Rani H.R. Laxmi (Estate) (Late) (Through B.K. Singh) Vs. Commissioner of Wealth-tax - Court Judgment

Excerpt:
- - 18. (1) if the assessing officer, deputy commissioner (appeals), commissioner (appeals), chief commissioner or commissioner or appellate tribunal in the course of any proceedings under this act is satisfied that any person has failed to furnish the return which he is required to furnish under sub-section (1) of section 14 or by notice given under subsection (2) of section 14 or section 17, or has failed to furnish within the time allowed and in the manner required by sub-section (1) of section 14 or by such notice, as the case may be. under section 18(1)(a) penalty can be imposed against those persons who have failed to furnish the return which they are required to furnish under section 14(1) of the act. 1. in this case the income-tax appellate tribunal, patna bench, patna, has referred the following question of law to this court for its opinion under section 27(1) of the wealth-tax act, 1957 (hereinafter referred to as 'the act') :' whether under the facts and circumstances of the case, the tribunal was right in holding that a penalty under section 18(1)(a) could be imposed on the executor assessed under section 19a of the wealth-tax act, 1957 ?'2. the short facts are that the assessee is an executor of the estate of the late rani h.r. laxmi, who died on march 7, 1980. the return of wealth as on the valuation date, i.e., march 31, 1980, was due to be filed by july 30, 1980. the said rani h.r. laxmi died before the valuation date after executing a will and appointing the assessee as an.....

Judgment:

1. In this case the Income-tax Appellate Tribunal, Patna Bench, Patna, has referred the following question of law to this court for its opinion under Section 27(1) of the Wealth-tax Act, 1957 (hereinafter referred to as 'the Act') :

' Whether under the facts and circumstances of the case, the Tribunal was right in holding that a penalty under Section 18(1)(a) could be imposed on the executor assessed under Section 19A of the Wealth-tax Act, 1957 ?'

2. The short facts are that the assessee is an executor of the estate of the late Rani H.R. Laxmi, who died on March 7, 1980. The return of wealth as on the valuation date, i.e., March 31, 1980, was due to be filed by July 30, 1980. The said Rani H.R. Laxmi died before the valuation date after executing a will and appointing the assessee as an executor under the will, who was required to file the return relating to the wealth of the deceased. The executor did not file the return by the aforesaid date but he filed it on July 12, 1982. As there was a delay of twenty-three completed months in filing the return, a proceeding under Section 18(1)(a) of the Act was initiated against the executor for imposition of penalty.

3. Pursuant to notice the executor appeared in the penalty proceeding and furnished an explanation. The explanation furnished by the executor was not accepted by the Wealth-tax Officer and he imposed penalty. When the matter was taken in appeal, the appellate authority confirmed the imposition of penalty. Thereafter, the executor took up the matter in further appeal before the Tribunal which also confirmed the order imposing penalty. Thereafter, upon a petition under Section 27(1) of the Act filed before the Tribunal, the question stated above has been referred to this court for its opinion.

4. Learned counsel appearing on behalf of the assessee submitted that the executor is assessable for payment of wealth-tax in relation to the net wealth of the testator under Section 19A of the Act and as there is no reference to Section 18 in the said section, penalty proceedings under Section 18(1)(a) of the Act could not have been initiated against the executor. For deciding this question, it would be necessary to refer to the provisions of sections 14(1), 19A(1) and 18(1)(a) of the Act which may be quoted hereunder :

' 14. (1) Every person, if his net wealth or the net wealth of any other person in respect of which he is assessable under this Act on the valuation date exceeded-the maximum amount which is not chargeable to wealth-tax, shall, on or before the due date, furnish a return of his net wealth or the net wealth of such other person as on that valuation date in the prescribed form and verified in the prescribed manner setting forth particulars of such net wealth and such other particulars as may be prescribed.

19A. (1) Subject as hereinafter provided, the net wealth of the estate of a deceased person shall be chargeable to tax in the hands of the executor or executors.

18. (1) If the Assessing Officer, Deputy Commissioner (Appeals), Commissioner (Appeals), Chief Commissioner or Commissioner or Appellate Tribunal in the course of any proceedings under this Act is satisfied that any person has failed to furnish the return which he is required to furnish under Sub-section (1) of Section 14 or by notice given under Subsection (2) of Section 14 or Section 17, or has failed to furnish within the time allowed and in the manner required by Sub-section (1) of Section 14 or by such notice, as the case may be. ...'

5. From a bare perusal of the provision of Section 14(1) of the Act, it would appear that under the said sub-section a person is assessable to payment of wealth-tax on his own net wealth. It further lays down that a person is liable to pay wealth-tax on the net wealth of any other person in respect of which he is assessable under this Act. So far as the executor is concerned, he is assessable to wealth-tax in relation to the net wealth of the testator as required under Sub-section (1) of Section 19A of the Act. From this, we have no difficulty in coming to the conclusion that an executor is liable to pay wealth-tax in relation to the net wealth of the testator under Section 14(1) of the Act read with Section 19A(1) of the Act. Under Section 18(1)(a) penalty can be imposed against those persons who have failed to furnish the return which they are required to furnish under

Section 14(1) of the Act. The executor was required to furnish the return under Section 14(1) of the Act. Therefore, on a plain reading of Section 18(1)(a) of the Act, we have no difficulty in holding that he is liable to pay penalty under Section 18(1)(a) of the Act.

6. Learned counsel appearing on behalf of the assessee in support of this reference has placed reliance upon a decision of the Allahabad High Court in the case of Ved Prakash Narang v. CWT : [1988]172ITR184(All) . The other case upon which reliance has been placed is the decision of the Madhya Pradesh High Court in the case of CWT v. Smt. Banoo E. Cowasji : [1985]152ITR16(MP) . In both the aforesaid decisions, the court was considering the case of a legal representative which was covered by Section 19 of the Act as a legal representative of a deceased person is assessable for payment of wealth-tax on the net wealth of the deceased under Section 19 of the Act. Therefore, the aforesaid two decisions are quite distinguishable and can be of no avail to learned counsel appearing on behalf of the assessee for deciding the present question referred to this court. As the present case is not a case in relation to legal representatives, we refrain from expressing any opinion relating to correctness of the law laid down in the aforesaid two decisions.

7. In view of the foregoing discussions, we are of the view that penalty proceedings under Section 18(1)(a) of the Act could have been initiated against the executor. We, accordingly, answer the question referred to this court against the assessee and in favour of the Revenue.

8. Let a copy of this order be sent to the Income-tax Appellate Tribunal, Patna Bench, Patna.