1981 (4) TMI 41 - HC - Wealth-tax

Summary

Issues Involved:
1. Applicability of Section 18(1)(c) of the Wealth-tax Act, 1957.
2. Validity of penalty imposed by the Inspecting Assistant Commissioner (IAC).
3. Maintainability of the appeal filed by the assessee under Section 24 of the Wealth-tax Act, 1957.
4. Interpretation of Sections 18(2A) and 18(2B) of the Wealth-tax Act, 1957.
5. Harmonious construction of statutory provisions.

Issue-wise Detailed Analysis:

1. Applicability of Section 18(1)(c) of the Wealth-tax Act, 1957:
The judgment addresses the applicability of Section 18(1)(c), which deals with penalties for concealment of assets or furnishing inaccurate particulars of assets or debts. The Wealth-tax Officer (WTO) initiated penalty proceedings as the net wealth returned by the assessee was less than 75% of the net wealth assessed. The IAC invoked Explanation (1) to Section 18(1)(c), concluding that the assessee failed to show absence of fraud or gross or wilful neglect. Consequently, the IAC held that the assessee committed a default under Section 18(1)(c) for the relevant assessment years.

2. Validity of Penalty Imposed by the Inspecting Assistant Commissioner (IAC):
The IAC imposed penalties at 5% of the minimum penalty imposable, following the Commissioner of Wealth-tax's reduction under Section 18(2A). The assessee argued that there was no concealment of assets and cited the Supreme Court's decision in CIT v. Anwar Ali [1970] 76 ITR 696 (SC) to support the contention that no penalty should be imposed. However, the IAC maintained that the assessee's valuation of immovable property at cost price instead of market price justified the penalty.

3. Maintainability of the Appeal Filed by the Assessee under Section 24 of the Wealth-tax Act, 1957:
The Tribunal dismissed the appeal, holding that no appeal lay in the facts and circumstances of the case. The Tribunal's decision was based on Section 18(2A) read with Section 18(2B), which implies that once the Commissioner reduces or waives the penalty, the order is final and not subject to appeal. The court examined whether the appeal against the IAC's penalty order was maintainable when the penalty was reduced by the Commissioner under Section 18(2A).

4. Interpretation of Sections 18(2A) and 18(2B) of the Wealth-tax Act, 1957:
Section 18(2A) allows the Commissioner to reduce or waive the minimum penalty if certain conditions are met, such as voluntary and good faith disclosure of net wealth before detection by the WTO. Section 18(2B) states that the Commissioner's order under Section 18(2A) is final and cannot be questioned in any court or authority. The court emphasized that the moment an assessee applies under Section 18(2A), it implies acceptance that the conditions for penalty imposition under Section 18(1) are met.

5. Harmonious Construction of Statutory Provisions:
The court aimed to harmonize the provisions of Sections 18(1), 18(2A), and 18(2B). It concluded that the penalty is imposable under Section 18(1) if the conditions are satisfied, and once the Commissioner exercises discretion under Section 18(2A), the penalty order cannot be appealed. The court rejected the argument that the assessee could still appeal the penalty quantum after applying for a waiver under Section 18(2A), stating that such an interpretation would render the Commissioner's discretionary power futile.

Conclusion:
The court held that the Tribunal was correct in concluding that no appeal lay against the penalty order when the penalty was reduced by the Commissioner under Section 18(2A). The question referred to the court was answered in the affirmative and in favor of the revenue. The judgment underscores the finality of the Commissioner's order under Section 18(2A) and the non-maintainability of appeals against such orders.

Costs:
Parties were directed to pay and bear their own costs.

Concurrence:
Sudhindra Mohan Guha J. concurred with the judgment.