Srinivasa Iyengar, J.
1. These are two sets of references made under s. 27(1) of the W.T. Act, 1957 (hereinafter referred to as 'the Act'), at the instance of the Commissioner of Wealth-tax and the assessee. The questions referred are four in number and relate to the penalties imposed under s. 18(1)(a) of the Act for default in filing the returns within the time without reasonable cause. The matter relates to the assessment years 1966-67, 1967-68 and 1968-69. T.R. Cs. No. 142, 144 and 146 of 1978 are at the instance of the department and the other three are at the instance of the assessee. The questions referred are as follows :
'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in entertaining the ground of the department that the appeals to the Appellate Assistant Commissioner and consequently the appeals to the Tribunal were incompetent
(2) If the answer to question No. (1) is in the affirmatives, whether the Tribunal, on the facts and in the circumstances of the case, was justified in deciding that, once an order has been passed under section 18(2A) of the Wealth-tax Act by the Commissioner, the order of the Wealth-tax Officer was effaced and hence no appeal could be filed against it to the appellate authorities
(3) If the answers to question No. (1) or (2) are in the negative, whether the Tribunal was justified, on the facts and in the circumstances of the case, in holding that the assessee had adequate opportunity for showing cause against the levy of penalty before the Appellate Assistant Commissioner
(4) If the answers to question No. (1) or (2) are in the negative, whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the quantum of penalty should be calculated with reference to the law as on the date on which the return was due to be filed and the default of not filing the return occurred ?'
2. The material facts which are not in dispute are as follows :
3. The assessee filed returns of wealth in respect of these three assessment years on February 22, 1973. As the returns had been filed beyond the prescribed time, the WTO initiated proceedings under s. 18(1)(a) and issued notice to the assessee fixing the date of hearing as April 6, 1973. The assessee filed a petition before the Commissioner for waiver of the minimum penalty leviable under s. 18(1)(a) of the Act, and by an application dated April 6, 1973, he also intimated the WTO the fact of his having filed such an application before the Commissioner and requesting the WTO to stay the penalty proceedings till the disposal of the application by the Commissioner. The proceedings were begin conducted before the WTO, I, Special Survey Circle. It, however, transpires that subsequently consequent on the abolition of the Special Survey Circle, the files were transferred to the VIth WTO, Circle I. He made an order on March 11, 1975, imposing penalties, which, according to him, were the minimum penalties imposable under the Act. It transpires that the Commissioner passed orders on the application filed under s. 18(2A) on March 21, 1975. He reduced the minimum penalty leviable and fixed them as follows :
as against the minimum penalty leviable, according to the WTO, at Rs. 16,860, Rs. 16,500 and Rs. 16,330, respectively. Consequent on this, the WTO communicated to the assessee on April 11, 1975, about the penalties as determined by the Commissioner, further intimating him that necessary challan would be issued on his request and that if the amounts were not paid, coercive steps will be taken. The assessee preferred appeals to the AAC on April 11, 1975, contending, inter alia, that he had reasonable cause for not filing the returns within time and there was no justfication for imposing the penalties and that no opportunity had been given by the WTO before he made the order levying penalties.
4. The AAC, however, dismissed the appeals by his order dated March 19, 1976. Against this order, the assessee preferred appeal to the Appellate Tribunal.
5. When the matter was pending before the Tribunal, on behalf of the department a contention was sought to be raised that the appeals filed before the AAC were not maintainable in view of the order that had been made by the Commissioner under s. 18(2A) of the Act and that, consequently, the further appeals before the Tribunal were also not maintainable. The said contention sought to be raised by the department was objected to by the assessee, but his objection was overruled. The Tribunal came to the conclusion that in view of the order of the Commissioner under s. 18(2A), the orders of the WTO made under s. 18(1)(a) were effaced and, therefore, there could have been no appeals against a non-existing order and, consequently, the further appeals before it were unsustainable. The Tribunal however gives a finding that the penalties imposable under s. 18(1)(a) should be in accordance with the provisions of the said section as they stood before they were amended with effect from April 1, 1969, and in the circumstances of the case, the penalty should have been restricted to fifty percent of the tax payable. However, in view of the other conclusion, no relief was afforded to the assessee and the appeals were dismissed.
6. The main contention on behalf of the department in the references sought for by it is in regard t the conclusion about the quantum of penalty that could be levied and that is question No. 4 referred to this court. The other three questions have been referred at the instances of the assessee.
7. So far as the first question is concerned, we find no substance in the contention raised on behalf of the assessee that the Tribunal was not justified in entertaining the ground at the instance of the department. It was only a legal question which did not depend upon any facts to be established and it was within the discretion of the Tribunal to permit any party to raise any question of law not raised in the appeal or by way of ross-objection. W, therefore, answer question No. 1 in he affirmative, namely, the Tribunal was justified in entertaining the ground sought to be raised on behalf of the department, in regard to the maintainability of the appeals.
8. So far as question No. 2 is concerned, in our opinion, the conclusion reached by the Tribunal is based upon an incorrect appraisal of the scope of the provisions of s. 18(2A) of the Act. The relevant provision as in force was as follows :
'18. (2A) No withstanding anything contained in clause (i) or clause (iii) of sub-section (1), the Commissioner may, in his discretion, -
(i) reduce or waive the amount of minimum penalty imposable on a person under clause (i) of sub-section (1) for failure, without reasonable cause, to furnish the return of net wealth which such person was required to furnish under sub-section (1) of section 14, or
(ii) reduce or waive the amount of minimum penalty imposable on a person under clause (iii) of sub-section (1), if he is satisfied that such person -
(a) in the case referred to in clause (i) of this sub-section has, prior to the issue of notice to him under sub-section (2) of section 14, voluntarily and in good faith, made full disclosure of his net wealth; and in the case referred to in clause (ii) of this sub-section has, prior to the detection by the Wealth-tax Officer of the concealment of particular of assets or of the inaccuracy of particulars furnished in respect of the assets of debts in respect of which the penalty is imposable, voluntarily and in good faith, made full and true disclosure of such particulars;
(b) has co-operated in any enquiry relating to the assessment of the wealth represented by such assets; and
(c) has either paid or made satisfactory arrangements of payment of any tax or interest payable in consequence of an order passed under this Act in respect of the relevant assessment year :
Provided that if in a case falling under clause (c) of sub-section (1) the amount in respect of which penalty is imposable for the relevant assessment year, or where such disclosure relates to more than one assessment year, such amount for any one of the relevant assessment year, exceeds five hundred thousand rupees, no order reducing or waiving the penalty shall be made by the Commissioner unless the previous approval of the Board has been obtained.
(2B) An order under sub-section (2A) shall be final and shall not be called in question before any court of law or any other authority.'
9. It is seen that the power conferred on the Commissioner was only to reduce or waives the amount of minimum penalty imposable an a person under clause (i) or clause (iii) of sub-s. (1). Clause (i) of sub-s. (1) was in relation to penalty imposable for failure, without reasonable cause, to furnish the return of net wealth within the prescribed time. This power could be exercised by the Commissioner notwithstanding the default and there being no reasonable cause for the failure to furnish the return within the time prescribed. The question of the existence of reasonable cause was not within the ambit of the action expected from the Commissioner under s. 18(2A); that inhered in the WTO. The opening words also indicate that it was only notwithstanding anything contained in clause (i) or clause (iii) of sub-s. (1) and not notwithstanding any other provision in the Act that the Commissioner could act. This provision did not override or obliterate the jurisdiction conferred on the other authorities under the Act. The Tribunal observed thus, after referring to the opening words in s. 18(2A) of the Act :
'This shows that the jurisdiction conferred on the commissioner of Wealth-tax in the above section is overriding the jurisdiction of the Wealth-tax Officer and the other authorities mentioned in section 18(1) in the matter of levy of penalty under clauses (a) to (e) thereof. This has to be so in the very nature of things and the scheme of the Act......'
10. Observation to this effect has been made in para. 13 of its order and in other places also. In our opinion, this observation is unwarranted and not justified by the terms of s. 18(2A). Under s. 18(2A), what is made final is the order made under s. 18(2A), i.e., in regard to the quantum of minimum penalty that is directed to be waived or reduced and nothing more. There is no provision that once the assessee filed an application under s. 18(2A) before the Commissioner, he waives his other rights. The approach to the Commissioner can be without any such waiver. In contrast, it may be seen that under s. 25 if the assessee were to approach the Commissioner in revision, he could do so only if the order challenged is not the subject-matter of appeal before the AAC or the Tribunal and the assessee should have waived his right of appeal. There is no such restriction imposed while invoking the provisions of s. 18(2A). This is because the ambit and scope of s. 18(2A) is quiet different and in no way affects the jurisdiction of the WTO to decide about the questions arising under s. 18(1)(a) of the Act as to the existence or non-existence of reasonable cause. The only effect the order of the Commissioner would have is that the minimum penalty to be levied by the WTO would be in accordance with what is determined by the Commissioner if the minimum penalty is only reduced and not waived, and if it is waived, the WTO is also bound not to levy any penalty. apart from this, there is no other effect consequent on the order of the Commissioner under s. 18(2A) so far as the jurisdiction of the WTO is concerned in the matter of imposition of penalty. Consequently, the right of appeal (available) to the assessee against the order of the WTO imposing penalty under s. 18(1)(a) (even subject to the reductions as directed by the Commissioner) is not lost. The Tribunal was in error in holding that the appeals before the AAC were not maintainable. Accordingly, question No. 2 is answered in the negative, i.e., the order of the WTO was not effaced consequent on the order made by the Commissioner under s. 18(2A) of the Act in the instant cases and appeals could be filed to the appellate authorities.
11. So far as question No. 3 is concerned, it appears to be incongruous and unnecessary. The Tribunal held that the assessee had adequate opportunity for showing cause against levying penalty before the AAC. The question whether the assessee had opportunity before the AAC was in no way germane to the case. What was being canvassed by the assessee was that the WTO did not afford him any opportunity. The learned counsel for the assessee submitted that he was aggrieved by the fact that the WTO had not given him adequate opportunity. He pointed out that the Tribunal in its order says that it did not want to decide that question and merely observed that the assessee had opportunity before the AAC. In these circumstances, it appears that question No. 3 is wholly unnecessary, and we decline to answer the same.
12. So far as question No. 4 is concerned, the matter is covered by a decision of this court in CWT v. C. S. Manvi : 114ITR417(KAR) and we answer the said question in the affirmative.