2017 (9) TMI 366 - SC - Wealth-tax

Payment of Wealth Tax - remedy of appeal to the High Court - whether the High Court was justified in allowing the appeals filed by the Revenue and thereby was justified in setting aside the orders passed by the Tribunal? - Held that - The interpretation made by this Court of Section 100 in Santosh Hazari s Case (2001 (2) TMI 131 - SUPREME Court), would equally apply to Section 27-A of the Act because firstly, both Sections provide a remedy of appeal to the High Court; Secondly, both Sections are identically worded and in pari materia ; Thirdly, Section 27-A is enacted by following the principle of legislation by incorporation ; fourthly, Section 100 is bodily lifted from the Code and incorporated as Section 27-A in the Act; and lastly, since both Sections are akin to each other in all respects, the appeal filed under Section 27-A of the Act has to be decided like a second appeal under Section 100 of the Code. Now coming to the facts of the case, we find that the High Court proceeded to decide the appeals without formulating the substantial question(s) of law. Indeed, the High Court did not make any effort to find out as to whether the appeals involved any substantial question(s) of law and, if so, which is/are that question(s) and nor it formulated such question(s), if in its opinion, really arose in the appeals. The High Court failed to see that it had jurisdiction to decide the appeals only on the question(s) so formulated and not beyond it. Section 27(5) . The impugned orders are not legally sustainable and thus liable to be set aside.

Summary

Issues:
Appeal against judgment by High Court in Wealth Tax Appeal Nos. 10 & 11/2001 and 3,4 & 5/2002 - Legality of setting aside Tribunal's order for levying penalty for delay in Assessment Years 1981-82, 1982-83, and 1983-84 - Interpretation of Section 27-A of the Wealth Tax Act for appeal to High Court - Failure of High Court to formulate substantial questions of law.

Analysis:

1. The appeals were filed against the judgment of the High Court of Punjab and Haryana, which allowed the appeals by the Revenue under Section 27-A of the Wealth Tax Act, setting aside the Tribunal's order for levying penalty for delay in Assessment Years 1981-82, 1982-83, and 1983-84. The issue revolved around whether the High Court was justified in its decision.

2. The appellant, a wealth tax assessee, was subjected to payment under the Wealth Tax Act for the mentioned assessment years. The Tribunal had initially ruled in favor of the appellant, leading the Revenue to appeal to the High Court under Section 27-A of the Act. The High Court's decision prompted the appellant to file appeals before the Supreme Court.

3. The main question for consideration in the appeals was whether the High Court's decision to set aside the Tribunal's orders was justified. After hearing both parties, the Supreme Court decided to allow the appeals, setting aside the High Court's orders, and remanding the case back to the High Court for fresh consideration on merits after formulating substantial questions of law.

4. Section 27-A of the Wealth Tax Act provides for appeals to the High Court against orders of the Income Tax Appellate Tribunal. The section is akin to Section 100 of the Code of Civil Procedure, with identical language. The Supreme Court noted that the High Court must formulate substantial questions of law before proceeding with the appeals, as established in previous legal precedents.

5. Referring to the case law of Santosh Hazari vs. Purushottam Tiwari, the Supreme Court emphasized the necessity of formulating substantial questions of law before hearing second appeals. The Court held that the same principles applied to Section 27-A of the Act, given the similarities with Section 100 of the Code.

6. Critically, the Supreme Court found that the High Court had proceeded with the appeals without formulating substantial questions of law, contravening the procedural requirements. Consequently, the Court held that the High Court's orders were legally unsustainable and set them aside, remanding the cases for fresh consideration.

7. In conclusion, the Supreme Court allowed the appeals, set aside the High Court's orders, and directed the High Court to decide the appeals afresh after formulating substantial questions of law, in line with the legal principles discussed in the judgment.