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TMI Blog1980 (10) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... 30-6-69 7-1-74 Rs. 85,462 2. 1970-71 28-2-72 1970-71 Rs. 97,380 This due data is taken as the net wealth of the assessee included agricultural lands in such cases the time had been extended for filing the returns for the asst. yrs. 1970-71 to 28th Feb., 1972. The notice for filing the return was issued by the WTO as admitted by the assessee, in his letter dated 23rd December, 1974 addressed to Wealth tax officer, B-ward, Bhatinda, filed with us. The WTO completed the assessment and computed the net wealth of the assessee and the tax payable therein as under: Sl. No. Asst. Year Net wealth computed Tax payable 1. 1969-70 Rs. 1,12,505 Rs. 63 2. 1970-71 Rs. 1.40,300 Rs. 202 The WTO also issued notice u/s 18(2) for the default u/s. 18(1)(a) for each of the assessment year under appeal. However, he dropped the penalty proceedings for the asst. year 1969-70 on 2nd February, 1977. For the asst. yr. 1970-71, he levied penalty u/s. 18 (1)(a) amounting to Rs. 101 on 7th February, 1977. 3. The CWT thereafter called for and examined the record relating to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asst. yr. 1970-71 @ 2% of the tax charged subject to a maximum of Rs. 50% of the tax against the correct amount of Rs. 8463. 4. For the asst. yr. 1969-70, the WTO dropped the penalty proceedings under the belief that only a nominal amount of penalty was leviable whereas the actual amount of penalty was leviable at Rs. 3376. 5. It, therefore, appears that the penalty orders of the WTO for the aforesaid asst. yrs. 1969-70 and 1970-71 are erroneous in so far as these are prejudicial to the interest of revenue. I therefore, propose to modify the said orders u/s. 25(2) of the WT Act, 1957. Before, however, orders u/s. 25(2) of the WT Act, 1957 were passed, you are hereby given an opportunity to appear before me in person or through an authorised representative on 24th July, 1978 at 11.00 A.M. in my office at 711 Model Town Jullundur and explain your case. It you do not wish to be present in person or through an authorised representative, you may send your objections, if any, in writing so as to reach me by the said date and the same will be considered on merits. Yours faithfull, Sd/- (S.C. Prasher) Commissioner of Wealth-tax "Jullundur" 5. Before the commr., Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f India under which the time limit for filing the wealth tax returns by the Agriculturisits was extended to the end of February, 1972. Thus the default by the assessee will start from 1st of March, 1972 and would continue upto the date the return of wealth was field i.e. 7th January, 1974. The penalty leviable on this basis works out to Rs. 4,433. I impose a penalty of Rs. 4,433 on the assessee for this year. The WTO will issue necessary notice of demand and challa." 7. Now, before us, the ld. counsel for the assessee contended that before the CWT issued notice u/s. 25(2) of the Act to the assessee, the WTO had issued a notice u/s. 35 of the Act on 22nd February, 1976 to correct the mistake of law in computing the quantum of penalty levied for the asst. yr. 1970-71, since the WTO was himself on his way to amend his order for the asst. yr. 1970-71, the action of the CWT had no justification. The ld. counsel for the assessee submitted that penalty for the asst. yrs. 1969-70 and 1970-71 was not leviable because the assessee had pleaded reasonable cause for delay in furnishing these returns before the WTO and the WTO at the time of penalty proceedings was convinced that on the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the reply dt 23rd December, 1974 to the show case notice, u/s. 25(2) of the Act, given by the Commissioner, requires consideration as it has not been properly looked into by him before making the impugned order. He submitted that both on facts and in law the common order of the CWT for both the years is untenable and deserves to be cancelled. It may be cancelled. 10. Replying to these submissions, the ld. Deptl. Rep. first submitted that the Commr.'s order though common has to be read in two parts as if these were two separate orders for each of the assessment years under appeal. Proceeding on these premises, it was submitted that so far as the penalty order of the WTO for the asst. yr. 1969-70 is concerned, it was erroneous so as to be prejudicial to the interest of revenue considering the office note left by the WTO below the penalty order dropping the proceedings. This was taken congnisance of by the Commr. and he had on the facts before him clearly a case that the order made by WTO was erroneous and prejudicial to the interest of revenue as the WTO did not apply the correct and proper provisions of law. In considering whether the order of the WTO was prejudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as the burden was upon the assessee to do so in view of the Punjab Haryana High Court judgement in the case of Kamala Wati vs. CIT (1978) 111 ITR 248 (P H). 13. The ld counsel for the assessee in the rejoinder submitted that the Commr. made common order for both the years and as such the contention of the revenue that these be treated as two independent orders is without any basis. He further submitted that reasonable opportunity should have been granted u/s. 18(2) if the Commr. had proceeded under that section as s. 274 of the IT Act, 1961 and s. 18(2) of the Act are in Pari materia. No notice u/s. 18(2) was served. He pointed out that s. 25(2) of the Act and s. 18(1)(a) are two independent sections and, therefore, separate appeals are provided for each independently. Sec. 25(2) does not empower the Commr. to levy penalty and the CWT could not levy penalty and the CWT could not levy penalty u/s. 18 himself. 14. The case laws cited by the revenue in the case of Kamale Wati is not applicable as in that case no opportunity was given to the assessee and in that case this plea of lack of opportunity was not taken. Pointing out to the contradiction in the contention of the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing order for the assessment year 1969-70: "Shri Swadesh Kumar C/o Shri Charanjilal, Advocate, Bhatinda. Asst. yr. 1969-70. Order Under Section 18(1)(a) Penalty proceedings are hereby filed Sd/- (Trilok Singh) Wealth-tax officer. E-Ward, Bhatinda" Dated 2nd February, 1977. However, for the asst. yr. 1970-71, he levied penalty of Rs. 101 by his order dt 7th February, 1977. 17. From a perusal of the assessee's submissions for the asst yr. 1969-70, and the order made by the WTO "filing" the penalty proceedings it is clear that the WTO was of the opinion that no penalty is leviable and used his judicial discretion to "file" these proceedings. As to what extent his mind was influenced by the rate of penalty that he was to adopt and the submissions made before him by the assessee in the letter dt. 23rd December, 1974 that there was reasonable cause for delay in filing the return is hard to tell. But one thing is clear that taking into consideration the letter dt 23rd December, 1974, the WTO exercised his judicial discretion to "file" the penalty proceedings for the asst. yr. 1969-70. The CWT, therefore, was in error when he considered and held that in dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no bad intention to avoid the tax. The explanation given above has no force and the same is rejected. I am satisfied that the return was field late which leads me to believe that the assessee has no sufficient cause which could prevent him from filing the return late. Therefore, penalty is leviable. The same is levied at Rs. 101 which is 50% of the tax since the default is more than 25 months. Penalty imposed Rs. 101. Assessed. Issue DNC copy of order. Sd/- (Trilok Singh) Wealth tax officer, E-Ward Bhatinda. Dt. 7th February, 1977 From a persual of this order, it is clear that the WTO considerded the explanation given by the assessee but rejected it and proceeded to impose the penalty. While doing so, he did not apply the proper and relevant law applicable in the computation of the quantum of penalty imposable. When the CWT called for the record of the assessee for the asst. yr. 1970-71 and on its examination found that the order of penalty made by the WTO was erroneous in view of the irrelevant and improper law applied by the WTO, which was clear from his order itself, the order of the WTO was erroneous and prejudicial to the interest of revenue. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mr. which may fall within the ambit of s. 25(2) of the Act, yet the language of the section is wide enough to bring such orders within the perview of s. 25(2) of the Act. However, the issue before us is whether such orders made by the WTO can be entirely annihilated or cancelled and fresh orders made in their place imposing different amounts of penalty. Such powers, in our opinion, are not enshrined in s. 25(2) as the Commr. could only modify the penalties of cancel the penalty order and direct the WTO to make fresh orders. He could not cancel the WTO's order as well as levy penalties by making orders of his own u/s 25(2) of the Act. Apparently, the consternations of limitation involved in matter of imposition of penalty restrained the Commr. from directing the WTO for making fresh orders after canceling the orders found by him as erroneous and prejudicial to the interest of revenue. But such restraints do not confer powers on the Commr. u/s. 25(2) to make fresh orders of his own. His order is, therefore, bad in law. It has to be cancelled. 21. We have held above that the Commr. has no power to levy penalty himself u/s. 25(2) after canceling order made by the WTO. However, for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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