1984 (1) TMI 120 - AT - Wealth-tax

Summary

Issues:
1. Validity of the order passed by the CWT under section 25(2) of the Wealth Tax Act, 1957 for the assessment year 1978-79.

Detailed Analysis:
The appeal was filed by the assessee against the order of the CWT made under section 25(2) of the Wealth Tax Act, 1957 for the assessment year 1978-79. The CWT set aside the assessment made by the WTO on the grounds that the WTO failed to consider the issuance of a notice under section 18(1)(a) of the WT Act for delay in the submission of the return. The CWT directed the WTO to consider initiating proceedings under section 18(1)(a) and then pass the necessary order. The assessee challenged this order, contending that the CWT had no basis to assume jurisdiction under section 25(2) and that the WTO's discretion not to initiate proceedings should not have been interfered with.

The assessee relied on previous judgments and argued that the CWT lacked a basis to conclude that the assessment by the WTO was erroneous and prejudicial to the revenue's interest. The assessee also contended that the CWT did not have jurisdiction to pass the order under section 25(2) as the WTO had chosen not to initiate proceedings for the delay in the return submission. On the other hand, the Revenue opposed these submissions, citing judgments to support the CWT's authority to make the order under section 25(2) and argued against interference in the order.

The Tribunal considered the submissions and cited authorities. Referring to a previous judgment, the Tribunal held that the failure of the ITO to record his satisfaction or lack thereof regarding the penalty does not vitiate the assessment order. The Tribunal concluded that the assessment could not be deemed erroneous or prejudicial to the revenue's interest due to the ITO's failure to record an opinion on the penalty issue. The Tribunal found that the Commissioner had not demonstrated the basis for assuming jurisdiction or how the assessment order was erroneous and prejudicial to the revenue's interest in the present case.

The Tribunal noted that while there could be two reasonable views on the issue, the principle that favors the assessee should be adopted when there are two reasonable views. Consequently, the Tribunal found the Commissioner's order invalid in law and canceled it, allowing the appeal of the assessee.