1982 (8) TMI 38 - HC - Wealth-tax

Summary

Issues Involved:
1. Whether section 18(4) of the Wealth-tax Act, 1957, is procedural in nature.
2. Necessity of prior approval from the Inspecting Assistant Commissioner (IAC) for levying penalty under section 18(1)(a) after its amendment by the Wealth-tax (Amendment) Act, 1964.
3. Jurisdiction of the Wealth-tax Officer (WTO) to impose penalties without prior approval of the IAC.
4. Interpretation of substantive and procedural law in the context of penalty imposition.

Detailed Analysis:

1. Whether section 18(4) of the Wealth-tax Act, 1957, is procedural in nature.
The Tribunal, on considering the arguments, concluded that the requirement for prior approval from the IAC was procedural. The amendment to section 18 by the Wealth-tax (Amendment) Act, 1964, removed the necessity for such approval, making the amendment applicable to all pending proceedings. The Tribunal held that obtaining the prior approval of the IAC was only a procedural matter and, when the provision was omitted, no approval was necessary.

2. Necessity of prior approval from the Inspecting Assistant Commissioner (IAC) for levying penalty under section 18(1)(a) after its amendment by the Wealth-tax (Amendment) Act, 1964.
The AAC initially held that for the imposition of penalty under section 18(1)(a) up to the assessment year 1964-65, the WTO had to take prior approval from the IAC. The AAC found that the WTO did not take any prior approval before imposing the penalty, thus rendering the penalty orders invalid. However, the Tribunal reversed this decision, stating that the amendment made the prior approval unnecessary for penalties imposed after April 1, 1965.

3. Jurisdiction of the Wealth-tax Officer (WTO) to impose penalties without prior approval of the IAC.
The Tribunal found that the WTO imposed the penalties on December 15, 1971, after the amendment took effect. Therefore, the WTO did not need the prior approval of the IAC to impose penalties. The Tribunal directed the AAC to decide on other grounds taken by the assessee according to law after giving both parties an opportunity to be heard.

4. Interpretation of substantive and procedural law in the context of penalty imposition.
The court examined whether the provision for taking prior approval from the IAC was substantive or procedural. It was noted that substantive law deals with rights, while procedural law governs the process of litigation. The court referred to various decisions, including those of the Supreme Court, to conclude that the provision for penalty is substantive, but the authority to levy penalty is procedural. The court observed that the deletion of the requirement for prior approval did not take away any substantive right of the assessee.

Conclusion:
The court held that section 18(4) of the Wealth-tax Act, 1957, as it stood prior to the amendment of 1964, was procedural in nature. The WTO had the jurisdiction to impose penalties without the prior approval of the IAC after the amendment. The question referred to the court was answered in the affirmative and in favor of the Department. Each party was ordered to bear its own costs.