1. The Income-tax Appellate Tribunal referred the following question of law under s. 27(1) of the W.T. Act, 1957, for the opinion of this court :
'Whether the Appellate Assistant Commissioner or the Income-tax Appellate Tribunal has jurisdiction to entertain an appeal by virtue of s. 18(2B) of the Wealth-tax Act after the Commissioner of Wealth-tax passed an order under section 18(2A) declining to waive penalty ?'
2. For the wealth-tax assessment years 1964-65 to 1969-70 (both years inclusive), the assessee filed returns on December 30, 1970. The WTO completed the assessments on January 28, 1971, and initiated proceedings for the levy of penalty under s. 18(1)(a) of the W.t. Act (hereinafter referred to as 'the Act') for the assessee's failure to file wealth-tax returns within the time allowed under s. 14(1) of the Act. While the proceedings for levy of penalty were pending before the WTO, the assessee filed a petition dated February 22, 1971, before the CWT praying that the Commissioner may waive the penalties leviable by exercising powers under s. 18(2A) of the Act. It appears, the Commissioner declined to waive the penalties leviable for the above assessment years apparently on the ground that the requirements of s. 18(2A) of the Act were not satisfied. Pursuant to the orders of the Commissioner declining to waive the penalty under s. 18(2A) of the Act, the WTO passed orders under s. 18(1)(a) on March 31, 1973, imposing penalties for the above assessment years for the default committed by the assessee in the mater of filing the wealth-tax returns. Against the orders of the WTO levying penalties, the assessee filed appeals under s. 23 of the Act contending that the WTO passed the impugned orders without giving him an opportunity of being heard and, therefore, the orders were illegal. The assessee also took the alternative plea that he was prevented by reasonable cause from complying with the provisions of s. 14(1) of the Act rendering justification for the delay in the filing of the wealth-tax returns. By his order dated March 30, 1974, the AAC rejected the assessee's contention regarding the justification for the levy of penalty, but held that the penalties for the assessment years 1964-65 to 1968-69 should be levied with reference to the law as was in existence prior to April 1, 1969 when the law was amended, inasmuch as the defaults for these assessment years occurred prior to the amendment. The AAC also held that for the assessment year 1969-70, there was no justification for interference with the order of penalty passed by the WTO, as the penalty was quantified with reference to the law which came into force on April 1, 1969, and the default in the filing of the return occurred subsequent to April 1, 1969.
3. The Department as well as the assessee filed appeals before the Tribunal, the Department contending that the AAC was in error in reducing the penalties by applying the law in existence prior to April 1, 1969, and the assessee contending that for the assessment year 1969-70, the AAC was in error in upholding the levy of penalty. The Tribunal disposed of the appeals filed by the Department as well as the assessee by a common order. The Tribunal dismissed the appeals filed by the Department and allowed the assessee's appeal for the assessment year 1969-70 on the short ground that the orders of penalty were passed by the WTO without giving an opportunity to the assessee of being heard, as required by s. 18(2) of the Act. Before the Tribunal, the Department urged the contention that the appeals filed by the assessee before the AAC were not maintainable, inasmuch as the assessee filed a petition for waiver of penalty under s. 18(2A) of the Act. The Commissioner passed an order rejecting that petition and under s. 18(2B) of the Act, the order of the Commissioner is final. Obviously, the contention of the Department is that, once the Commissioner rejected the application filed by the assessee for waiver or reduction of the penalty under s. 18(2A) of the Act, the assessee forfeits his right to file an appeal against the order of the WTO under s. 18(1)(a) of the Act before the AAC. The Tribunal rejected this contention of the Department and held that the appeals filed by the assessee before the AAC were maintainable and the appeals validly lay before the Tribunal to refer the abovementioned question of law under s. 27(1) of the Act for the opinion of this court.
4. When proceedings are initiated for levy of penalty under s. 18 of the Act, two remedies are open to the assessee. He may, after the WTO levies the penalties, file an appeal to the AAC under s. 23 of the Act claiming that the penalty is not leviable. The assessee may also approach the Commissioner to waive or reduce the penalty if the requirements of s. 18(2A) of the Act are satisfied. These two remedies act in different directions. The power of the Commissioner to waive or reduce the penalty is subject to the fulfilment of the conditions specified in s. 18(2A) of the Act, whereas the power of the appellate authorities to confirm or reduce the penalty levied is unconnected with the requirements specified in s. 18(2A) of the Act. Section 23(1)(d) of the Act confers a right on the assessee to file an appeal before the AAC objecting to any penalty imposed by the WTO under s. 18 of the Act. This right of the assessee to file an appeal before the AAC is not taken away either expressly or by necessary implication by the provisions contained in s. 18(2B) of the Act. All that s. 18(2B) states is that an order passed by the Commissioner under sub-s. (2A) of s. 18 shall be final and shall not be called in question before any court of law or any other authority. In the present case, the assessee has not called in question before the AAC, the order passed by the Commissioner under sub-s. (2A) of s. 18 of the Act. The order called in question is the one passed by the WTO under s. 18(1)(a) of the Act. The provision giving a finality to the order of the Commissioner under s. 18(2A) does not have the effect of denying the right of appeal to the assessee against an order passed under s. 18(1)(a) of the Act. We are fortified in this view by the decision of the Madras High Court in CWT v. Vanavarayar : 122ITR184(Mad) and of the Karnataka High Court in CWT v. Kempanna : 126ITR825(KAR) . The Tribunal has, therefore, rightly come to the conclusion that the appeals filed by the assessee before the AAC are maintainable and the provisions of s. 18(2B) of the Act do not oust the assessee's right to file an appeal before the AAC under s. 23 of the Act. We, accordingly, answer the question referred to us in the affirmative, that is, in favour of the assessee and against the Department. No costs.