Rajasthan H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the penalty order passed under s. 18(1)(c) of the WT Act, 1957, holding that the IAC had no jurisdiction to levy the said penalty of—Rs. 3,70,733 on 2nd March, 1977 ?

High Court Of Rajasthan

CIT vs. S.K. Golcha

Section WT 18(1)(c)

Asst. Year 1969-70, 1970-71

J.S. Verma, C.J. & I.S. Israni, J.

D.B. IT Ref. Nos. 38 and 38A of 1980

7th September, 1987

Counsel Appeared

R. N. Surolia, for the Revenue : S. K. Keshote, for the Assessee

BY THE COURT :

This order shall dispose of both these references. These references under s. 256(1) of the IT Act, 1961, are at the instance of the Revenue in respect.

Assessment year 1969-70 :

“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the penalty order passed under s. 18(1)(c) of the WT Act, 1957, holding that the IAC had no jurisdiction to levy the said penalty of—Rs. 3,70,733 on 2nd March, 1977 ?

Assessments year 1970-71 :

“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the penalty order passed under s. 18(1)(c), holding that the IAC had no jurisdiction to levy the said penalty of Rs. 3,95,333 on 2nd March, 1977 ?”

The assessee, filed a wealth tax return for the asst. yr. 1969-70 on 23rd July, 1971, showing a net wealth of Rs.2,55,219. The assessment was completed on 5th Jan., 1973, on a net wealth of Rs. 4,19,514. This assessment was cancelled by the CWT and a fresh assessment was made on 5th March, 1975, on the net wealth of Rs. 5,19,370. The WTO initiated penalty proceedings under s. 18 ( 1 )(c) of the WT Act and referred the case for levy of penalty to the Inspecting Assistant CWT on 16th Dec., 1976. By an order dt. 2nd March, 1977, the IAC imposed penalty of Rs. 3,70,333. Similarly for the asst. yr. 1970-71, the wealth-tax return was filed by the assessee on 23rd July, 1971, declaring a net wealth of Rs. 3,08,614. Ultimately the assessment was made on 5th March, 1975, on a net wealth of Rs. 7,83,720, for this assessment year. The WTO initiated penalty proceedings under s. 18(1)(c) of the WT Act for this year and referred the matter to the IAC on 17th Jan., 1977. On 2nd March, 1977, the IAC imposed a penalty of Rs. 3,95,333.

The Tribunal has upheld the assessee’s contention that the Inspecting Asstt. CIT had no jurisdiction to impose penalty by the order passed on 2nd March, 1977, for both these years after the deletion of earlier sub-s. (3) of s. 18 of the WT Act, 1957, w.e.f. 1st April, 1976, by the Taxation Laws (Amendment) Act, 1975 and its substitution by new subs. (3). Hence these references at the instance of the Revenue. We have already held in a number of income-tax matters relating to imposition of penalty under s. 27)(1)(c) r/w s. 274 of the IT Act, 1961, that after the amendment made in s. 274 by the deletion of sub-s. (2) thereof by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1st April, 1976, the IAC had no jurisdiction to impose penalty in references made by the ITO subsequent to 1st April, 1976, and that it is only the references pending before the IAC prior to 1st April, 1976, in which the IAC had jurisdiction to make the order. This was on the ground that the determining factor is the date of making reference, so that only the references made to the IAC prior to 1st April, 1976, were saved for being decided by the IAC and not those references which were made by the ITO subsequent to 1st April, 1976. We have taken this view in the income-tax matters involving the same point followin the view taken in CIT vs. Shri Rant Prakash Saraf (1986) 160 ITR 860 (MP). The same view his to be taken in respect of the corresponding provisions in the WT Act also. It follows that the IAC in respect of both these assessment years had no jurisdiction to impose penalty after the above change in the WT Act in the references made by the WTO on 16th Dec., 1976, and 17th Jan., 1977, i. e., after 1st April, 1976.

Consequently, these references are answered against the Revenue and in favour of the assessee by holding that the Tribunal was justified in cancelling the penalty for both these years for the reasons given by us.

No costs.

[Citation : 173 ITR 664]

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