1977 (8) TMI 85 - AT - Wealth-tax

Issues Involved:
1. Whether an appeal would lie before the Appellate Assistant Commissioner (AAC) against the orders passed by the Wealth Tax Officer (WTO).
2. Whether the AAC was right in holding that no appeal would lie against the impugned orders by the WTO.
3. Whether the impugned orders of penalty passed by the WTO were orders under Section 18(1)(c) of the Wealth-tax Act, 1957 or if the WTO was only giving effect to the order of the Commissioner of Wealth-tax passed under Section 18(2A) of the Act.
4. Whether penalty under Section 18(1)(c) is leviable.

Detailed Analysis:

1. Appealability of WTO's Orders:
The assessees filed revised returns disclosing the value of previously omitted assets. The WTO initiated penalty proceedings under Section 18(1)(c) of the Wealth-tax Act, 1957. The assessees approached the Commissioner under Section 18(2A) for waiver or reduction of penalties, which the Commissioner granted, reducing the penalties. The WTO then imposed penalties as per the reduced amounts specified by the Commissioner. The AAC dismissed the appeals, holding that the WTO's orders were essentially the orders of the Commissioner and thus not appealable.

2. AAC's Decision on Appealability:
The Department raised a preliminary objection that no appeal would lie before the Tribunal against the AAC's order since the WTO's orders were effectively those of the Commissioner. The Department argued that Section 18(2B) rendered the Commissioner's order final and non-appealable. However, the learned counsel for the assessees contended that the proceedings under Sections 18(1)(c) and 18(2A) are independent, and the WTO's orders were indeed passed under Section 18(1)(c), making them appealable.

3. Nature of WTO's Orders:
The Tribunal examined if the WTO's orders were independent orders under Section 18(1)(c) or merely effecting the Commissioner's orders under Section 18(2A). The Tribunal noted that the WTO initiated penalty proceedings under Section 18(1)(c) and issued show cause notices. The WTO's orders stated that the assessees had concealed particulars of their assets, thus attracting penalties under Section 18(1)(c). The WTO then imposed penalties as per the Commissioner's reduced amounts. The Tribunal concluded that the WTO's orders were indeed under Section 18(1)(c) and thus appealable.

4. Leviability of Penalty under Section 18(1)(c):
The assessees argued that they had filed revised returns voluntarily and disclosed the omitted assets before the Department detected the omission. They claimed the omission was bona fide and not intentional. The Department contended that moving an application under Section 18(2A) implied that penalties were leviable. The Tribunal, upon reviewing the facts, found no evidence of contumacious or dishonest conduct by the assessees. The Tribunal held that the omission was bona fide and no penalty was leviable under Section 18(1)(c).

Separate Judgment by Accountant Member:
The Accountant Member provided an in-depth analysis of Sections 18(1), 18(2A), and 18(2B), highlighting that the Commissioner's discretion under Section 18(2A) is a judicial one, exercised only if the prerequisites of Section 18(1) are met. The Member emphasized that the Commissioner's order under Section 18(2A) is final and non-appealable, but the WTO's orders under Section 18(1)(c) are appealable. The Member concluded that the WTO's orders were not merely effecting the Commissioner's orders but were independent orders under Section 18(1)(c), thus appealable.

Conclusion:
The Tribunal allowed the appeals, holding that the WTO's orders were indeed under Section 18(1)(c) and thus appealable. The penalties imposed were canceled, as the Tribunal found no grounds for penalty under Section 18(1)(c). The Tribunal emphasized the independent nature of proceedings under Sections 18(1)(c) and 18(2A), supporting the assessees' right to appeal the WTO's orders.

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