2000 (7) TMI 60 - HC - Wealth-tax

Summary

Issues:
1. Whether penalty can be levied on the legal heir under section 18(1)(a) of the Wealth-tax Act, 1957 after the death of the assessee?

Analysis:
The case involved a question referred by the Income-tax Appellate Tribunal, Delhi Bench regarding the imposition of penalties on the legal heir under section 18(1)(a) of the Wealth-tax Act, 1957 after the death of the assessee. The late Shri Bawa Singh Chauhan, being the assessee, had filed returns for the assessment years 1960-61 to 1971-72. After his death, proceedings under section 18(1)(a) of the Act were initiated against his legal heir, Shri H. S. Chauhan, for delays in filing the returns. The Appellate Assistant Commissioner canceled the penalties, stating that penalties could not be levied on the legal heir. The Revenue appealed to the Tribunal, which upheld the cancellation of penalties. The Revenue contended that penalties could be imposed on the legal heir, citing section 19 of the Act.

The Court analyzed the provisions of the Wealth-tax Act, specifically focusing on sections 14, 15, 16, 17, 18, and 19. Section 18(1)(a) deals with the power to levy penalties for failure to furnish returns within the prescribed time. The definition of "assessee" under section 2(c) includes a legal heir. Section 19 outlines the liability of the legal representative to pay tax of a deceased person and the assessment procedures. The Court noted that while section 19 deals with the liability to pay tax and assessment, it does not specifically address penalties. It compared the provisions with section 159 of the Income-tax Act, which explicitly allows for the continuation of penalty proceedings against a legal representative.

The Court concluded that the provisions of section 18 do not fall within the scope of section 19 and that penalties could not be levied on the legal representative in this case. The judgment favored the assessee and rejected the Revenue's appeal. The Court emphasized the contextual differences between the provisions of the Wealth-tax Act and the Income-tax Act regarding penalty proceedings against legal representatives.

In summary, the Court held that penalties could not be imposed on the legal heir under section 18(1)(a) of the Wealth-tax Act, 1957 after the death of the assessee. The judgment provided a detailed analysis of the relevant provisions of the Act, emphasizing the distinction between tax liability, assessment procedures, and penalty imposition on legal representatives.