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TMI Blog1982 (6) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... returns of net wealth for the assessment years 1970-71 and 1971-72 were due respectively on or before 30th June, 1970 and 30th June, 1971. However, the return of net wealth for the assessment year 1972-73 was due on or before 31st July, 1972. The levy of wealth-tax on agricultural lands came to be challenged in a writ petition before the Hon'ble Punjab and Haryana High Court by one Shri Hira Singh [1981] 25 CTR (P H) 101. The Hon'ble High Court held the impost as ultra vires the Constitution of India. However, on appeal to the Supreme Court in the said case, the judgment of the High Court was reversed and the Supreme Court held that levy of Wealth-tax on agricultural lands under theWealth-taxAct was within the competence of the Central Legislature. Till the decision of the Supreme Court, there was, with regard to the date of the assessee for filing the returns declaring in their net wealth the value of the agricultural lands, fluid position of law. Taking note of this anomlous situation arising out of the judgments of the courts, the CBDT issued Circular No. 78 (F. No. 328/11/72-WT) dated 17th February, 1972 granting general extension of time for filing the Wealth-tax returns in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has separately been issued. 6. The quantum assessments were challenged in appeal and the AAC made his orders on 24th July, 1975 and finally the issue travelled upto the Tribunal. The Tribunal in WTA Nos. 238, 239 and 240 of 1975-76 by order dated 12th June, 1978 adjudicated upon the quantum assessments and gave part relief to the assessee. 7. According to sub-s. (5) of section18 of the Wealth-tax Act, 1957, before this sub-section was substituted by the Amendment Act, 1971, no order imposing a penalty under this section shall be passed after the expiration of 2 years from the date of the completion of the proceedings in the course of which the proceedings for the imposition of penalty have been commenced. According to this provision which was applicable for the assessment year 1970-71, order of penalty could be passed only on or before 23rd October, 1975. However, for the assessment years 1971-72 and 1972-73, the order of penalty could be made either within two years from the end of the financial year in which the proceedings in the course of which action for imposition of penalty has been taken are completed or six months from the end of the month in which the order of the AA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant. The WTO that may is also directed to consider any other argument be brought before him during the hearing of de novo proceedings." This order of the AAC was not challenged further by either of the parties. 10. After the above directions were issued, the WTO made fresh penalty orders in all the years under appeal on 28th March, 1979. The penalty imposed by the WTO being after the order of the Tribunal giving quantum relief, he determined the penalty impossible, inter alia, on the above count of Rs. 39,733, Rs. 24,719 and Rs. 7,732 respectively. These penalty orders were challenged in appeal before the AAC and as mentioned supra, these penalties have been reduced by the AAC in the manner projected in the beginning of this order as the issues involved in these appeals. 11. According to the learned counsel for the assessee, original order of penalty could be passed by the WTO in each case only on or before the end of February, 1976 for all the years under appeal. The learned counsel for the assessee submitted that the penalty orders made by the WTO on 25th March, 1976 no longer held the field because these had been set aside by the AAC vide his order dated 21st Octob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the WTO to impose the impugned penalties. It was contended that assessee has major portion of net wealth as value of the agricultural lands. The exigibility of the agricultural lands to Wealth-tax was the subject-matter of litigation and even the CBDT recognised this fact that the legal position was fluid and unsettled and, therefore, issued the circular referred to above absolving the assessee having agricultural lands as part of net wealth from filing the returns upto 29th February, 1972 for the assessment years 1970-71 and 1971-72. He, however, submitted that the assessee had bona fide belief on the above position of law that he could file the returns after the positions clear and did so on 18th October, 1972 voluntarily. No penalty could be levied for such an Act of the assessee. It was submitted that the Karta of the family was ailing since 1960 and therefore, he had given general power of attorney to one Shri Dalip Singh who signed the returns. It clearly shows that the assessee was consciously making efforts to comply with the provisions of law. However, the returns were not valid due to the specified persons entitled to sign the returns mentioned in the Act not signing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had reasonable cause for not furnishing the returns. 14. It was further contended that the assessee could not have reasonable belief on the basis of the judgment of the Punjab and Haryana High Court regarding the exigibility of the agricultural lands to wealth-tax. The judgment in that case applied to the facts of that case only. The appeals of the assessee may, therefore, be dismissed. 15. The learned counsel for the assessee in the rejoinder emphasised that he was entitled to raise the question of invalidity of the returns as it was legal issue and could be raised in any proceedings. It was contended that penalty proceedings being independent of the assessment proceedings and the issue raised by him being purely legal, there was no bar on raising this in these appeals. 16. We have carefully considered the rival submissions and the relevant provisions of law and are of the considered opinion that the penalty orders are barred by time and are even otherwise illegal. In the case of Raja Jagdambika Pratap Narain Singh v. CBDT [1975] 100 ITR 698 (SC) the Hon'ble Supreme Court has held that merely because an order has been passed by the ITO and has not been appealed against, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the observations that the view of the Tribunal that it had left the IAC free to make a fresh order if he could make a valid order in law, was correct. Now if we apply the ratio of this judgment to the facts before us, we find that it fits like hand in glove. The AAC in this case had directed the WTO to pass fresh penalty orders in accordance with law. He had not issued the directions to the WTO to pass the orders regardless of the position of law. Therefore, it cannot be said that when the WTO made the impugned penalty orders, he was merely acting on the directions issued to him by the appellate authority. He was, in fact, passing an order which had been directed to be made in accordance with law. This also removes the doubt created by the revenue that the powers of the AAC under section 23(5) being different than those conferred upon him under section 251(1) of the Income-tax Act, 1961, the order made by the AAC was valid in law. 18. Even the Gauhati High Court in the case of Jai Parkash Singh v. CIT [1978] 111 ITR 507 (Gau.), though considering a different issue, yet held that the appellate authorities cannot nullify the provisions of limitation by passing an order setting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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