Madhya Pradesh H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in cancelling the penalties of Rs. 3,000 and Rs. 16,500 as imposed by the WTO under s. 18(1)(a) of the Act for the asst. yrs. 1971-72 and 1972-73, without taking into account the fact that the assessee was given opportunity by the AAC to give his explanation on the question of delay and to substantiate the same ?

Counsel Appeared

B. K. Rawat, for the Revenue : None appeared, for the Assessee

C. P. SEN, J.:

In, pursuance of the direction of this Court under s. 27(3) of the WT Act, 1957, in Miscellaneous Civil Case No.522 of 1981, decided on 19th Nov., 1982, the Tribunal has stated the case and referred the following question of law for this Court’s opinion :

“Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in cancelling the penalties of Rs. 3,000 and Rs. 16,500 as imposed by the WTO under s. 18(1)(a) of the Act for the asst. yrs. 1971-72 and 1972-73, without taking into account the fact that the assessee was given opportunity by the AAC to give his explanation on the question of delay and to substantiate the same ?”

2. The assessee filed his returns of wealth for the two years in dispute on 16th Aug., 1974, while the returns were due on 30th June, 1971 and 31st July, 1972. Penalty proceedings for filing the returns late were started and the assessee’s counsel was heard, but no reasonable cause was shown. The WTO, therefore, imposed penalty of Rs. 3,000 for the asst. yr. 1971-72 and Rs. 16,500 for the asst. yr. 1972-73. The WTO also levied a penalty of Rs. 1,075 for the asst. yr. 1973-74, which is not the subject-matter of this reference. The assessee went up in appeals before the AAC, who disposed of the appeals for the years 1971-72 to 1973-74 by a common order. The explanation of the assessee that he was under a bona fide belief that only his capital in the firm was subject to wealth-tax and the value of the truck owned by him was not subject to wealth-tax, was not accepted. In further appeals to the Tribunal, all the three appeals were disposed of by common order. So far as the appeal for the asst. yr. 1973-74 was concerned, the penalty has already been waived by the WTO and regarding the penalties for the years 1971-72 and 1972-73, the Tribunal has observed that the order of the CWT is very cryptic and that although there is an entry on 14th Feb., 1978, for hearing of the case, there is no earlier order fixing the hearing on that date. The orders of the WTO, not being speaking orders and against the principles of natural justice, were quashed. On an application being made under s. 27(3) of the Act, the aforesaid question was directed to be referred to this Court. This question is directly covered by the decision of this Court in Sardar Pritam Singh vs. CIT (1985) 154 ITR 133 (MP) : TC 49R.1261. “Notice issued to show cause why penalty be not imposed- Prayer for adjournment of proceedings granted-Assessee not appearing on the date fixed Order imposing penalty passed—Tribunal justified in holding that assessee was granted reasonable opportunity of being heard before the imposition of penalty.”

3. In the present case, the AAC had heard the assessee and his explanation was found to be unacceptable. It was also observed that when the case was fixed for hearing before the WTO and a prayer for adjournment was made, it was refused. It was also mentioned that the assessee’s counsel was heard and no reasonable cause was shown. Therefore, the question is answered in the negative, in favour of the Revenue and against the assessee. Under the circumstances, there shall be no order as to costs, since the assessee has not appeared and opposed the reference.

[Citation : 177 ITR 429]