Commissioner of Wealth-tax Vs. Maharani Rajluxmi Kr. Debi - Court Judgment

Suhas Chandra Sen, J.

1. In this case, the assessee is an individual and the relevant assessment year is 1966-67. The return of net wealth for the said assessment year was due for submission on or before 30th June, 19,66, but was actually filed on 28th September, 1967. Because the return was filed late, penalty proceeding under Section 18(1)(a) of the W. T. Act was initiated. The WTO ultimately imposed a penalty of Rs. 12,874 under Section 18(1)(a) of the Act on 27th . November, 1967.

2. The assessee preferred an appeal to the AAC against the penalty order and the AAC, following the decision of this court in the case of CIT v. Vegetable Products Ltd. : [1971]80ITR14(Cal) , gave a direction to the WTO to verify whether the wealth-tax for the assessment year under consideration was paid and, if so, whether there was any justification for imposition of penalty.

3. The WTO preferred an appeal to the Tribunal against the order of the AAC. The Tribunal upheld the order of the AAC relying on the case of CIT v. Vegetable Products Ltd. : [1971]80ITR14(Cal) . The Tribunal was of the view that this case was completely covered by the decision of the Calcutta High Court.

4. At the instance of the Revenue, the Tribunal has referred the following question of law under Section 27(1) of the W.T. Act, 1957 :

' Whether, on the facts and in the circumstances of the case and ona correct understanding of the decision of the Supreme Court in the caseof Commissioner of Income-tax v. Vegetable Products Ltd. : [1973]88ITR192(SC) ,the Tribunal was correct in holding that the penalty payable Under Section 18(1)(a)of the Wealth-tax Act, 1957, should be computed on the basis of theamount of tax payable on the date of imposition of penalty and not onthe basis of the amount of tax payable as per demand notice Under Section 30 ofthe said Act?'

5. It has been, argued before us that in the case of CIT v. Vegetable Products Ltd. : [1971]80ITR14(Cal) , Section 271(1)(a) of the I.T. Act came up for consideration. The section has undergone substantial changes now. It has been contended that Section 18(1)(a) of the W.T. Act is materially different from Section 271(1)(a) of the I.T. Act as it stood at the time when the case ofthe Vegetable Products was taken into consideration by the High Court and also by the Supreme Court. It has, therefore, been argued that the judgment delivered in that case has no bearing on the case before us and the Tribunal was wrong in affirming the decision of the AAC in this case.

6. We are of the view that there is no substantial difference between Section 18(1)(a) of the W.T. Act and Section 271(1)(a) of the I.T. Act as it stood at the material time. The case of Vegetable Products Ltd. : [1971]80ITR14(Cal) , ultimately went to the Supreme Court and the law applicable was explained by the Supreme Court in the case of CIT v. Vegetable Products Ltd. : [1973]88ITR192(SC) .

7. A Division Bench of the Allahabad High Court had also occasion to go into the question which has now been raised before us in the case of CWT v. Mahatab Chand : [1979]117ITR32(All) . In that case it was observed at p. 33 of the report as follows :

' There is no doubt that the provisions of Section 18(1)(i) of the W.T. Act are identical in language with Section 271(1)(i) of the I.T. Act. The provisions of the I.T. Act came up for consideration before the Supreme Court in the case of Vegetable Products Ltd. : [1973]88ITR192(SC) , which was an appeal from the decision of the Calcutta High Court mentioned above. After discussing the pros and cons of the contentions, the Supreme Court ultimately held that the phrase 'the amount of the tax, if any, payable by him' occurring in that section refers to the tax payable for which a demand notice is issued under Section 156. It further held that the words ' the tax ' occurring in the latter part of the provision also refer to the amount of tax referred to in the earlier part, namely, the amount of tax mentioned in the demand notice issued under Section 156. In view of this decision we are unable to agree with the view taken by the Tribunal that the amount in question has to be determined with reference to the tax still outstanding on the date on which the WTO passes the penalty order. The crucial amount is that which is mentioned in the demand notice. The Tribunal has not, however, given the facts as to what was the amount of tax assessed on the quantum side and as to when it was paid and what was the amount mentioned in the demand notice issued by the WTO. These facts, will, however, be found by the Tribunal after the matter goes back to it as a result of our answer. '

8. In this case also there is no clear finding of the Tribunal as to the exact amount that was payable under the notice of demand after deduction of the tax that had already been paid under the W.T. Act for this assessment year. Therefore, in our view, the proper course in this case would be to direct the Tribunal to dispose of this case in accordance with the principles laid down by the Supreme Court in the case of CIT v.Vegetable Products Ltd. : [1973]88ITR192(SC) and to determine the tax that, was actually payable under the notice of demand that was issued in this case. It has been mentioned on behalf of the assessee that the assessment order was modified in appeal by the AAC. The order of the AAC, however, is not before us nor has it been referred to by the Tribunal.

9. In our opinion, the best course will be to direct the Tribunal to go into the question whether the amount of tax determined as payable by the WTO has been reduced in appeal or not. If it has been reduced as alleged on behalf of the assessee, the Tribunal should take into consideration the appellate order in determining the amount of tax payable and the quantum of penalty should be calculated accordingly.

10. We, therefore, direct the Tribunal to dispose of this case in accordance with the principles laid down above. The question referred is answered accordingly.

11. In the facts and circumstances of the case, each party will pay and bear its costs.

Sabyasachi Mukharji, J.

12. I agree.