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TMI Blog1980 (1) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant dates. The tax due on the basis of the said returns was also paid. The WTO initiated penalty proceedings for the delay in filing the returns and required Venkateswara Iyer's legal representative to show cause against the levy of such penalties. The legal representative filed a petition under s. 18(2A) praying for the waiver of the penalty. By his order dated 17th March, 1972, the Commissioner rejected the petition on the ground that s. 18(2A) was not applicable since the returns had not been filed voluntarily but had been filed only after notices were issued. The WTO completed the penalty proceedings on March 25,1972, by levying various amounts as penalty for these years. The assessee appealed to the AAC for each of these years contending that since the default had been committed by Venkateswara Iyer, the son could not be penalised as there was no provision in the W.T. Act enabling levy of penalty on a legal representative for a default committed by the deceased. The AAC pointed out that there was no provision in the W.T. Act corresponding to s. 159(2)(b) of the I.T. Act, 1961, and that s. 19(3) of the W.T. Act did not provide for the application of s. 18 to a lega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19(1) casts liability to pay out of the estate of the deceased person the wealth-tax assessed as payable by the deceased. Thus, s. 19(1) would apply to all cases where the assessment had been completed on the deceased and the tax alone remained to be paid. It would also apply to the recovery of penalty because the section uses the words " or any sum, which would have been payable by him under this Act, if he had not died ". The words " any sum " would include even a penalty levied on the deceased but remaining unpaid during his lifetime. This sub-section does not apply to the facts here. We shall now turn to sub-s. (2) of. s. 19. It provides for cases where a person dies without having furnished a return under the provisions of s. 14 or where, after having furnished the return, the WTO finds that the return was incorrect or incomplete. In either case, the WTO is empowered to make an assessment of the net wealth of the deceased person and determine the wealth-tax payable by him on the basis of such assessment. For this purpose, appropriate notices which could have been served on the deceased, if he had survived, could be served on the executor, administrator or other legal represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the wealth of the deceased. All the consequences of the filing of such a return may follow in his hands when once he filed such a return. But this is a case where the legal representative did not file the return, as the deceased himself had done so. Thus, reference to s. 14 in s. 19(3) does not appear to improve the matter in this case, so as to clothe the department with a right to levy penalty on the legal representative with reference to the default committed by the deceased. It is in this context that reference has to be made to the corresponding provisions of the I.T. Act. Section 24B of the Indian I.T. Act, 1922, dealt with the liability of the legal representative as regards the tax payable by a deceased person. Where a person died, his legal representative was liable to pay out of the estate of the deceased to the extent to which the estate of the deceased was capable of meeting the charge, the tax as payable by such person, or any tax which would have been payable by him under the Act, if he had not died. This is almost in identical terms with s. 19(1) which we have already considered and which we have already found is not applicable to the facts here, as ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legal representative being treated to be the assessee. However, on the facts of the Calcutta case, the point, which was in a way assumed, did not actually arise. That was a case where on the death of the assessee a notice under s. 22(2) of the Indian I.T. Act, 1922, was served on the son, as legal representative for the submission of the return. In compliance with that notice, the son submitted a return in which there were omissions and, therefore, penalty proceedings came to be initiated under s. 28 of that Act. It was held that the imposition of penalty on the son was valid. That would appear to us to be a clear case where the person by submitting a false return invited the application of the penalty provisions and brought upon himself the liability to penalty. No deeming provision was necessary in that case, because the son himself had committed the default. That was also not a case coming within the scope of s. 24B(3) as the deceased had not been required to furnish a return, or the return filed by him was incorrect or incomplete. Section 159 of the I.T. Act, 1961, made certain changes in the previous law as enacted under s. 24B. Sub-section (1) of section 159 practically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessment under the Indian Income-tax Act, 1922..." The Hyderabad I.T. Act thus ceased to have effect from 1st of April, 1950. The portion of that Act in respect of the levy of assessment and collection of income-tax and super-tax in respect of the periods prior thereto, for which liability of income-tax could not be imposed under the Indian I.T. Act, 1922, was saved. The ITO issued on 22nd December, 1949, a notice to the assessee requiring him to show cause why penalty should not be imposed and by an order dated October 31, 1951, imposed penalty on the assessee. The assessee challenged the validity of the penalty order before the AAC who confirmed it. The Appellate Tribunal, on further appeal, took the view that the order imposing penalty was not valid, and the High Court on reference upheld the order of the Tribunal. On further appeal to the Supreme Court, it was held that the view taken by the High Court was proper. Their Lordships referred to an earlier case in Abraham V. ITO [1961] 41 ITR 425 (SC) and followed it. In Abraham's case, it was held that penalty was only additional tax, which was designated as penalty, and which was imposed in view of the dishonest or contumac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en payable by the deceased had he been alive, out of the estate of the deceased. Though there is no discussion of the relevant provisions, we find that the conclusion reached by the Andhra Pradesh High Court is the same as ours. One aspect which may be noticed about the Andhra Pradesh High Court's decision is that it is a case which came only within the scope of s. 19(3) if at all. Section 19(2), as we have already seen, provides for cases where a person dies without furnishing a return or where the return furnished by him was found to be incorrect or incomplete. In that case, the deceased had filed the return which had also ended in an assessment on the basis of the return. Therefore, there was no scope for the WTO treating the return to be incorrect or incomplete. As that was a case where the person died after furnishing a return, s. 19(2) did not have any scope for application. Apparently because of this, the learned judges have referred to only s. 19(3) and extracted it at page 647 of the judgment. In A F. Harvey Ltd. v. CWT [1977] 107 ITR 326, a Bench of this court went into the scope of s. 19(1) and (2). In that case, the deceased died before the valuation date and the qu ..... 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