Andhra Pradesh H.C : The penalty under s. 18(1)(a) should be computed after deducting the total wealth assessed under s. 16 from the total wealth assessed under s. 17

Counsel Appeared

Case Referred No. 161 of 1980 : M. S. N. Murthy, for the Revenue

JEEVAN REDDY, J.:

The question referred for our opinion under s. 27(1) of the WT Act, 1957, is :

“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the penalty under s. 18(1)(a) should be computed after deducting the total wealth assessed under s. 16 from the total wealth assessed under s. 17 of the Act ?“

The relevant facts are that for the asst. yr. 1967-68, the assessment was completed on 28th March, 1968. The assessment was made under s. 16(3) of the WT Act. No proceedings for levy of penalty under s. 18 were initiated on this occasion. Subsequently, a notice under s. 17 was issued and served upon the assessee on 3rd May, 1972. (Sec. 17 of the Act provides for bringing to tax the escaped wealth.) 35 days time was granted under this notice for filing a revised return. The assessee, however, did not file any such return within the said period or thereafter. Accordingly, the WTO made an assessment on 31st March, 1973, to the best of his judgment under s. 16(5) r/w s. 17 of the Act. Simultaneously, he initiated proceedings for penalty and levied penalty under s. 18(1)(a) upon the total wealth so assessed by him by his order, dt. 31st March, 1973. This was challenged by the assessee in appeal before the AAC, but without success. On further appeal, however, the Tribunal agreed with the assessee and held that penalty should be levied upon the total wealth assessed as per the order, dt. 31st March, 1973, as reduced by the wealth assessed as per the order dt. 28th March, 1968. The correctness of the said view is sought to be questioned before us in this referred case. We are not, however, satisfied that the view taken by the Tribunal is in any manner contrary to law. The previous assessment was made under s. 16(3) and no penalty proceedings were initiated on that occasion. Now, as a result of the proceedings under s. 17, the value of the net wealth has gone up, but while levying penalty, it is but just and proper that the wealth assessed earlier should be deducted. If this is not so done, the result would be that penalty would be levied not only upon the escaped wealth but also upon the wealth initially returned and assessed and in respect of which no penalty proceedings whatsoever were initiated. It is not brought to our notice that any provision of law under the Act or the Rules militates against this just proposition.

For the above reasons, the answer to the question referred to us is in the affirmative, i.e., in favour of the assessee and against the Revenue.

[Citation : 174 ITR 249]