Calcutta High Court
Gajanand Harlalka And Sons vs Commissioner Of Wealth-Tax And Ors. on 2 February, 2001
Equivalent citations: [2001]249ITR9(CAL)
Author: Kalyan Jyoti Sengupta
Bench: Kalyan Jyoti Sengupta
JUDGMENT Kalyan Jyoti Sengupta, J.
1. This writ petition is directed against the order of the Commissioner of Income-tax, West Bengal-X, Calcutta, acting as the Commissioner under the Wealth-tax Act, 1957, passed on the application for waiver of penalty by the writ petitioner-assessee for the assessment years 1970-71, 1976-77 and 1977-78.
2. The Commissioner affirmed the order of the Assessing Officer imposing the penalty for the aforesaid relevant assessment years. From a perusal of the records I find the Assessing Officer has imposed penalty amounting to Rs. 44,800 for the assessment year 1970-71, Rs. 4,961 for the assessment year 1976-77 and Rs. 5,230 for the assessment year 1977-78.
3. The case, in short, is that admittedly the petitioner filed returns beyond the stipulated time under the statute. So while passing the assessment orders the concerned officer imposed the aforesaid amounts of penalty. Against the aforesaid order an application under Section 18B(1)(b) of the Wealth-tax Act was made.
4. The ground taken in the application by the assessee/petitioner was that before issuance of notice under Section 14(2) of the aforesaid Act be voluntarily and in good faith made full and true disclosure of his net wealth. From the records, it would appear, according to the writ petitioner-assessee, that he satisfied all the conditions in Section 18B(1)(b) of the aforesaid Act. As such the Commissioner should have exercised discretion as provided in the statute itself.
5. Mr. Khaitan, the learned advocate appearing in support of this application, contends that the Commissioner concerned has misdirected himself while deciding the issue. He contends the reasons given in the impugned order are not sustainable under the law. The reason given for the assessment year 1970-71 is absolutely erroneous as factually no notice under Section 17 was received. Moreover, issuance of notice under Section 17 is not germane to this matter. Moreover, he has equated the payment of penalty with the payment of taxes and interest and it is not permissible under Section 18B which requires payment of tax and interest or satisfactory arrangement for its payment. Factually, the petitioner paid on self assessment tax of Rs. 650 and further Rs. 38 was also paid after the assessment was done. He contends that interest and penalty cannot be equated with the tax as it has been held by a series of decisions rendered by this court as well as the Supreme Court. In this connection, he relies on the decisions reported in Debabrata Basu v. State of West Bengal [1980] 84 CWN 90 and Hindustan Motors Ltd. v. CIT .
6. He further contends that the Act itself makes a distinction between tax, penalty and interest and other reasons of non-disclosure of value of jewel lery and ornaments in the return of wealth is wholly factually incorrect and the same will appear from the return filed by the writ petitioner annexed to the writ petition.
7. The other reasons as to non-disclosure of appreciated value of the immovable property in the earlier years as determined by the Appellate Assistant Commissioner are not factually correct as it has been done in the returns. He contends that the law enjoins that the disclosure is to be made by the petitioner according to his own estimate and this valuation and not that which might be arrived at by the Assessing Officer, is to be reckoned for disclosure. In this connection, he relies on a decision of the Delhi High Court in Sohan Singli Basu v. Union of India .
8. Therefore, reasons recorded in the aforesaid impugned order for the assessment year 1970-71 are patently absurd and this cannot be accepted.
9. As far as the other two assessment years are concerned, Mr. Khailan submits that the reasons given by the Commissioner that the petitioner neither paid the regular demands nor the penalty amounts in any of the assessment years and tax and penalty demands were still outstanding, are not a decisive factor in this case. The question of payment of tax only arises, after the same is assessed by the authority(ies) right up to the appellate one, properly and the same cannot be reasons for rejecting the petitioner's application.
10. Mr. Ramachandra Prasad and Mr. Som, learned advocates, jointly made the submission in support of the impugned order saying the Commissioner in his absolute discretion has decided this case with reasons. This court will not substitute its own reason unless of course the reasonings are found to be patently absurd so much so as no reasonable prudent man could come to the conclusion on the given materials. Mr. Som contends that the assessee filed returns after a longtime and did not make full disclosure nor co-operated in the enquiry. Even, the assessee did not pay any tax nor made any arrangement for payment of outstanding tax. He contends that Section 18B provides ground for exercise of discretion. So the assessee-writ petitioner did not satisfy the Commissioner as required under the aforesaid section. Mr. Som relies on a decision on the question of exercise of power under this section reported in N. Ramachandran v. CWT .
11. Having heard the learned advocates for the parties in a case like this the power of the writ court is very limited, as it has been settled law by various judgments one of which 1 find is the judgment cited by Mr. Som reported in N. Ramachandran v. CWT . I have gone through the order of the Assessing Officer. I find the grounds of imposing of penalty has been mentioned in all the three assessment years for not furnishing returns within the stipulated time as provided in the statute. So the writ petitioner-assessee applied for waiver of the penalty stating that before issuance of notice under Section 14 of the aforesaid Act, the returns were submitted and made full disclosure voluntarily. The writ petitioner co-operated with the enquiry and paid taxes. Therefore, it was the issue which fell for determination by the Commissioner on the application for waiver as to whether the petitioner had fulfilled the conditions laid down in the section mentioned in Section 18B. So it is necessary to reproduce Section 18B of the aforesaid Act.
"18B. (1) Notwithstanding anything contained in this Act, the Commissioner may, in his discretion, whether on his own motion or otherwise,--
(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 under 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.
Explanation--For the purposes of this sub-section, a person shall be deemed to have made full and true disclosure of the particulars of his assets or debts in any case where the excess of net wealth assessed over the net wealth returned is of such a nature as not to attract the provisions of Clause (c) of Sub-section (1) of Section 18.
(2) Notwithstanding anything contained in Sub-section (1), if in a case falling under Clause (c) of Sub-section (1) of Section 18, the net wealth in respect of which the penalty is imposed or imposable for the relevant assessment year, or, where such disclosure relates to more than one assessment year, the net wealth for any one of the relevant assessment years, exceeds five hundred thousand rupees, no order reducing or waiving the penalty under Sub-section (1) shall be made by the Commissioner, except with the previous approval of the Board.
(3) Where an order has been made under Sub-section (1) in favour of any person, whether such order relates to one or more assessment years, he shall not be entitled to any relief under this section in relation to any other assessment year at any time after the making of such order.
(4) Without prejudice to the powers conferred on him by any other provision of this Act, the Commissioner may, on an application made in this behalf by an assessee, and after recording his reasons for so doing, reduce or waive the amount of any penalty payable by the assessee under this Act or stay or compound any proceeding for the recovery of any such amount, if he is satisfied that--
(i) to do otherwise would cause genuine hardship to the assessee, having regard to the circumstances of the case, and
(ii) the assessee has co-operated in any inquiry relating to the assessment or any proceeding for the recovery of any amount due from him.
(5) Every order made under this section shall be final and shall not be called into question by any court or any other authority."
12. It will appear from the aforesaid section that the Commissioner is to decide the question of waiver of penalty. From the impugned order I find that the Commissioner did not apply his mind from the beginning as from the records it will appear that the application under Section 18B of the Wealth-tax Act was filed for waiver of penalty under Section 18(1)(a) of the said Act for late filing of the returns of wealth. The aforesaid section does not envisage waiver of interest. Even if it is assumed that this is an accidental slip or mistake on the part of the Commissioner still then it appears in other portion of this impugned order he has proceeded on the basis that it was an application for waiver of interest.
13. For the assessment year 1970-71, he has come to a wrong finding stating that the notice under Section 17 was issued and thereafter return was filed. It is not possible for me to accept this finding on the admitted documents vis-a-vis the position of the law. In a case like this the relevant point is to be considered whether notice under Section 14(2) was issued or not. It appears from the order of the Assessing Officer that before issuance of notice under Section 14(2) the return was filed. Therefore, the Commissioner has come to such findings which are not borne out by records that were before him as well as the Assessing Officer so also by the statement made in the affidavit-in-opposition.
14. Other consideration of non-payment of penalty is wholly immaterial. The only point to be considered is whether tax has been paid or payment of tax has been arranged properly or not. In this case it appears that the petitioner has paid tax for the assessment year 1970-71. Sadly enough the Commissioner has equated payment of penalty with the tax and interest. Payment of penalty or interest cannot take place of payment of tax as it has been held in the case of Debabrata Basu v. State of West Bengal by the decisions of this court reported in [1980] 84 CWN 90 ; Debabrata Basu v. State of West Bengal [1981] 85 CWN 133 and Hindustan Motors Ltd. v. CIT . So, the reasons given by the Commissioner are patently absurd for the aforesaid assessment year.
15. As far as the assessment years 1976-77 and 1977-78 are concerned the Commissioner has proceeded absolutely on the wrong footing. He did not make any endeavour to see as to whether the petitioner filed returns before issuance of notice under Section 14(2) of the aforesaid Act or not. He has proceeded on the basis that demand of payment of penalty remained outstanding. So this is a factor for which discretion could not be exercised. He has also come to the finding that the petitioner has not made true disclosures in respect of the value of the movable property. This reason is absolutely irrelevant to the issues involved in this matter. The first relevant point to be considered is whether the petitioner filed returns before or after issuance of notice under Section 14(2). Moreover, the Commissioner has proceeded on the same wrong footing in these two assessment years also as has been done in case of the assessment year 1970-71,
16. Upon a perusal of the aforesaid Section 18B it will appear that the learned Commissioner is bound to exercise his discretion when an asses-see has fulfilled the conditions as mentioned therein. From the materials I find that the writ petitioner has fulfilled the conditions. So the penalty imposed ought to have been waived and it is waived hereby. Therefore, the impugned order is not liable to be sustained and the same is hereby set aside. Consequently, demands in respect of penalty are set aside.
17. There will be no order as to costs.