Purshottam Thackersey Vs. K.N. Anantarama Ayyar, Commissioner of Wealth-tax and Another - Court Judgment

Pendse, J.

1. There is no merit in this petition filed under articles 226 of the Constitution of India to challenge the legality of the order dated May 2, 1979, passed by the Commissioner of Wealth-tax, Bombay, in exercise of the powers under s. 18B of the W.T. Act, 1957 (hereinafter referred to as 'the Act'). The facts giving rise to the filing of this petition are as under :

The petitioner is the karta a Purshottam Thackersey (HUF) and was liable to file the return of wealth-tax under s. 14 of the Act. The petitioner was liable to pay wealth-tax from the assessment years 1967-68 onwards and the wealth return was to be filed for each of the assessment years before June 30. The petitioners filed the wealth-tax returns for the assessment years 1967-68, 1968-69 and 1969-70 on August 6, 1970, while the wealth-tax return for the assessment year 1970-71 was filed on January 1, 1972. After the assessment was completed, the WTO commenced penalty proceeding under s. 18(1)(a) of the Act for delay in filing the returns. Notices were served upon the petitioner, but the assessee filed to appear before the WTO, and ultimately on February 2, 1979, the Officers imposed penalties. For the assessment year 1967-68 penalty of Rs. 15,663; for the assessment year 1968-69 penalty of Rs. 9,222; for the assessment year 1969-70 penalty of Rs. 4,459; and for the assessment year 1970-71 penalty of Rs. 6,282 was imposed. Penalty was also imposed by the WTO under s. 18(1)(c) of the Act on the ground that the assessee had concealed the particulars of the assets. This penalty was imposed, as the assessee was a holding shares of two private companies, Sunderdas Thakersey & Bros Pvt. Ltd. and Ashwin Properties Pvt. Ltd., having their registered head offices at Calcutta. The brothers of the petitioners was in management of the two private companies, and the dividends declared by the two companies for the year 1960-61 onwards were not disclosed in the wealth-tax returns. The penalties imposed under s. 18(1)(c) were Rs. 7,622, Rs. 7,622 and Rs. 8,402 for the assessment years 1968-69, 1969-70 and 1970-71, respectively.

2. The petitioner preferred two petitions under s. 18B of the Act before the Commissioner of Wealth-tax seeking waiver of penalties levied under s. 18(1)(c) and under s. 18(1)(a) of the act by the WTO. As regards the penalty imposed under s. 18(1)(a) of the Act, Commissioner by his order dated May 2, 1979, reduced the penalty to Rs. 3,500 for each of the three relevant assessment years. The penalties imposed under s. 18(1)(a) of the Act were not waived. The order passed by the Commissioner is under challenge in this petition.

3. Shri Ganesh, learned counsel appearing on behalf of the petitioner, submitted that the assessee had preferred an appeal against the order of the imposition of penalty under s. 18(1)(c) of the Act before the Income-tax Appellate Tribunal and the same was allowed by order dated September 15, 1983, in respect of the assessment 1969-70 and 1970-71, and the penalty imposed under s. 18(1)(a) was set aside. Shri Ganesh submits that the assessee desires to challenge the penalty imposed for the assessment year 1968-69 in this petition, but I decline permission to the learned counsel to agitate the issue, because the appeal preferred by the assessee in respect of that assessment order in pending before the Income-tax Appellate Tribunal and in these circumstances, it is not proper to permit the assessee to agitate the contention in this writ petition. In my judgment, it is improper for the assessee to prosecute two remedies simultaneously, and I am not inclined to exercise my writ jurisdiction to investigate the correctness of the order passed under s. 18(1)(c) of the Act when an appeal against the said order is pending before the Tribunal. For these reasons, I declined permission to the learned counsel to argue the question about the validity imposed under s. 18(1)(c) of the Act.

4. Turning to the penalty imposed under s. 18(1)(c) of the Act, Shri Ganesh did not dispute that the returns were filed beyond the prescribed time, and the learned counsel accepted that there was nothing on the record to indicate that there was any reasonable cause for filing the returns late. The learned counsel urged that though the returns were filed beyond the prescribed period, still it is not in dispute that the returns were filed before the notice under sub-s.(2) of s. 14 of the Act was issued to the assessee. It was urged that the Commissioner, in these circumstances, ought to have exercised his discretion and waived the penalty. It is not possible to accepted this submission. The relevant part of s. 18B reads as under :

'18B. (1) Notwithstanding anything contained in this Act, the Commissioner May, in his discretion, whether on his now motion or other wise, - (i) reduce or waive the amount of penalty imposed or imposable on a person under clause (i) of sub-section (1) of section 18 for failure without reasonable cause to furnish the return of net wealth which such person was required to furnish sub-section (1) of section 14, or

(ii) reduce or waive the amount of penalty imposed or imposable on a person under clause (iii) of sub-section (1) of section 18,

if he is satisfied that such person, -

(a) in the case referred to in clause (i), has, prior to the issue of a notice to him under sub-section (2) of section 14, voluntarily and in good faith, made full and true disclosure of his net wealth, and

(b) in the case referred to in clause (ii), has, prior to the detection by the Wealth-tax Officer, of the concealment of particulars of assets or of the inaccuracy of particulars furnished in respect of any asset or debt in respect of which the penalty is imposable, voluntarily and in good faith made full and true disclosure of such particulars,

and also has co-operated in any inquiry relating to the assessment of his net wealth and has either paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under this Act in respect of the relevant assessment year.'

5. Shri Ganesh urged that the penalty imposed under a. 18(1)(a) of the Act was not legal, because the assessee had filed the return before the service of notice under sub-s.(2) of s. 14 of the Act, and, therefore, the WTO had no jurisdiction to imposed the penalty and the Commissioner ignored this aspect and declined to waive the penalty on the ground that the assessee had concealed the particulars of the dividends received during the relevant year. Shri Joshi, learned counsel for the Revenue, on the other hand, submits that the petition under s. 18B was filed before the Commissioner on the basis that the penalty imposed under s. 18(1)(a) of the Act was just and proper, but it should be waived because of a certain circumstances. Shri Joshi is right in the submission that in a petition filed under s. 18B of the Act, it is open to challenge the jurisdiction of the WTO to impose the penalty. The powers to be exercised under s. 18B of the Act are purely discretionary and on the facts and in the circumstances of the present case, the Commissioner has declined to waive the penalty under s. 18(1)(a) of the Act in his discretion, and in my judgment, it is not open to disturb such discretionary order in exercise of the writ jurisdiction. Writ jurisdiction is not meant to disturb each and every discretionary order passed by the authority empowered to do so under the statute. In my judgment, the grievance of the petitioner has no merit and deserves to be repelled.

6. Shri Ganesh relied upon the decisions in Anjanappa v. CWT : [1980]124ITR433(KAR) and Shareef Ahmad v. CWT : [1979]117ITR35(All) , but, in my judgment, these decisions have no bearing on the issue involved in the petition. The order passed by the Commissioner is purely a discretionary order and it is not possible to hold that the discretion has been exercised arbitrarily or irrationally. In my judgment, there is no merit in the petition and the same deserves to be dismissed.

7. Accordingly, the rule is discharged with costs.