Punjab & Haryana H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the order of the WTO does not bear the separate identity and that it has not been passed under s. 18(1)(a) and he simply gave effect to the order of the CIT passed under s. 18(2A)?

High Court Of Punjab & Haryana

Amrik Singh L/H Of Surjan Singh vs. Commissioner Of Wealth Tax

Sections WT 18(1)(a), WT 18(2A)

D.S. Tewatia & S.S. Sodhi, JJ.

WT Ref. No. 1 of 1978

4th August, 1987

Counsel Appeared

R. K. Aggarwal, for the Assessee : Ashok Bhan, A. K. Mittal, for the Revenue

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 29th Feb., 1972. He failed to do so. That led to the issuance of a notice under s. 18(1)(a) of the WT 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 WTO, the assessee moved the CWT under s. 18(2A) of the Act for waiver or reduction of penalty leviable in his case by the WTO under s. 18(1)(a) of the Act. The CWT, on his application, fixed Rs. 5,000 as the amount of penalty. This order is made final under s. 18(2B) of the Act, as no appeal lay against the order passed by the CIT.

On receipt of this order, the WTO, in compliance with that order, passed the order imposing penalty under s. 18(1)(a) of the Act of the same amount, i.e., Rs. 5,000.

The assessee, treating this order of the WTO to be an independent order, challenged it unsuccessfully in an appeal before the AAC 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 WTO does not bear the separate identity and that it has not been passed under s. 18(1)(a) and he simply gave effect to the order of the CIT passed under 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 AAC was wrong in holding that no independent order was passed by the WTO under s. 18(1)(a) of the Act of 1957 and he simply gave effect to the orders passed by the CWT under s. 18(2A). He vehemently pressed before us that it is amply clear from the orders passed by the WTO that he had imposed penalties under s. 18(1)(a) of the Act of 1957. He concedes that, while levying the penalties under s. 18(1)(a), the WTO levied the same amount of penalties which had been determined by the CWT under s. 18(2A). It is argued by him that under s. 18(1)(a), penalties can be imposed by the WTO 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 WTO that default was committed by the assessee without any reasonable cause and that the orders passed by the WTO for all these years are bad, inasmuch as no opportunity as required by law of being heard was given to the assessee by the WTO. The contention of the Revenue is that if it is taken for granted that the orders purportedly passed under 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 under s. 18(1)(a) as such by the WTO, the Revenue argued that it is futile on the part of the assessee’s counsel to insist upon an opportunity to be given under s. 18 before imposing the penalty. So, the important question for consideration before us is whether the WTO really proceeded under s. 18(1) (a) for imposing the penalty or whether he simply gave effect to the order passed by the CWT under s. 18(2A). According to the Revenue, the WTO 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 CWT under s. 18(2A). It appears to us that the view taken by the AAC 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 under s. 18(1)(1) and the other under 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 CWT, was not separately demanded from the assessee by the WTO. Whether or not an independent order was passed by the WTO, this question can be tested by the fact whether the amount of penalties as reduced by the CWT was to be recovered separately from the assessee by the WTO. As the amount of penalty reduced by the CWT under 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 under s. 18(1)(a) and had the WTO imposed the penalties under s. 18(1)(a) independent of the order passed by the CWT under s. 18 (2A), then the order of the WTO would have been capable of being executed independent of the orders passed by the CWT under s. 18(2A). This does not appear to be the case here. The orders passed by the CWT and the order passed by the WTO are not to be executed on the assessee separately. It is, therefore, clear that the order of the WTO is not an independent order and it has simply been passed by him to give effect to the orders passed by the CWT under s. 18(2A). It is a misnomer to say that the WTO has independently proceeded under s. 18(1)(a) and he has imposed penalties under that provision. We agree with the Revenue that it is a case where the WTO has wrongly labelled his orders. Since the assessee approached the CWT under s. 18(2A) and since the amounts of penalty imposable on the assessee were reduced by him, the WTO was bound to give effect to those orders and effect to those orders has been given by the orders passed by the WTO which were wrongly purported to have been passed under s. 18(1)(a). The orders passed by the WTO simply tantamount to raising demands in conformity with the order passed by the CWT. The assessee cannot take advantage of a wrong label put on the order by the WTO. 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 WTO sought to raise the demands as per the orders passed by the CWT. It being so, we hold that no provision of law was flouted by the WTO 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 WTO did not record as 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 WTO under s. 18(1)(a), it was not necessary for the WTO to consider all these points.

For the above reasons, we hold that the AAC rightly concluded that the appeals had been filed, in fact, against the orders passed by the CWT under s. 18(2A) which are non-appealable. We, therefore, agree with the AAC and hold that the appeals, in fact, have been filed against the orders passed by the CWT under 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 CIT, Patiala, within one month.

[Citation : 170 ITR 656]

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