1977 (9) TMI 18 - HC - Wealth-tax

Summary

Issues:
1. Whether an appeal under the Wealth-tax Act to the Tribunal can be heard by a single member of the Appellate Tribunal when the total income of the assessee is within the maximum prescribed in the Income-tax Act.

Analysis:
The judgment pertains to a reference under section 27(1) of the Wealth-tax Act, where the main issue was whether a single member of the Appellate Tribunal could hear an appeal under the Wealth-tax Act when the total income of the assessee is within the maximum prescribed by the Income-tax Act. The case involved an individual assessee who was treated as a defaulter for not filing the return of net wealth on time, leading to a penalty imposed by the Wealth-tax Officer. The Appellate Assistant Commissioner upheld the penalty but reduced the quantum. The department appealed to the Tribunal, which heard the case with a single member Bench, triggering a reference to the High Court.

The judgment analyzed the relevant provisions of the Wealth-tax Act, 1957, and the Income-tax Act, 1961 to determine the issue. It discussed the definitions of "Appellate Tribunal" and "Assessee" under the Acts, along with the powers and functions of the Appellate Tribunal as detailed in section 255 of the Income-tax Act. The Tribunal's decision to allow a single member Bench to hear the appeal was based on sub-sections (2) and (3) of section 255, which empower the President or a member to dispose of cases where the assessee's total income does not exceed a specified limit.

However, the High Court held that sub-section (11) of section 24 of the Wealth-tax Act excludes the application of sub-sections (2) and (3) of section 255 of the Income-tax Act in cases referred under the Wealth-tax Act. It emphasized that the constitution of the Appellate Tribunal requires a Bench with one judicial member and one accountant member, except for specific circumstances outlined in sub-section (3) of section 255. The judgment clarified that the definition of "Assessee" under the Income-tax Act differs from that under the Wealth-tax Act, and the Tribunal's reliance on the Income-tax (Appellate Tribunal) Rules was misplaced.

Ultimately, the High Court answered the question in the negative, favoring the revenue, and remitted the matter back to the Appellate Tribunal for fresh disposal. The judgment highlighted the necessity for a Bench comprising two members, as per the requirements of section 255(2) of the Income-tax Act, in cases under the Wealth-tax Act, where a single member Bench hearing was deemed inappropriate.