1983 (9) TMI 63 - HC - Wealth-tax

Summary

Issues: Jurisdiction of Inspecting Assistant Commissioner to impose penalty under section 18(1)(c) after the amendment of section 18(3) with effect from April 1, 1976.

The judgment pertains to a reference under section 27(1) of the Wealth Tax Act, 1957, where the Income-tax Appellate Tribunal referred a question of law to the High Court regarding the jurisdiction of the Inspecting Assistant Commissioner (IAC) to impose a penalty under section 18(1)(c) after an amendment to section 18(3) on April 1, 1976. The assessee had filed her return for the assessment year 1975-76 declaring the value of her ornaments at Rs. 50,000, but the Wealth Tax Officer assessed the actual value at Rs. 85,000 and initiated penalty proceedings. The IAC imposed a penalty of Rs. 35,000 on December 3, 1977. The Tribunal rejected the contention that the IAC had no jurisdiction post the amendment of section 18(3). The High Court directed the Tribunal to provide a supplementary statement of the case, revealing that the reference was made by the WTO to the IAC on March 11, 1977. The court considered the amendment brought by the Taxation Laws (Amendment) Act, 1975, which removed the jurisdiction of the IAC to impose penalties after April 1, 1976. The court relied on a previous decision and held that the jurisdiction of the IAC is derived from a valid reference made by the WTO, and in this case, since the reference was made before the amendment to section 18(3), the IAC had no jurisdiction to impose the penalty. Therefore, the court answered the question against the Department, concluding that the IAC had no jurisdiction to impose the penalty under section 18(1)(c) after the amendment of section 18(3) with effect from April 1, 1976.

In this judgment, the primary issue was whether the Inspecting Assistant Commissioner (IAC) had the jurisdiction to impose a penalty under section 18(1)(c) of the Wealth Tax Act after an amendment to section 18(3) came into effect on April 1, 1976. The court considered the timeline of events, where the Wealth Tax Officer (WTO) had initiated penalty proceedings and referred the matter to the IAC on March 11, 1977, before the amendment date. The court analyzed the relevant provisions of the Act post-amendment and emphasized that the IAC's jurisdiction to impose penalties was contingent upon a valid reference made by the WTO. The court referred to a previous decision to establish that the validity of the reference is determined by the provisions in force at the time of the reference. Since the reference in this case was made before the amendment to section 18(3), the court concluded that the IAC lacked jurisdiction to impose the penalty post-amendment, thereby ruling against the Department.

The court also delved into the legislative changes brought about by the Taxation Laws (Amendment) Act, 1975, which altered the provisions related to the jurisdiction of the IAC in imposing penalties under the Wealth Tax Act. The court highlighted the specific amendment to section 18(3), which limited the IAC's authority to impose penalties exceeding a certain amount without the prior approval of the IAC. By analyzing the impact of this amendment, the court concluded that the IAC's jurisdiction was curtailed after April 1, 1976, and any penalties imposed after that date without a valid reference were without jurisdiction. This interpretation was crucial in determining the outcome of the case and formed the basis for the court's decision against the Department, emphasizing the importance of adherence to statutory provisions in determining jurisdictional matters related to penalty imposition under the Wealth Tax Act.