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TMI Blog1987 (11) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... n January 22, 1969, a partition of his property was made between his heirs. The assessee, being one of the heirs, applied for obtaining a succession certificate in respect of some of the assets to the civil court on November 24, 1969, and the certificate was granted on January 17, 1970. The dispute relates to the assessment years 1969-70 and 1970-71, the relevant valuation dates for the said assessment years being March 31, 1969, and March 31, 1970, respectively. For both the years, the due dates for filing the returns were June 30, 1969, and June 30, 1970, but they were filed on May 1, 1972. The Wealth-tax Officer, therefore, initiated penalty proceedings for default under section 18(1)(a) of the Act of 1957, by issuing a show cause notice to the assessee. In reply, the assessee stated that section 18 is not included in section 19(3) of the Act of 1957, and, therefore, no penalty proceedings could be commenced against the legal representative for late filing of the returns. The contention was repelled by the Wealth-tax Officer and he imposed penalties in the sums of Rs. 56,950 and 40,040 for these two years respectively. The assessee appealed to the Appellate Assistant Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring which the assessee could have collected the relevant details and then filed the return for 1969-70. The default for this year is, therefore, restricted to 25 months and the penalty would be recalculated accordingly. " So far as the assessment year 1970-71 is concerned, the order of the Appellate Assistant Commissioner confirming the penalty imposed by the Wealth-tax Officer was affirmed by the Tribunal. First, the question for consideration is whether a penalty for default under section 18(1)(a) of the Act can be imposed on a legal heir or a legal representative under the special provisions of section 19 or section 19A as stated in Chapter V of the Act of 1957. The Tribunal has given a clear finding that as Keshav Ram Narang died before the valuation date, viz., March 31, 1969, relevant to the assessment year 1969-70, section 19A is applicable to the assessee's case. What the Tribunal says is that since the case is covered by section 19A, it is immaterial whether sub-section (3) of section 19 refers to section 18 or not. Then the Tribunal refers to its earlier decisions given in the cases of Late Babu Ram Gupta, W.T.A. No. 35 (Alld) of 1974-75 and of Ram Shanker Agrawal, W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 82: " Sub-section (1) of section 19 is confined to liability to pay, and it casts upon the legal representative liability to pay wealth-tax or any sum which would have been payable by the deceased if he had not died. Section 19(1) by itself does not create on the legal representative liability to pay which was non-existent till the date of death of the deceased. In other words, if an order creating liability to pay under the Act had not been passed till the date of death of the original assessee, sub-section (1) does not authorise creation of the liability to pay on the legal representative." This authority clearly supports our view that section 19(1) deals with a case where liability was already assessed in the hands of the deceased who died before discharging the liability. It is such liability which will be payable by the legal representative under section 19(1). A similar view was taken in A. F. Harvey Ltd. (as agents to Executors of the Estate of Late Andrew Harvey) v. CWT [1977] 107 ITR 326, in which the Madras High Court succinctly stated the legal position on pages 335 and 336 as follows : " Section 19(1) deals with the situation where an assessee has been alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that person can be recovered from his legal representative, the executor or the administrator and for that purpose, the proceedings will be continued against them. Section 19(2) provides for a case where a person dies without having furnished the return or he dies after having furnished the return and in such a case, the power is given to the Wealth-tax Officer to make an assessment of the net wealth of such person. The power under sub-section (2), therefore, is to assess the wealth of a person as on the valuation date before his death. Both sub-sections (1) and (2) will apply when person having wealth was alive on the valuation date, but died later. The distinction between the two is that section 19(1) envisages a case of person who was assessed to tax before his death and sub-section (2) of section 19 takes care of the cases where no assessment was made prior to the death or even no return was filed, but the person having wealth died after the valuation date. If no return was filed by the person who died after the valuation date, then section 14(1) read with sub-section (3) of section 19 obligates a legal representative to file the return and get the assessment done. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not vested in any particular individual, does not escape liability to wealth-tax. Then the question is whether any will was executed in this case. The Tribunal has given a clear finding: " It was not a case of an executor or an administrator or issue of letters of administration. It was a case where one of the heirs gave an application for succession certificate only and hence the use of the word administrator for him is not correct." This finding was recorded as the Appellate Assistant Commissioner referred to the assessee as " administrator " in his order. This shows that no will was executed by Keshav Ram Narang in favour of the assessee and that the assessee is not an executor or administrator but that he is a pure and simple legal heir of the deceased. On these facts, the application of section 19A cannot be conceived of and the Tribunal was in error in holding otherwise. It is settled law that inheritance never remains in abeyance. It being so, the inheritance was an open right on January 19, 1969, when Keshav Ram Narang died and the assets belonging to him had devolved on his legal heirs then and there. Lastly, we come to the chief question whether the penalty proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presentative, because the legal representative is not liable to be assessed; and since no order determining liability can be passed after the death of the person who was liable to be assessed, it is obvious that no valid order can be passed after his death against the legal representatives." This court also considered the submission of the Revenue that the words " or any sum " occurring in sub-section (1) of section 19 are of the widest amplitude embracing penalty also. But this submission also did not find favour with this court. We see no good reason to deflect from the view taken by this court in Rameshwar Prasad's case [1980] 124 ITR 77 (All). We, therefore, follow the semantic view taken by this court in Rameshwar Prasad's case [1980] 124 ITR 77 (All) and hold that no penalty proceedings could be legally initiated under section 18(1)(a), as section 18 is not mentioned in section 19(3) and hence the entire penalty imposed on the assessee has to be quashed. For the above reasons, we hold that the Appellate Tribunal was in error in holding that the cases are governed by section 19A and that subsection (3) of section 19 takes within its ambit section 18 of the Act of 1957 as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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