section 18(2A) could not be exercised.
3. Relevant portion of Section 18(2A) reads as follows :
' 18. (2A) Notwithstanding anything contained in Clause (i) or Clause (iii) of Sub-section (1), the Commissioner may, in his discretion--
(i) reduce or waive the amount of minimum penalty imposable on a person under Clause (i) of Sub-section (1) for failure, without reasonable cause, to furnish the return of net wealth which such person was required to furnish under Sub-section (1) of Section 14, or
(ii) reduce or waive the amount of minimum penalty imposable on a person under Clause (iii) of Sub-section (1),
if he is satisfied that such person--
(a) in the case referred to in Clause (i) of this sub-section has, prior to the issue of notice to him under Sub-section (2) of Section 14, voluntarily and in good faith, made full disclosure of his net wealth... '
4. It is the case of both the parties that the penalty in this case is being sought to be imposed merely for late filing of wealth-tax return and for no other reason and that the petitioner's claim for waiver of penalty was to be considered under Clause (i) of Section 18(2A). Under this clause, the Commissioner has been empowered to reduce or waive the amount of minimum penalty imposable for late filing of return only when he is satisfied that the assessee had, prior to the issue of notice to him under Sub-section (2) of Section 14, voluntarily and in good faith made full disclosure of his net wealth and had complied with certain other conditions as well. There is no dispute that, in this case, the assessee had voluntarily made a disclosure of the particulars of his assets before any notice under Sub-section (2) of Section 14 was issued to him. Only question, therefore, that remained to be considered was whether, in the circumstances, it could be said that the assessee had in good faith made full disclosure of his net wealth.
5. The Commissioner did not go into the question whether the disclosure made by the assessee was in good faith or not. He took the view that as, in this case, the value of the assets disclosed by the assessee was below that determined at the time of final assessment, which had become final, the assessee had not made full disclosure about his net wealth. As making afull disclosure of net wealth is one of the conditions precedent for exercising jurisdiction under Section 18(2A)(i), the penalty imposable on the assessee could not be waived. Learned counsel appearing for the Commissioner supported the conclusion arrived at by him and contended that the requirement of Section 18(2A) that the assessee should, in good faith, have made full disclosure of his net wealth, in substance amounts to this that while disclosing his net wealth the assessee must have acted in good faith and further that the disclosure of net wealth made by him was in fact full. If any of the two conditions is missing, one of the conditions precedent for exercising jurisdiction under Section 18(2A) would be lacking and the Commissioner would have no jurisdiction to accede to the request made by the assessee. The expression 'net wealth ' has been defined in clause(m) to Section 2 of the Wealth-tax Act, which reads as follows :
'(m) ' net wealth ' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than...'
6. Keeping this definition in mind, it becomes obvious that in this case the assessee did not disclose the entire amount which went to constitute his net wealth, i.e., he did not make a full disclosure of his net wealth.
7. We are unable to accept this submission. Section 18(2A) provides that, if along with certain other matters, the Commissioner is satisfied that the assessee had in good faith made full disclosure of his net wealth, he could, in his discretion, waive the amount of minimum penalty imposable on the assessee. This condition cannot, in our opinion, be split up into two independent conditions in the manner suggested by the learned counsel for the department; for in a case where the disclosure of net wealth made by the assessee is ultimately found to be correct the question whether it was made bona fide or not cannot arise. On the other hand, where it is found to be incorrect, according to the counsel for the department, the question of bona fides would be irrelevant. In either case, the condition that the assessee should have acted in good faith will have no significance. In our opinion, the condition in fact is a single condition, and all it means is that before exercising jurisdiction under Section 18(2A), the Commissioner has to be satisfied that while disclosing his net wealth fully, the assessee had acted in good faith. As defined in the Central General Clauses Act, an act is deemed to be done in good faith when, whether negligently or not, it is in fact done honestly. Accordingly, the aforesaid condition precedent for exercising jurisdiction under Section 18(2A) is satisfied where an assessee, whether negligently or not, has, while making full disclosure of his net wealth,acted honestly. This necessarily implies that in some cases the assessee might be negligent in making a disclosure about his net wealth, and that is why the net wealth disclosed by him may not be found to be correct, but if he honestly thought that he had fully disclosed his net wealth he would not be lacking in good faith. In such a case although the disclosure made by him is ultimately found to be inaccurate it would not be possible to say that while making a full disclosure of his net wealth the assessee did not act in good faith. In our opinion, in the context, the question whether the assessee made full disclosure of his net wealth or not, has not to be looked into with reference to the net wealth as ultimately evaluated by the Wealth-tax Officer, but from the point of view of the assessee, i.e., whether or not while disclosing his net wealth fully, he acted honestly.
8. Normally, the assessee is required to make a complete disclosure of his net wealth in the return required to be filed under Section 14 of the Wealth-tax Act. The form in which the return is to be filed has been prescribed by the rules framed under the Act. There are various annexures to this form in which the information and particulars of various classes of assets and liabilities, the value of which goes into the constitution of the assessee's net wealth, have to be disclosed, e.g., if any part of the assets owned by the assessee comprises of immovable property situated in India, its particulars are to be specified in annexures 2 and 3 to that form. Column 6 of annexure 2 and column 5 of annexure 3 requires that the assessee should state therein the estimated value of the concerned property. From the very nature of things it is obvious that this estimate has to be that of the assessee. It follows that, in the context, full disclosure of net wealth means full disclosure of the particulars which the assessee is required to furnish with regard to his assets and liabilities, the value of which goes into the constitution of his net wealth. If all the particulars required to be mentioned in the various columns of these annexures have been fully disclosed by the assessee and he has also supplied all other information in relation to his net wealth as required by the Wealth-tax Officer, it would not be possible to say that he did not make full disclosure of his net wealth. If those particulars have been given by the assessee honestly then, irrespective of the fact whether the estimated value given by the assessee was ultimately accepted by the assessing authority or not, it would not be possible to accuse the assessee of bad faith. The expression ' in good faith made full disclosure of his net wealth ' merely means that the assessee should have honestly described all his assets and liabilities which go to constitute his net wealth, along with their estimated value. If this has been done, it would become possible for the Commissioner to consider the assessee's application for waiving the penalty imposable upon him under Section 18(2A) of the Act on merits. It follows that before exercising his jurisdiction to reduce or waive the amount ofpenalty as specified in Section 18(2A), the Commissioner should apply his mind to the fact whether the assessee had acted honestly in disclosing all the particulars required to be mentioned in the return, and if the assessee so satisfies the Commissioner and further complies with Clauses (b) and (c) of the section the Commissioner must consider his prayer for exercising its power under Section 18(2A) for revoking the minimum penalty imposable on the assessee on merits.
9. Since, in this case, the Commissioner misdirected himself with regard to the scope of the condition precedent for the exercise of jurisdiction under Section 18(2A), the impugned order cannot be permitted to stand.
10. In the result we allow this petition with costs and quash the order dated 17th January, 1973. We direct the Commissioner to dispose of the application moved by the petitioner in accordance with law.