1976 (4) TMI 122 - AT - Wealth-tax

Summary

Issues Involved:
1. Legality of penalty orders without prior approval of the Inspecting Assistant Commissioner (IAC).
2. Applicability of the law before and after the amendment to Section 18 of the Wealth Tax Act (WT Act).
3. Procedural irregularities and their curability.

Issue-Wise Detailed Analysis:

1. Legality of Penalty Orders Without Prior Approval of the IAC:
The penalties were imposed under Section 18(1)(a) of the WT Act for delayed filing of returns for assessment years 1960-61 to 1964-65. The assessee argued that the Wealth Tax Officer (WTO) passed the penalty orders without obtaining the prior approval of the IAC, as required by Section 18(4) of the WT Act before its amendment on 1st April 1965. The Department did not dispute this fact. The Tribunal held that the WTO's orders imposing penalties without prior IAC approval were illegal and needed to be set aside.

2. Applicability of the Law Before and After the Amendment to Section 18 of the WT Act:
The key issue was whether the provisions of Section 18 before or after 1st April 1965 were applicable. The Tribunal noted that the amendment substituted the entire Section 18, indicating a repeal of the earlier law. Citing the Supreme Court's decision in State of Orissa & Anr. vs. M.A. Tallach & Co., the Tribunal held that the provisions of Section 18 as they stood before 1st April 1965 were saved by Section 6 of the General Clauses Act. Therefore, the old provisions applied to offences committed before 1st April 1965. The Tribunal concluded that the law prevailing on the date of the offence (i.e., the due date for filing returns) was applicable.

3. Procedural Irregularities and Their Curability:
The Tribunal acknowledged that the procedural irregularity of not obtaining prior IAC approval was curable. Citing the Supreme Court's decision in Dutta Brothers, the Tribunal held that the matter should be restored to the WTO to proceed afresh from the point where the illegality occurred. The WTO was directed to continue the penalty proceedings and impose penalties only after obtaining the necessary approval from the IAC.

Conclusion:
The Tribunal set aside the orders of the WTO and the Appellate Assistant Commissioner (AAC) for each of the five assessment years. The cases were restored to the WTO for fresh disposal according to the law, with the direction to obtain prior IAC approval before imposing any penalties. The appeals were deemed to be allowed, and the assessee was given the opportunity to raise any other points during the fresh proceedings.