1. The Income-tax Appellate Tribunal, Indore, has at the instance of the Department made this reference to this court under Section 27(1) of the W.T. Act, 1957, to answer the following question as framed :
' Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that penalty proceedings under Section 18(1)(a) of the Wealth-tax Act could not be initiated against the legal heirs ?'
2. The facts giving rise to this reference as stated by the Tribunal are thus : Late Shri E. C. Cowasji had to submit his wealth-tax return for the assessment year 1967-68 on or before September 30, 1967, which he did not file during that period. Shri E. C. Cowasji died on December 23, 1967. His widow, Smt. Banoo E. Cowasji, the legal representative of the deceased, however, filed the wealth-tax return for that year on January 18, 1973. The WTO, Tndore, initiated penalty proceedings under Section 18(1)(a) of the said Act for the delay in filing of the return of wealth. After hearing the legal representative of the deceased, i.e., the present respondent, the WTO imposed on the heir a penalty of Rs. 1,85,855.
3. The assessee preferred an appeal before the AAC of Wealth-tax, who cancelled the order of the WTO, after taking into account the ratio of the decision of the Andhra Pradesh High Court in Yawamnnisa Begum v. WTO : 100ITR645(AP) .
4. The Revenue took up the matter in appeal before the Tribunal which after hearing both the sides maintained the order of the AAC by also placing reliance on another decision of the Allahabad High Court in Rameshwar Prasad v. CWT : 124ITR77(All) , which also supported the case of the petitioner. The Tribunal observed that since Section 19(3) of the W.T. Act specifically excludes Section 18 of the Act, the logical inference is that the penalty proceedings under Section 18 cannot be initiated against the legal representative, because the legal representative has not been made liable to be subjected to penalty.
5. On these facts the question referred to above has come up for decision before this court.
6. The learned counsel for the Revenue, Shri R. C. Mukati, submitted that under Section 2(c) of the said Act, which defines an assessee, an assessee includes the legal representative also. He, therefore, submitted that the said legal representative, after the death of her husband, for the said accounting year should have immediately filed the wealth-tax return on or before September 30, 1968. He also submitted that the decisions relied upon by the Tribunal, i.e., Yawarunnisa Begum's case : 100ITR645(AP) and Rameswar Prasad's case : 124ITR77(All) are distinguishable on facts as in those cases for failure of the assessee himself in not filing the wealth-tax returns within the stipulated time, the WTO had initiated penalty proceedings under Section 18(1)(a) of the W.T. Act by issuing show-cause notice and that it is only thereafter the assessee died. He, therefore, urged that these cases do not help the respondent because as she became an assessee after the death of her husband, she was bound to file the wealth-tax returns at least on or before September 30, 1968.
7. On the other hand the learned counsel for the respondent relying on the two decisions referred to above, also placed reliance on the Supreme Court decision in CWT v. Suresh Seth : 129ITR328(SC) , wherein after considering the relevant provisions of the said Act, it has held that Section 18 of the said Act does not require the assessee to file a return during every month after the last day to file it is over. Non-performance of any of the act mentioned in Section 18(1)(a) of the Act gives rise to a single default and to a single penalty, the measure of which, however, is geared up to the time lag between the last date on which the return has to be filed and the date on which it is filed. The default, if any, committed is committed on the last date allowed to file the return. The default cannot be one committed every month thereafter. The words 'for every month during which the default continued' indicate only the multiplier to be adopted in determining the quantum of penalty and do not have an effect of making the default in question a continuing one. He, therefore, submitted that in the present case no default was committed by the respondent herself as it was her husband, the assessee, who had to submit the return on or before September 30, 1967. Therefore, the argument of the learned counsel for the Revenue that though the respondent could not be held liable for payment of penalty till December 23, 1967, the day on which her husband died, she should be held liable for not submitting the wealth-tax returns on or before September 30, 1968, cannot be accepted.
8. After hearing the learned counsel and after going through the case law cited, we are not persuaded to agree with the submission made by the learned counsel for the Revenue, Shri R. C. Mukati. The learned counsel for the Revenue was unable to point out any provision of law that as a legal representative of the deceased assessee, she was bound to submit the wealth-tax returns for the assessment year 1967-68, immediately after the death of her husband or on or before September 30, 1968, as in this case, we are only concerned with the penalty proceedings initiated against the respondent for not filing the wealth-tax returns for the assessment year 1967-68. Admittedly, Shri E. C. Cowasji was alive on September 30, 1967, up to which date he had to file the return. Therefore, till that date the legal representative did not come into the picture as no default can be said to have been committed by her, the liability to file the return having been that of her husband who died on December 23,1967. The Supreme Court in the decision referred to above having held that there could be only one default, the legal representative in the present case could not be in any way held liable for not submitting the wealth-tax return on or before September 30, 1967, and, consequently no penalty proceedings could be initiated against her in view of the provisions of Section 19(3) of the said Act which deals with the tax of a deceased person payable by his legal representative and according to Sub-clause (3) of Section 19, only provisions of Sections 14, 15 and 17 of the said Act were applied to an executor, administrator or other legal representative as they apply to any person referred to in those sections. Therefore, this section has clearly excluded Section 18 of the Act in so far as the liability of the legal representative for the levy of penalty is concerned.
9. It is, no doubt, true that Section 2(c) of the said Act, which defines an asses-see, also includes the legal representative. But on that basis, in the present case, the respondent, considering the facts and circumstances of the case, cannot be held liable for payment of any penalty under Section 18(1)(a) of the Act as this is not a case where the original assessee had died before the expiry of the date for submitting his wealth-tax return so that after the death of the assessee, the legal representative becomes the assessee, who should have filed the return before the expiry of that date on which the original assessee had to submit his wealth-tax return.
10. In the result, our answer to the question referred to us is that, on the facts and circumstances of the case, the Tribunal was right in law in holding that penalty proceedings under Section 18(1)(a) of the W.T. Act could not be initiated against the legal heirs. The reference is, therefore, answered in favour of the legal heir, namely, the respondent, and against the Department. Costs as incurred.