Punjab-Haryana High Court
Commissioner Of Income Tax vs P.N. Tuli on 24 January, 2005
Equivalent citations: (2005)198CTR(P&H)246, [2008]296ITR672(P&H)
Author: Viney Mittal
Bench: Viney Mittal
JUDGMENT G.S. Singhvi, J.
1. On the applications filed by CWT, Haryana, under Section 27(1) of the WT Act, 1957 (for short, 'the 1957 Act'), the Income-tax Appellate Tribunal, Delhi Bench 'B', New Delhi (for short, 'the Tribunal'), has referred the question of law in the following terms :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that wealth-tax (assessments for) asst. yrs. 1967-68, 1968-69, 1970-71 and 1971-72 were barred by time and in further holding that no penalties could be levied on the basis of such assessments ?"
2. In case the answer to the aforesaid question is in the negative, the following further question would arise :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that in case penalty is leviable on the assessee, the same should be calculated only at 2 per cent p.m. of the tax assessed and not at different rates for different periods of default ?"
3. While finalising the assessments under the 1957 Act for the asst. yrs. 1967-68, 1968-69, 1970-71 and 1971-72, the WTO levied penalties on the assessee under Section 18(1)(a) of the 1957 Act on account of delayed filing of returns. The particulars of the returns filed by the assessee and the penalties levied by the WTO are as under:
"Asst. yr. Due date Date of Assessment Wealth-tax Penalty
of return filing return made on assessed levied
1967-68 31-7-1967 5-10-1977 31-3-1984 363 30,780
1968-69 31-7-1968 5-10-1977 31-3-1984 380 1,06,000
1970-71 31-7-1970 20-12-1983 31-3-1984 1,543 98,156
1971-72 31-7-1971 20-12-1983 31-3-1984 1,540 33,010"
The AAC upheld the penalties. However, in the further appeal, the Tribunal quashed the penalties by holding that the assessments had become time-barred. This is evident from paras 10 to 12 of order dt. 9th Aug., 1989 passed by the Tribunal. The same read as under:
"10. We, however, find that in this case no penalty whatsoever could be legally levied because, the assessments have not been validly made. From 1st Jan., 1976 Section 17A was introduced in the WT Act, 1957 providing for time-limits for completion of the assessments. Prior thereto, there was no limit for the completion of an assessment and under Section 15 an assessee could furnish a return or a revised return at any time before the assessment is made. Thus, prior to the introduction of Section 17A, a return could be filed at any time and so an assessment could also be made at any time. All these returns were, however, filed after the introduction of Section 17A. Under Section 17A(1)(a), no order of assessment could be made at any time after the expiration of a period of four years commencing on and from the first day of April, 1975, or one year from the date of the filing of the return or a revised return under Section 15, whichever is later. Thus, for asst. yrs. 1967-68 and 1968-69 an assessment could be made on 31st March, 1984. The assessments were, therefore, time-barred and no penalty could be levied on the basis of an assessment which was barred by time.
11. For asst. yrs. 1970-71 and 1971-72, the assessments again become barred by time on 31st March, 1979. By that time no returns had been filed. The assessments for these years could not even be reopened under Section 17(1) as the period of 8 years prescribed thereunder had also expired. The returns were filed by the assessee after the assessments had become barred by time and such returns, therefore, were non est in law. This was so held by Hon'ble the Bombay High Court in CIT v. Bhagwan Dass Amar Singh . That was a case of a return under the IT Act, 1922, and the question was whether the assessee having filed a return voluntarily after the expiry of the period of limitation, could action under Section 34 of the IT Act, 1922, be validly taken ignoring the voluntary return. It was held that a return filed after the expiry of the period of limitation was non est in law. The same view was taken by Hon'ble the Supreme Court in CIT v. S. Raman Chettiar , in which it was held that a return under Section 22(3) of the IT Act, 1922, must be filed before the expiry of time mentioned in Section 34(3). Section 22(3) permitted an assessee to furnish a return at any time before the assessment is made (similar is the provision under the WT Act). By virtue of Section 34(3) of the IT Act, 1922, as it stood in 1949, assessment could have been made at least upto 31st March, 1949. The Hon'ble Supreme Court observed that therefore, it may be implied that the return must be filed before the time mentioned in Section 34(3) expired. A return filed thereafter was held to be invalid and could be ignored for taking action under Section 34.
12. In the case before us the assessee filed returns of his wealth for asst. yrs. 1970-71 and 1971-72 on 20th Dec., 1983, i.e., much after the period of limitation for making the assessment had expired in the year 1979 and, therefore, no assessments could have been made on the basis of such returns and the assessments made by the WTO on 31st March, 1984 is invalid. No penalty could, therefore, be levied on the basis of such invalid assessments. For the reasons discussed above, we hold that the penalties in question have not been validly levied and cannot be sustained.".
4. We have heard Shri Rajesh Bindal, learned Counsel for the Revenue, and perused the record.
5. On 20th Jan., 2005, Shri Bindal had sought time to ascertain whether the assessments made after remand by the AAC had been quashed on the ground that the same were time-barred.
Today, Shri Bindal stated that he is not in a position to make a firm statement whether or not the assessments made in the case of the assessee for the years 1967-68, 1968-69, 1970-71 and 1971-72 had been quashed as time-barred.
6. In view of the above, we do not find any justification to ignore, the findings and conclusions recorded in the Tribunal's order that the assessments for the aforementioned years had become time-barred. As a corollary to this, we hold that the view taken by the Tribunal on the legality of the penalties imposed by the AO cannot be faulted. Consequently, the first question referred by the Tribunal is answered in favour of the assessee.
7. In view of the above, we do not consider it necessary to answer question No. 2.
8. The references are disposed of in the manner indicated above. However, liberty is given to the Revenue to apply for revival of this reference, if it is discovered that further proceedings were taken by the Revenue in relation to the assessment orders and the same terminated in its favour.