Income Tax Appellate Tribunal - Ahmedabad
H.H. Maharaja Daljitsingh vs Wealth-Tax Officer on 31 October, 1995
Equivalent citations: [1996]58ITD91(AHD)
ORDER
B.M. Kothari, Accountant Member 1 to 2. [These paras are not reproduced here as they involved minor issues.]
3. A perusal of the summary of grounds of appeal mentioned herein before reveals that some points raised in all these appeals are common in some of these appeals.
4. The first common ground taken by these assessees in some of these appeals as indicated hereinbefore relates to assessee's claim that the assessment made by the Wealth-tax Officer under Section 16(3) are barred by limitation of time as prescribed by Section 17A of the Act. The appeals which relate to assessment years 1986-87 and 1987-88 in the cases of the aforementioned assessees contain such a common ground relating to assessment being barred by limitation of time. The undisputed facts necessary for disposal of these common ground are that all the concerned assessees filed their returns of wealth for assessment years 1986-87 & 1987-88, in which this question arises for consideration were filed in the month of March 1991. The assessments were made by the Assessing Officer in the month of February/March 1992.
4.1 The learned authorised representative of the assessee submitted that the assessments for hese years were clearly barred by limitation of time. Assessment up to assessment year 1987-88 ought to have been completed before 31st March, 1991. The return for assessment year 1987-88 could be furnished up to 31st March, 1990 and return for the earlier year ought to have been furnished before that date as per the relevant provisions contained in the W.T. Act. In no case the return of wealth for assessment year 1987-88 or earlier years could be furnished after 31st March, 1990 and no such assessment for assessment year 1987-88 or earlier year could be completed after 31st March, 1991. He also submitted written submissions along with letter dated 17-10-1995 in which elaborate arguments were submitted to support this contention.
4.2 The learned Sr. departmental representative also submitted written submissions in this regard to support the view taken by the Dy. CIT(A) holding that assessments in question cannot be treated as barred by limitation of time. It has been pointed out in the written submissions that provisions contained in Section 16(7) of W.T. Act provides that the provisions of Section 16 as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 shall apply to and in relation to any assessment for assessment year 1988-89 or any earlier assessment year. Since the assessee had filed returns of wealth in the month of March 1991, the WTO was required to issue a notice under Section 16(2) and the assessments have been made within one year from the date of furnishing of the return. Such assessments made by the WTO should be governed by the unamended provisions contained in Section 17 A as it existed prior to its amendment with effect from 1-4-1989, which, inter alia, permits the Assessing Officer to complete the assessment within 4 years from the end of the assessment year or one year from the date of filling of the return under Section 15, whichever is later. The learned D.R. also submitted elaborate written submissions to support the view taken by the Dy. Commissioner of Income-tax (Appeals).
4.3 We have carefully considered the submissions made by the learned representatives and have also gone through the relevant provisions contained in W.T. Act.
4.4 It will be imperative to reproduce the relevant provisions of W.T. Act. Section 15 along with proviso (a) &(b) reads as under :-
15. If any person has not furnished a return within the time allowed under Sub-section (1) of Section 14 or under a notice issued under Clause (i) of Sub-section (4) of Section 16, or having furnished a return discovers any omission or wrong statement therein, he may furnish a return or a revised return, as the case may be, at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier :
Provided that-
(a) where such return or revised return relates to the assessment year commencing on the 1st day of April, 1987 or any earlier assessment year, it may be furnished at any time up to and inclusive of the 31st day of March, 1990 or before the completion of the assessment, whichever is earlier ;
(b) where such return or revised return relates to the assessment year commencing on the 1st day of April, 1988, it may be furnished at any time up to and inclusive of the 31st day of March, 1991 or before the completion of the assessment, whichever is earlier.
Section 16(7) reads as under :-
(7) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions for the time being in force and applicable to the relevant assessment year.
Section 17A(1) reads as under :-
17A(1) : No order of assessment shall be made under Section 16 at any time after the expiry of two years from the end of the assessment year in which the net wealth was first assessable.
Provided that-
(a) where the net wealth was first assessable in the assessment year commencing on the 1st of April, 1987, or any earlier assessment year, such assessment may be made on or before the 31st day of March, 1991 ;
(b) where the net wealth was first assessable in the assessment year commencing on the 1st day of April, 1988, such assessment may be made on or before the 31st day of March, 1992.
4.5 A perusal of proviso (a) to Section 15 clearly and specifically prescribes that a return of wealth relating to assessment year 1987-88 or any earlier year can be furnished at any time up to and inclusive of 31 March, 1990 or before the assessment whichever is earlier. Likewise provision (b) provides that return for assessment year 1988-89 can be furnished upto 31st March, 1991 or before the assessment is completed, whichever is earlier.
4.6 The time limit prescribed in Section 17A as amended by the Finance Act, 1989 with effect from 1-4-1989 contains specific proviso providing for limitation of time in relation to completion of assessment for assessment year 1987-88 or any earlier assessment year as well as for assessment year 1988-89. Such time limit provided in proviso (a) to Section 17A clearly provides that assessment for assessment year 1987-88 can be made on or before 31st March, 1991 and assessment for assessment year 1988-89 should be made on or before 31st March, 1992. Such limitation of time prescribed in the second proviso of Section 17A as 31 -3-1991 and 31-3-1992 with a view to ensure that the Assessing Officer gets at least a period of one year from the last date prescribed for furnishing of the return in the proviso to Section 15. Such provisions would clearly govern the controversy raised in the present appeals. The provisions of Section 16(7) will not in any manner help the department, as it only provides that old provisons of Section 16 will be applicable in relation to assessments for assessment year 1988-89 or any earlier assessment year. It does not in any manner relate to the limitation of time for furnishing of the return prescribed in Section 15 nor it relates to time limit prescribed for completion of assessment in Section 17A. In the present case, the returns for assessment years 1986-87 and 1987-88 in which such a ground as to limitation of time has been raised, the returns of wealth were admittedly filed in the month of March 1991, i.e., after 31st March, 1990 being the last date prescribed in proviso (a) to Section 15. Such returns are clearly non est and invalid. In case the Wealth-tax Officer would have acted properly in accordance with the provisions of law, he should have initiated proceedings under Section 17 of the W.T. Act to regularise the proceedings and could then make an assessment in accordance with separate limitation of time provided in Section 17A, Sub-section (2) and the proviso to Sub-section (2). In the present case, the Wealth tax Officer has not issued any notice under Section 17 for regularising the belated and non est return furnished after the prescribed limitation of time. Therefore, the assessment for assessment year 1987-88 or any earlier assessment year ought to have been made on or before 31-3-1991. The assessments in the present cases for assessment years 1986-87 and 1987-88 have admittedly been made in the month of February/March 1992. The assessments so made after the expiry of limitation of time prescribed in proviso (a) to Section 17A(1) are, therefore, clearly barred by limitation of time. Such a common ground raised by these assessees in the concerned appeals is, therefore, allowed.
5. The remaining grounds raised in all these appeals [except the Appeal Nos. 656 to 658 relating to penalty under Section 18(1)(a)] involve consideration of points relating to non-deduction of outstanding wealth-tax and income-tax liabilities or it relates to alleged invalidity of reference made to Valuation Officer under Section 16A of W.T. Act.
5.1 We find that such grounds raised in the present appeals relating to non-deduction of wealth-tax and income-tax liability and relating to reference made to Valuation Cell under Section 16A were not pressed on behalf of the assessee before the Dy. CIT(A). Such grounds were rej ected by the Dy. CIT(A), as not pressed.
5.2 The learned counsel appearing before us was fair enough to state that since these grounds were not pressed before the first appellate authority, he cannot press such grounds now before the Tribunal. He, therefore, did not submit any submissions in relation to these grounds.
5.3 In our view, these assessees cannot agitate the ground relating to denial of deduction of wealth-tax and income-tax liability or relating to validity of reference made to Valuation Cell in the present appeals before use because the assessee did not press such grounds before the first appellate authority. Such common grounds raised in the above referred concerned appeals have, therefore, no merit and are accordingly rejected.
6. Now we will consider appeals in the case of N.K. Rajendra Singhji against the order of the first appellate authority confirming the levy of penalty under Section 18(1)(a) for assessment years 1981-82,1982-83 and 1984-85.
6.1 The relevant details as to due dates for filing the returns date of filing of I.T. return and W.T. returns and penalty levied under Section 18(1)(a) are as under :-
______________________________________________________________ Asstt. year Date of filing Due Dt. Date of Penalty Under return of filing Section income return 18(1)(a) of wealth Rs.
______________________________________________________________ 1981-82 3-9-83 31-7-81 31-3-86 1,17,490 1982-83 30-3-85 31-7-82 31-3-87 1,42,800 1984-85 31-3-87 31-7-84 31-3-89 2,05,400 ______________________________________________________________
6.2. The Assessing Officer observed that the assessee did not submit any explanation in response to show-cause notice under Section 18(1)(a). The assessee is a habitual defaulter and is violating all the provisions not. Only in filing the W.T. returns, but also in Income-tax Act. He, therefore, levied penalty under Section 18(1)(a) for all the aforesaid years.
6.3 Shri C.K. Vohra, the learned CWT(A) by his common order dated 4-1 -1995 dismissed the appeals submitted by the assessee for all the three years under consideration. He has given elaborate reasons in support of the view taken by him in the aforesaid common order.
6.4 The learned Sr. departmental representative submitted that the assessee had raised three-fold arguments before the CIT(A). First it was stated that returns for assessment years 1981-82 and 1982-83 were filed under the Amnesty Scheme and, therefore, no penalty should have been levied. The second contention was that the Assessing Officer should have accepted the contention of the appellant that the delay in submission of the return was for reasonable cause. The third contention was that since in this case, the Income-tax returns were also filed late, at least, the delay up to the date of filing of the Income-tax returns should not have been taken into account for the computation of penalty. The learned Sr. departmental representative submitted elaborate arguments in relation to all the three aspects.
6.5 However, at the time of hearing, the learned counsel for the assessee -submitted that his contention about claim of returns for assessment years 1981-82 and 1982-83 should be treated to have been filed under the Amenstry Scheme as well as the ground of reasonable cause on account of illness of the assessee and the Accountant perhaps have no merit and therefore, he did not advance any arguments to support these two aspects. He however heavily relied upon the last reason namely that the delay in filling of the IT. returns for the respective years should be treated as a reasonable cause justifying the delay in W.T. returns.
6.6 We will therefore take into consideration the arguments advanced by the learned Sr. departmental representative and by the learned counsel for the assessee only in relation to the third category of the explanation submitted before the CIT(A).
6.7 The learned Sr. departmental representative Mr. Lohia submitted that the CIT(A) has given elaborate reasons as to why the decision of the Tribunal in assessee's own case for assessment years 1978-79 and 1979-80 based on the judgment of Hon'ble Madras High Court in the case of Addl. CWT v. Babulal K. Shah [1978] 114 ITR 370 should not be accepted, it was pointed out by the learned Sr. departmental representative Mr. Lohia that the Tribunal in the cases of H.H. Maharani Manharkunverba and H.H. Maharaja Daljitsinghji in its order dated 1-12-1989 in WTA Nos. 364 & 365/A/88 and WTA Nos. 455 and 456/A/88 has taken such a view by relying upon the head note of the judgment of BabulalK. Shah's case (supra) which was reproduced in para-4 of that order. He pointed out that the Head Note of the said judgment was not properly drawn. It was held by the Hon'ble Madras High Court in the aforesaid judgment that any reasonable delay in the preparation of the particulars of the assessee's income for the purposes of income-tax return cannot be brushed aside as irrelevant while considering whether any consequential delays in the filling of the same assessee's wealth-tax return was for reasonable cause or not. In the Head Note, the word 'reasonable' has been omitted by the Editor of the said report. He further relied upon the elaborate reasons given by the CIT(A) in para 5 to 7 of the order of the CIT(A) appearing at pg. 4 to 10 of the said order.
6.8 The learned Sr. departmental representative further placed reliance on judgment of Hon'ble Gujarat High Court in the case of Ganpatlal N. Dalwadi v. CIT [1993] 200 ITR 503. It was held by the Hon'ble Gujarat High Court in that case that the contention raised by the assessee was only to the effect that he had not got his share of profit from the partnership business income and that, therefore, he had not filed his return in time. He did not offer any other explanation. There was no evidence on record to show that the books of account of the firm were not ready or that the assessee's share income from the firm was not worked out in time. The Hon'ble High Court held that the assessee had not discharged the burden of proving the there was a reasonable cause for delay in filing of the return. Penalty was sustained.
6.9 Mr. Lohia then relied upon another judgment of Hon'ble Gujarat High Court in the case of CIT v. J.L. Trivedi & Sons [1994] 210 ITR 112. In this case it was held by the Hon'ble High Court that when a default, which is a continuing default, is committed and again a similar default is committed thereafter, it will not be proper to invoke the principle of double jeopardy because the subsequent default cannot be said to be the same default, it being an independent default committed subsequently. It was, therefore, held that the question whether the delay in filing the return of income for the subsequent year because of delay in the completion of accounts of the earlier year can amount to reasonable cause or not will have to be decided by reference to the facts of each case.
6.10 The learned Sr. departmental representative also brought to our notice that the Hon'ble Gujarat High Court in the case of H.H. Maharaja Daljitsinghji has called for a reference against the order of the Tribunal passed in the above referred WT Appeal Nos. 364 & 365/A/88 and WTA Nos. 455 & 456/A/88 vide judgment dated 5-5-1992.
6.11 The learned Sr. D.R. further submitted that the view taken by the Hon'ble Madras High Court in the case of Babulal K. Shah (supra) will have to be viewed in the light of aforesaid glaring mistake in the Head Note as well as it has to be understood in the light of facts of that case. He pointed out that an assessee who may submit his I.T. return in time, but the W.T. return is delayed, he would be liable to penalty for late filing of the return under W.T. Act. But in the case of an assessee who does not care to file within the time allowed both the IT return and WT return, will escape the levy of penalty on the simple ground that the I.T. return could not be prepared and the IT liability could not be determined. Thus, a person who commits default under both the Acts and for a longer period may be subjected to penalty, but a person who complied with the requirement of filing of the I.T. return, but unfortunately could not file the W.T. return will be liable for penalty for delayed submission of return under WT Act, if the ratio of judgment of Hon'ble Madras High Court is applied without careful consideration of the relevant facts. He, therefore, strongly urged that the penalty in the present case should be confirmed particularly in view of the fact that the returns have been filed late by the assessee in various previous years as well as in the years under consideration. He submitted that the assessee's own faults can never be treated as a reasonable cause or as a valid excuse to justify the delay in filing of the return. Reliance was placed by the Sr. departmental representative on the decision reported in Jiyalal Shyamlal (HUF) v. WTO [1988] 31 TTJ (Jab.) 538. He, therefore, strongly urged that the penalty should be confirmed.
6.12 The learned counsel for the assessee submitted that the Tribunal in assessee's own case for assessment years 1978-79 and 1979-80 has directed the WTO to exclude the period up to which the I.T. returns for the respective years were not filed. The delay in submission of I.T. return for the respective year has thus been accepted as a reasonable cause explaining the delay in submission of W.T. return of that particular year. Such a view is fully supported by the judgment of Hon'ble Madras High Court in the case of Babulal K. Shah (supra) which has been followed by the Tribunal in various cases of this very group. No contrary judgment of any High Court has been pointed out by the learned CIT(A) or by the learned Sr, departmental representative. In the absence of any contrary view of any other High Court, the Tribunal is bound to follow the judgment of the Hon'ble High Court other than the judgment of Hon'ble Jurisdictional High Court. The Tribunal is also bound to follow its own decision on identical facts in the cases of H.H. Maharaja Daljitsinghji, H.H. Maharani Manharkunverba and in the case of assessee himself for assessment years 1978-79 and 1979-80.
5.13 The learned counsel submitted that it is wrong on the part of the learned departmental authorities to say that the earlier decision of the Tribunal was based on alleged misleading Head Note appearing at pg. 3 70 of 114 ITR. He invited our attention towards a subsequent Hon'ble Madras High Court in the case of CWT v. V. Venugopal [1984] 149 ITR 394. In that case, it was held that the assessee could file the WT returns only after the f inalisation of his Income-tax returns and therefore, the delay for the period up to which the I.T. returns had not been filed was treated as a reasonable cause for the delay in furnishing of the WT return. The learned counsel further pointed out that in that case, the assessee had suffered levy of penalty for the late filing of IT return which proves that there was no reasonable cause for delay in furnishing of the IT return. Yet the Hon'ble Court approved the finding of the Tribunal that this cannot be a relevant factor for the purpose of application of Section 18(1)(a) of the WT Act.
6.14 The learned counsel also placed reliance on judgment of Hon'ble Supreme Court in the case of CIT v. Sun Engg. Works (P.) Ltd. [992] 198 ITR 297 and submitted that the CIT(A) ought to have gone through the judgment of Hon'ble Madras High Court as a whole. A mere omission of the word 'reasonable' in the Head Note would not lead to the conclusion that the ratio of the Madras High Court judgment was not properly understood by the Tribunal while applying the same in the earlier decisions in assessee's own case and in the cases of other family members on identical facts. He submitted that such an approach is neither desirable nor permissible and the authorities below could not pick out a word or sentence from the particular judgments divorced from the context of the question under consideration. He submitted that consistency is one of the time honoured principle of law recognised by Various Courts. The Tribunal therefore should not take a different view than the one taken in earlier decisions on identical facts particularly when the facts are identical and no other judgment of any other High Court has been pointed out by the learned Sr. departmental representative.
6.15 We have carefully considered the submissions made by the learned representatives. The learned counsel for the assessee candidly admitted before us that the assessee could not submit necessary material and evidence in support of his contention that delay in filing of the returns had, inter alia, occurred on account of prolonged illness of the Accountant and the assessee. It is, therefore, a case where the assessee could not submit any evidence to prove that there was a reasonable cause justifying the delay in submission of the W.T. returns except that I.T. returns could not be prepared and that should be regarded as a valid excuse or a reasonable cause justifying the delay in submission of W.T. return.
6.16 The learned counsel for the assessee also did not advance any arguments before us to support his contention that W.T. returns for assessment years 1981-82 and 1982-83 were covered under the Amnesty Scheme.
6.17 It is also true that the assessee has committed default by way of delayed submission of all its I.T. and W.T. returns and it can be categorised as a habitual defaulter.
6.18 However, the only point which requires our serious consideration is whether the ratio of the two judgments of Hon'ble Madras High Court; one reported in Babulal K. Shah's case (supra) and the other reported in V. Venugopal's case (supra) should be applied on the facts and circumstances of the present case, particularly in view of the fact that the various Benches of the Tribunal at Ahmedabad have consistently been following the said decisions in other cases involving similar facts. The learned Sr. departmental representative brought to our notice the two judgments of the Hon'ble Gujarat High Court, but those judgments do not directly relate to penalty levied under Section 18(1)(c) of W.T. Act. One judgment relied upon by the learned Sr. D.R. deals with delay in filing of I.T. return by a person who is a partner of a partnership firm wherein it was held that delay in filing of the return by the firm by itself cannot be a valid excuse for delay in submission of return by the partner. The Hon'ble High Court held that all the surrounding circumstances as to whether the books of account of the firm were completed or not, etc., will have to be taken into consideration. The other judgment of the Hon'ble High Court also deals with delay in submission of return for the subsequent year arising on account of delay in furnishing of the return for the earlier year. The Hon'ble High Court held that each case will have to be decided on the basis of facts and circumstances of that particular case whether the overlapping period of delay could be considered as a reasonable cause or not. On the other hand, the Hon'ble Madras High Court in the case of Babulal K. Shah (supra) and in the case of V. Venugopal (supra) considered this very question as to whether delay in filing of the I.T. return could be treated as a reasonable cause for delay in filing of the W.T. return. It will be worthwhile to reproduce the relevant extracts from the judgment of the Hon'ble Madras High Court in the case of V. Venugopal (supra) as appearing at pg. 396 and 397 of 149 ITR :
In this case, the Tribunal felt that the assessee could file the wealth-tax returns only after the finalisation of his income-tax returns and, therefore, the entire delay in the filing of the returns for the various years cannot be said to be without reasonable cause and that portion of the delay before the filing of the income-tax returns should not be taken into account for the levy of penalty under Section 18(1)(a). Though the Tribunal refers to the fact that the assessee has paid penalty for the delayed filing of income-tax returns, it cannot be a relevant factor for the purpose of the application of Section 18(1) of the Act. However, the Tribunal appears to take the view that the assessee could not file the wealth-tax returns before he finalised the income-tax returns and, therefore, the delay after the filing the income-tax return should alone be taken for the purpose of Section 18(1)(a).
It cannot be said that Section 18(1) creates an absolute liability to pay penalty for delayed filing of returns. The section, as already stated, penalises only the delays which are not for reasonable cause. Therefore, discretion is given to the authorities under Section 18(1) to find out whether the delay is due to a reasonable cause and, if the assessee establishes that the delay is for a reasonable cause, not to levy penalty. As a matter of fact, this Court in V.L. Dutt v. CIT [1976] 103 ITR 634 (which, in turn, referred to Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26(SC) has pointed out (p. 643) Penalty will not be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute.
In that case, the Court further pointed out that the levy of penalty under Section 271(1)(a) of I.T. Act, 1961, is not a mere concomitant of a delay in filing the return and, therefore, even if there is any delay in filing the return, the assessee is not liable to be penalised unless the Department established that he had acted in deliberate disregard of his statutory obligations that he had conduct is contumacious.
Having regard to the opinion expressed in the above case, we find that the Tribunal has properly exercised its discretion in treating a portion of the period of delay is being for a reasonable cause and excluding that portion for the computation of the penalty.
6.19. On a very careful consideration of the entire facts and circumstances and the various decisions relied upon by the learned representatives of both the parties, we find that both the views are equally forceful. However, for the sake of consistency and in view of the fact that no direct judgment on this very point has been brought to our notice by the learned Sr. D.R., we will prefer to follow the view taken by the Hon'ble Madras High Court relied upon by the learned counsel for the assessee. We, therefore, hold that the delay for the period up to which the I.T. returns have not been filed by the assessee for the respective years should be treated as a reasonable excuse or a reasonable cause justifying the delay in submission of the W.T. returns for the respective years. The Assessing Officer is, therefore, directed to cancel the penalty for the period up to which there was a delay in submission of the I.T. returns for the respective years. The penalty for the remaining period of delay in all the years under consideration is confirmed.
7. In the result, all the appeals are disposed off as indicated above.