1995 (10) TMI 17 - HC - Wealth-tax

Issues Involved
1. Appealability of the Wealth-tax Officer's order levying penalty under section 18(1)(a) in light of the Commissioner of Wealth-tax's order under section 18(2A).
2. Confirmation of the Appellate Assistant Commissioner's order by the Tribunal.
3. Competency of the appeal against the Wealth-tax Officer's penalty order in view of section 18(2B).
4. Legality of the Tribunal's confirmation of the Appellate Assistant Commissioner's order canceling the penalty.

Detailed Analysis

Issue 1: Appealability of the Wealth-tax Officer's Order
The primary question was whether the Income-tax Appellate Tribunal was correct in holding that the Wealth-tax Officer's order levying penalty under section 18(1)(a) was not passed in pursuance of the Commissioner of Wealth-tax's order under section 18(2A), thereby allowing the assessee the right to appeal without the bar of section 18(2B). The court clarified that the scope and jurisdiction of sections 18(1)(a) and 18(2A) are different. Section 18(1)(a) deals with the imposition of penalty for failure to file returns without reasonable cause, whereas section 18(2A) allows the Commissioner to reduce or waive the penalty based on certain conditions. The court emphasized that the Commissioner's order under section 18(2A) does not negate the assessee's right to appeal against the Wealth-tax Officer's penalty order.

Issue 2: Confirmation of the Appellate Assistant Commissioner's Order
The Tribunal upheld the Appellate Assistant Commissioner's order, which had canceled the penalty imposed by the Wealth-tax Officer. The Appellate Assistant Commissioner found that the penalty proceedings are quasi-criminal in nature, and the Revenue failed to establish that the assessee's failure to file the return was without reasonable cause. Thus, the penalty was deleted. The Tribunal agreed with this reasoning, emphasizing that the necessary ingredient for penalty under section 18(1)(a) is "failure to file the return without reasonable cause."

Issue 3: Competency of the Appeal
The court examined whether the appeal against the Wealth-tax Officer's penalty order was competent in view of section 18(2B). Section 18(2B) states that the order under section 18(2A) is final and not subject to appeal. However, the court distinguished between the two provisions, noting that section 18(2A) deals with the reduction or waiver of penalty, while section 18(1)(a) addresses the imposition of penalty. The court held that the right to appeal against the imposition of penalty under section 18(1)(a) remains intact, even if the Commissioner has exercised discretion under section 18(2A).

Issue 4: Legality of the Tribunal's Confirmation
The Tribunal confirmed the Appellate Assistant Commissioner's order canceling the penalty. The court supported this decision, stating that the Wealth-tax Officer's order retained its independent character and was not merely an executive action giving effect to the Commissioner's order. The Wealth-tax Officer had independently laid the foundation for imposing the penalty by rejecting the assessee's explanation for the delay in filing the return and then applied the Commissioner's order to reduce the penalty. Thus, the appeal against the Wealth-tax Officer's order was maintainable.

Conclusion
The court answered all the questions in the affirmative, confirming that the Appellate Commissioner could entertain the appeal from the Wealth-tax Officer's order imposing penalty, despite the reduction of the penalty amount by the Commissioner under section 18(2A). The Tribunal's decision to uphold the Appellate Assistant Commissioner's order canceling the penalty was also affirmed. There was no order as to costs.

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