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Commissioner of Wealth-tax Vs. Chandmal Surajmal - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMadhya Pradesh High Court
Decided On
Case NumberMiscellaneous Civil Case No. 15 of 1979
Judge
Reported in[1983]143ITR178(MP)
ActsWealth Tax Act, 1957 - Sections 18(1) and 18(3)
AppellantCommissioner of Wealth-tax
RespondentChandmal Surajmal
Appellant AdvocateS.C. Bagdiya, Adv.
Respondent AdvocateB.P. Jhanjari, Adv.
Excerpt:
- .....of rs. 22,000 upon the assessee. the assessee filed an appeal before the tribunal. before the tribunal a question was raised that in view of the amendment in section 18(3) of the act, which came into force with effect from april 1, 1976, the iac had no jurisdiction to impose the penalty after this date (i.e., april 1, 1976). the other contention was that there was no concealment as all the necessary facts were disclosed in the return. the tribunal upheld both the contentions of the assessee and cancelled the order of the iac imposing penalty. on an application by the department, the aforesaid questions have been referred to this court for answer.5. with regard to the first question, the contention was that in view of the amended section 18(3), the wto had the jurisdiction even.....
Judgment:

U.N. Bhachawat, J.

1. This is a reference under Section 27(1) of the W.T. Act, 1957 (hereinafter referred to as 'the Act'), by the Tribunal at the instance of the Department for answer to the following questions by this court:

'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the IAC had no jurisdiction when he imposed the penalty under Section 18(1)(c) in 1977 and that he ceased to exercise such jurisdiction with effect from 1st April, 1976 ?

(2) Whether, on the facts and in the circumstances of the case and on the basis of the material available on record, the Tribunal was right in holding that there was no concealment of wealth and that no penalty under Section 18(1)(c) was attracted in this case ?'

2. The short facts material for answering the aforesaid questions arethese:

3. The relevant assessment year is 1974-75.

4. The assessee returned his ' net wealth ' at Rs. 84,211. In his return the assessee showed a debit balance of Rs. 40,609 against which he had deposited an amount of Rs. 40,000 with the Bank of Baroda, which he claimed was exempted. The WTO, vide his order of assessment dated September 22, 1974, on interpretation of Section 2(m)(ii) of the Act disallowed the exemption and added a sum of Rs. 40,000 to Rs. 84,211, the net wealth that was returned by the assessee, and held that the net wealth on which the tax was to be imposed was Rs. 1,24,211. The, WTO was also of the view that the assessee was guilty of concealment of this amount of Rs. 40,000 and he accordingly initiated penalty proceedings under Section 18(1)(c) of the Act. As the amount of concealment was in respect of an amount of more than Rs. 25,000, he referred the matter to the IAC. The date of reference is September 22, 1974, the date on which actually the reference was made, albeit it is not specifically mentioned in the body of the statement of case, it is mentioned in the application for reference which is additional annex, I to the statement of the case and is not disputed before us by the learned counsel for the assessee also. The IAC, vide his order dated 28th March, 1977 (annex. D), to the statement of the case, imposed a penalty of Rs. 22,000 upon the assessee. The assessee filed an appeal before the Tribunal. Before the Tribunal a question was raised that in view of the amendment in Section 18(3) of the Act, which came into force with effect from April 1, 1976, the IAC had no jurisdiction to impose the penalty after this date (i.e., April 1, 1976). The other contention was that there was no concealment as all the necessary facts were disclosed in the return. The Tribunal upheld both the contentions of the assessee and cancelled the order of the IAC imposing penalty. On an application by the Department, the aforesaid questions have been referred to this court for answer.

5. With regard to the first question, the contention was that in view of the amended Section 18(3), the WTO had the jurisdiction even regarding the amount, in respect of which penalty is imposable under Clause (c) of Section 18(1) of the Act, exceeded a sum of twenty-five thousand rupees; the IAC had no jurisdiction on the date he imposed the penalty. The argument of the learned counsel for the assessee was that the jurisdiction of the IAC should be determined with reference to the law in force on the date of imposing the penalty.

6. It is not necessary for us to dilate much on this point inasmuch as it, is covered by the decision of this court in M.C.C. No. 314/76 (Addl. CIT v. Nandkishore) (reported in : [1983]143ITR182(MP) (Appx. I) infra). The other Division Bench decision of this court in CIT v. A. N. Tiwari : [1980]124ITR680(MP) has been relied upon in this decision. Though it was a matter with reference to income-tax, yet the question of law involved is identical as would be indicated from the observation of the decision in A.N. Tiwari's case, which is being extracted hereinbelow from the decision in Nandkishore's case (p. 183 infra):

'Now Section 274(2) as it stood before 1st April, 1971, required the ITO to refer the case to the IAC, if the minimum penalty imposable exceeded a sum of Rs. 1,000. The IAC, on a reference made by the ITO, got jurisdiction to impose penalty in such cases. The references validly made by the ITO before 1st April, 1971, were not invalidated by the amendment. In such pending references, in our opinion, the IAC continued to have jurisdiction to impose penalty even though the amount of income in respect of which the particulars were concealed did not exceed Rs. 25,000 and the case did not satisfy the requirement of Section 274(2) as amended.'

7. The provision of Section 18(3) of the Act before amendment with effect from April 1, 1976, and after the amendment is more or less analogous to Section 274(2) of the I.T. Act, 1961, prior to its amendment and even after its amendment with effect from April 1, 1971.

8. In the instant case also when the reference was made the IAC had the jurisdiction. The amendment was made in Section 18(3) during the pendency of the reference. This amendment would not invalidate the pending reference.

9. We may here state that Shri Jhanjhari, learned counsel for the assessee, submitted, relying on the decision of some other High Courts, that the decisions of this court : [1983]143ITR182(MP) (infra) and : [1980]124ITR680(MP) , require reconsideration, but, we are unable to persuade ourselves to agree with his submission and we do not find any cogent reason for a reconsideration of the matter and referring the matter to a larger Bench. We thus answer the first question in the negative, that is, in favour of the Department and against the assessee.

10. With regard to the second question, in the light of the finding of the Tribunal that factually there was no concealment so far as the assessee was concerned, he had disclosed all the facts, and raised a legal question involving the interpretation of Section 2(m)(ii) of the Act. We are of the opinion that this question did not arise at all for reference as a question of law.

11. The reference is answered as indicated hereinabove.


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