1984 (6) TMI 26 - HC - Wealth-tax

Summary

Issues:
Jurisdiction of Appellate Assistant Commissioner or Income-tax Appellate Tribunal to entertain an appeal under s. 18(2B) of the Wealth-tax Act after Commissioner of Wealth-tax passed an order under section 18(2A) declining to waive penalty.

Analysis:
The case involved the question of whether the Appellate Assistant Commissioner (AAC) or the Income-tax Appellate Tribunal has jurisdiction to entertain an appeal under s. 18(2B) of the Wealth-tax Act after the Commissioner of Wealth-tax passed an order under section 18(2A) declining to waive penalty. The assessee filed returns for wealth-tax assessment years 1964-65 to 1969-70, and penalties were imposed for failure to file returns on time. The Commissioner declined to waive the penalties under s. 18(2A), leading to penalties being imposed by the Wealth Tax Officer (WTO). The AAC upheld penalties for certain years based on pre-amendment law and for the remaining year based on post-amendment law. Both the Department and the assessee appealed to the Tribunal, with the Department arguing that the appeals before the AAC were not maintainable after the Commissioner's order under s. 18(2A). The Tribunal held that the appeals before the AAC were maintainable, leading to the reference of the legal question to the High Court.

The High Court clarified that when penalties are levied under s. 18 of the Act, the assessee has two remedies available. The assessee can file an appeal to the AAC under s. 23 of the Act challenging the penalty or approach the Commissioner to waive or reduce the penalty under s. 18(2A) if conditions are met. The power of the Commissioner to waive or reduce penalties is subject to specific conditions, while the appellate authorities' power to confirm or reduce penalties is independent of s. 18(2A) requirements. Section 23(1)(d) grants the assessee the right to appeal to the AAC against penalties imposed by the WTO under s. 18, which is not taken away by s. 18(2B). The High Court cited precedents from the Madras and Karnataka High Courts to support the view that s. 18(2B) does not bar the assessee's right to appeal against penalties imposed by the WTO. As the assessee did not challenge the Commissioner's order under s. 18(2A) before the AAC, the right to appeal against the WTO's penalty order remained intact. Therefore, the High Court held in favor of the assessee, affirming the maintainability of the appeals before the AAC.