1980 (3) TMI 78 - HC - Wealth-tax

Summary

Issues Involved:
1. Continuation of penalty proceedings under the W.T. Act against a legal representative after the death of the original assessee.
2. Applicability of section 18 in conjunction with section 19(3) of the W.T. Act.
3. Validity of penalty proceedings without specific notice to the legal representative.

Summary:

1. Continuation of Penalty Proceedings:
The primary issue was whether penalty proceedings under the W.T. Act for late filing of returns, initiated against Rameshwar Prasad, could validly continue against his legal representative, Inder Bhushan, after his death. The court held that penalty proceedings could not validly be continued against the legal representative. The legal representative is not liable to be assessed for the default committed by the deceased assessee. The court emphasized that liability to assessment and liability to pay are distinct, and the legal representative cannot be held liable for penalties arising from defaults committed by the deceased.

2. Applicability of Section 18 and Section 19(3):
The court examined the provisions of section 19 of the W.T. Act, which deals with the liability of a legal representative. It was noted that section 19(3) makes sections 14, 15, and 17 applicable to legal representatives but does not include section 18. Therefore, penalty proceedings under section 18 cannot be initiated or continued against a legal representative. The court clarified that section 19(1) pertains to the liability to pay wealth-tax or any sum payable by the deceased, but it does not extend to penalties for defaults committed by the deceased.

3. Validity of Penalty Proceedings Without Specific Notice:
The court addressed whether the penalty proceedings were valid when no specific notice was issued to the legal representative, Inder Bhushan, before the imposition of the penalty. The court concluded that since the legal representative is not liable for the penalties under section 18, the absence of a specific notice to the legal representative rendered the penalty proceedings invalid.

Conclusion:
The court answered the questions in favor of the assessee and against the department, stating that the penalty proceedings could not be continued against the legal representative, and the legal representative could not be held liable for the defaults of the deceased. The assessee was entitled to costs assessed at Rs. 200.