Amrik Singh vs Commissioner of Wealth Tax

D.S. Tewatia, J.—The applicant-assessee (for short "the assessee"), inter alia, was required under law to furnish his return of wealth on or before February 29, 1972, He failed to do so. That led to the issuance of a notice u/s 18(1)(a) of the Wealth-tax Act, 1957 (hereinafter referred to as "the Act"), requiring him to show cause why penalty proceedings be not initiated against him.

When the penalty proceedings were so pending before the Wealth-tax Officer, the assessee moved the Commissioner of Wealth-tax u/s 18(2A) of the Act for waiver or reduction of penalty leviable in his case by the Wealth-tax Officer u/s 18(1)(a) of the Act. The Commissioner of Wealth-tax, on his application, fixed Rs. 5,000 as the amount of penalty. This order is made final u/s 18(2B) of the Act, as no appeal lay against the order passed by the Commissioner.

On receipt of this order, the Wealth-tax Officer, in compliance with that order, passed the order imposing penalty u/s 18(1)(a) of the Act of the same amount, i.e., Rs. 5,000.

The assessee, treating this order of the Wealth-tax Officer to be an independent order, challenged it unsuccessfully in an appeal before the Appellate Assistant Commissioner and thereafter before the Tribunal, but ultimately succeeded in getting the Tribunal to refer the following question to this court for decision :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the order of the Wealth-tax Officer does not bear the separate identity and that it has not been passed u/s 18(1)(a) and he simply gave effect to the order of the Commissioner passed u/s 18(2A)?"

Learned counsel for the assessee reiterated before us the very same points which were asserted on behalf of the assessee before the Tribunal. The Tribunal repelled the contention with the following observation :

"Shri Sood, counsel for the assessee, argued before us that the Appellate Assistant Commissioner was wrong in holding that no independent order was passed by the Wealth-tax Officer u/s 18(1)(a) of the Act of 1957 and he simply gave effect to the orders passed by the Commissioner of Wealth-tax u/s 18(2A). He vehemently pressed before us that it is amply clear from the orders passed by the Wealth-tax Officer that he had imposed penalties u/s 18(1)(a) of the Act of 1957. He concedes that, while levying the penalties u/s 18(1)(a), the Wealth-tax Officer levied the same amount of penalties which had been determined by the Commissioner of Wealth-tax u/s 18(2A). It is argued by him that u/s 18(1)(a), penalties can be imposed by the Wealth-tax Officer only when there is a default on the part of the assessee in not filing the returns (in time) without reasonable cause. It is argued that no finding has been recorded by the Wealth-tax Officer that default was committed by the assessee without any reasonable cause and that the orders passed by the Wealth-tax Officer for all these years are bad, inasmuch as no opportunity as required by law of being heard was given to the assessee by the Wealth-tax Officer. The contention of the Revenue is that if it is taken for granted that the orders purportedly passed u/s 18(1)(a) were really passed under that provision, then certainly the assessee deserved to get the opportunity of being heard, but if no order has been passed u/s 18(1)(a) as such by the Wealth-tax Officer, the Revenue argued that it is futile on the part of the assessee''s counsel to insist upon an opportunity to be given u/s 18 before imposing the penalty. So, the important question for consideration before us is whether the Wealth-tax Officer really proceeded u/s 18(1)(a) for imposing the penalty or whether he simply gave effect to the order passed by the Wealth-tax Commissioner u/s 18(2A). According to the Revenue, the Wealth-tax Officer simply gave a wrong label to his orders and, in fact, he simply raised demands by virtue of his orders, pursuant to the orders passed by the Commissioner of Wealth-tax u/s 18(2A). It appears to us that the view taken by the Appellate Assistant Commissioner in the matter is correct. At the time of hearing, we posed a question to the counsel for the assessee, if there were two demands against the assessee, one u/s 18(1)(a) and the other u/s 18(2A) and whether both of them were to be satisfied by the assessee. The counsel for the assessee clearly answered that there was only one demand against the assessee. The assessee''s counsel concedes that the amount of penalty, as reduced by the Commissioner of Wealth-tax, was not separately demanded from the assessee by the Wealth-tax Officer. Whether or not an independent order was passed by the Wealth-tax Officer, this question can be tested by the fact whether the amount of penalties as reduced by the Commissioner of Wealth-tax was to be recovered separately from the assessee by the Wealth-tax Officer. As the amount of penalty reduced by the Commissioner of Wealth-tax u/s 18(2A) has not been separately demanded from the assessee, we think that the contention of the Revenue is correct. Had there been an independent order u/s 18(1)(a) and had the Wealth-tax Officer imposed the penalties u/s 18(1)(a) independent of the order passed by the Commissioner of Wealth-tax u/s 18(2A), then the order of the Wealth-tax Officer would have been capable of being executed independent of the orders passed by the Commissioner of Wealth-tax u/s 18(2A). This does not appear to be the case here. The orders passed by the Commissioner of Wealth-tax and the order passed by the Wealth-tax Officer are not to be executed on the assessee separately. It is, therefore, clear that the order of the Wealth-tax Officer is not an independent order and it has simply been passed by him to give effect to the orders passed by the Commissioner of Wealth-tax u/s 18(2A). It is a misnomer to say that the Wealth-tax Officer has independently proceeded u/s 18(1)(a) and he has imposed penalties under that provision. We agree with the Revenue that it is a case where the Wealth-tax Officer has wrongly labelled his orders. Since the assessee approached the Commissioner of Wealth-tax u/s 18(2A) and since the amounts of penalty imposable on the assessee were reduced by him, the Wealth-tax Officer was bound to give effect to those orders and effect to those orders has been given by the orders passed by the Wealth-tax Officer which were wrongly purported to have been passed u/s 18(1)(a). The orders passed by the Wealth-tax Officer simply tantamount to raising demands in conformity with the order passed by the Commissioner of Wealth-tax. The assessee cannot take advantage of a wrong label put on the order by the Wealth-tax Officer. There is a well-settled law that the pith and substance should be seen and the court should not be guided by the mere form of the order. Reality of the matter in issue is that the Wealth-tax Officer sought to raise the demands as per the orders passed by the Commissioner of Wealth-tax. It being so, we hold that no provision of law was flouted by the Wealth-tax Officer and the orders passed by him cannot be said to be bad on the ground that no opportunity of being heard was given to the assessee. Also, the orders cannot be impugned on the ground that the Wealth-tax Officer did not record a clear finding that the default was committed by the assessee in not filing the return without reasonable cause. As no order has been passed by the Wealth-tax Officer u/s 18(1)(a), it was not necessary for the Wealth-tax Officer to consider all these points.

For the above reasons, we hold that the Appellate Assistant Commissioner rightly concluded that the appeals had been filed, in fact, against the orders passed by the Commissioner of Wealth-tax u/s 18(2A) which are non-appealable. We, therefore, agree with the Appellate Assistant Commissioner and hold that the appeals, in fact, have been filed against the orders passed by the Commissioner of Wealth-tax u/s 18(2A) which, under the law, are non-appealable."

In our opinion, the Tribunal has taken the correct view and we entirely endorse the same.

In view of the above, we answer the question referred to us in the affirmative, in favour of the Revenue and against the assessee. The assessee is to pay Rs. 1,500 by way of costs which shall be paid by a bank draft to the Commissioner of Income Tax, Patiala, within one month.