2002 (1) TMI 8 - HC - Wealth-tax

Whether in terms of section 17B of the Act the assessee can be held liable to pay interest for delay in filing the return of net wealth? - The assessees have preferred these appeals under section 27 of the Wealth-tax Act 1957 ( the Act for short). By the impugned order the Tribunal ha s held that the assessees have rightly been held liable to pay interest under section 17B of the Act. - In the present case admittedly the assessee has not paid the admitted tax due on the net wealth returned by him. Therefore the Commissioner of Wealth-tax (Appeals) had no competence to entertain the appeal and it was rightly dismissed in limine. - we hold that the Tribunal was justified in rejecting the appeals.

Summary

Issues:
1. Leviability of interest under section 17B of the Wealth-tax Act for delay in filing the return of net wealth.
2. Applicability of section 17B(1) of the Act to cases of assessment under section 17.
3. Maintainability of the appellant's appeal before the Commissioner of Wealth-tax (Appeals) as per section 23(2A) of the Act.

Issue 1: Leviability of interest under section 17B:
The primary issue in this case revolved around whether the assessee could be held liable to pay interest for delay in filing the return of net wealth under section 17B of the Wealth-tax Act, 1957. The Tribunal had held the assessees liable to pay interest under section 17B. The legislative mandate under section 17B(1) clearly states that if the return of net wealth is furnished after the due date, the assessee shall be liable to pay simple interest at the rate of two per cent. per month. In this case, the assessees had filed belated returns, making them liable for the interest. The Wealth-tax Officer had no discretion to waive or reduce the interest as it was mandatory. The Tribunal's decision was supported by the Supreme Court's judgment in CIT v. Anjum M. H. Ghaswala, emphasizing the mandatory nature of interest collection under similar sections of the Income Tax Act.

Issue 2: Applicability of section 17B(1) to assessment under section 17:
An argument was raised regarding the applicability of section 17B(1) to assessments made under section 17 of the Act. However, Explanation 3 of section 17B(1) explicitly covers cases of assessment under section 17. The contention that the provisions of levy of interest under section 17B were not applicable to assessments under section 17 was deemed fallacious. The judgment referred to the Supreme Court's ruling to support the mandatory nature of statutory interest collection under relevant sections of the Act.

Issue 3: Maintainability of the appeal before the Commissioner of Wealth-tax (Appeals):
The final issue concerned the maintainability of the appellant's appeal before the Commissioner of Wealth-tax (Appeals) as per section 23(2A) of the Act. Section 23(2A) mandates that an appeal can only be admitted if the appellant has paid the tax due on the net wealth returned by them at the time of filing the appeal. In this case, the appellant had not paid the admitted tax due, leading to the dismissal of the appeal by the Commissioner of Wealth-tax (Appeals). The Tribunal upheld this decision, stating that the appeal could not be entertained as per the mandatory provisions of the Act.

In conclusion, the High Court of Karnataka dismissed the appeals, upholding the Tribunal's decision regarding the liability to pay interest under section 17B for delay in filing the return of net wealth. The judgment emphasized the mandatory nature of interest collection under the Act and clarified the applicability of section 17B(1) to assessments made under section 17. Additionally, the Court affirmed the dismissal of the appeal before the Commissioner of Wealth-tax (Appeals) due to non-payment of the admitted tax as required by the statutory provisions.