1978 (12) TMI 17 - HC - Wealth-tax

Summary

Issues Involved:

1. Whether the Appellate Tribunal was right in holding that the order of the Wealth-tax Officer (WTO) levying penalty was under section 18(1)(a) and not in pursuance of the Commissioner's order under section 18(2A).
2. Whether the order of the Commissioner of Wealth-tax dated July 19, 1971, was a valid order under section 18(2A).
3. Whether the cancellation of the penalty by the Appellate Tribunal on merits was justified.
4. Whether the Tribunal had jurisdiction to entertain the appeal.
5. Whether the Appellate Tribunal should have referred the appeals to the Appellate Assistant Commissioner (AAC) for fresh disposal on merits.

Detailed Analysis:

1. Order of the WTO under Section 18(1)(a) or in Pursuance of Commissioner's Order under Section 18(2A):

The Tribunal held that the order of the WTO levying penalty was under section 18(1)(a) and not in pursuance of the Commissioner's order under section 18(2A). The court agreed with the Tribunal's view, stating that the WTO sought to exercise powers under section 18(1)(a) by levying the penalty, thereby making the order appealable. The AAC was wrong in holding that no appeals lay to him since the orders were passed by the WTO "in pursuance" of the Commissioner's order.

2. Validity of the Commissioner's Order Dated July 19, 1971:

The Tribunal concluded that the Commissioner's order dated July 19, 1971, was not valid as it was not communicated to the assessee. The court agreed with this conclusion, noting that an order affecting the assessee must be communicated to be valid. Since the order was not communicated, it lacked legal existence, and the only operative order was that of the WTO dated September 28, 1971.

3. Cancellation of Penalty by the Tribunal on Merits:

The Tribunal found that there was reasonable cause for the assessee not filing the returns in time, citing the assessee's bona fide belief regarding the non-liability of the outstanding sale consideration to wealth-tax. The court upheld the Tribunal's decision, noting that the Tribunal's finding on reasonable cause was sufficient to justify the cancellation of the penalty.

4. Tribunal's Jurisdiction to Entertain the Appeal:

The court affirmed that the Tribunal had jurisdiction to entertain the appeal against the WTO's order. Since the Commissioner's order was not valid, the WTO's order had independent existence, making it appealable.

5. Referral to AAC for Fresh Disposal on Merits:

The court held that it was within the Tribunal's discretion to dispose of the appeal on merits rather than remanding it to the AAC. The Tribunal had sufficient material to decide on the merits of the case, and thus, it was justified in setting aside the penalty without referring the matter back to the AAC.

Conclusion:

The court answered all the questions in favor of the assessee, except for the second question in Tax Cases Nos. 1427 to 1432 of 1977, which was deemed not arising out of the Tribunal's order. The assessee was entitled to costs of the references, with counsel's fee set at Rs. 500.