1. By this reference under Section 27(1) of the Wealth-tax Act, 1957 (hereinafter referred to as 'the Act'), the Income-tax Appellate Tribunal has referred the following question of law to this court for its opinion:
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the appeal before the AAC of wealth-tax was maintainable against the WTO's penalty order under Section 18(1)(a) even after the Commissioner of Wealth-tax had passed an order under Section 18B(4) reducing the penalty leviable ?'
2. The material facts giving rise to this reference briefly are as follows :
3. The assessee filed voluntary returns of wealth-tax for the assessment years 1964-65 to 1973-74. As there was delay in filing the returns, the WTO initiated penalty proceedings under Section 18(1)(a) of the Act and imposed penalty by his order dated December 7, 1976. Aggrieved by that order, the assessee preferred appeals before the AAC. The assessee also submitted an application under Section 18B(4) of the Act before the Commissioner and the Commissioner by his order dated March 18,1977, reduced the amount of penalty imposed by the WTO to double the gross wealth. tax charged for the assessment years 1964-65 to 1972-73. For the assessment year 1973-74, the Commissioner held that as the penalty levied was less than double the gross wealth-tax, no interference was called for. When the appeals preferred by the assessee before the AAC came up for consideration, the AAC held that the order of the Commissioner had become final and that order of the Commissioner could not be assailed in view of the provisions of Section 18B(5) of the Act. In this view of the matter, the AAC dismissed the appeals. Aggrieved by the order of the AAC upholding the levy of penalty in respect of assessment years 1972-73 and 1973-74, the assessee preferred appeals before the Tribunal. The Tribunal held that the AAC was wrong in dismissing the appeals preferred by the assessee without going into the merits of the case. The Tribunal, therefore, set aside the order of the AAC and remanding the appeals, directed the AAC to decide those appeals afresh in accordance with law. Aggrieved by the order of the Tribunal, the Department sought a reference and it is at the instance of the Department the Tribunal has referred the aforesaid question of law to this court for its opinion.
4. Having heard the learned counsel for the parties, we have come to the conclusion that the Tribunal was justified in holding that the AAC should have decided the appeals on merits. The provisions of Section 18B of the Act, which confer power on the Commissioner to reduce or waive the amount of penalty imposed on an assessee under Section 18(1) of the Act, do not affect the right conferred by Section 23 of the Act on the assessee to prefer an appeal against the order of the WTO imposing penalty. There is no provision in the Act which lays down that once the assessee has filed an application under Section 18B of the Act before the Commissioner, he waives his other rights. Consequently, the right of appeal available to an assessee against the order of the WTO imposing penalty under Section 18(1)(a) of the Act is not lost: Under Section 18B(5) what is made final is the order passed under Section 18B with regard to the quantum of penalty. It will not, in any manner, affect the jurisdiction of the AAC to decide the question as to whether the order of the WTO imposing penalty is or is not justified. This is the view taken by the Karnataka High Court in CWT v. B. Kempanna : 126ITR825(KAR) . We are in respectful agreement with that view.
5. The learned counsel for the Department contended that the order passed by the WTO merged in the order passed by the Commissioner under Section 18B of the Act and hence the jurisdiction of the AAC to decide the appeal preferred by the assessee is taken away. The contention cannot be upheld. The Commissioner, while exercising powers under Section 18B of the Act, does not exercise appellate or revisional powers. In exercising powers under Section 18B of the Act, the Commissioner has to act on criteria different from those on which the appellate or the revisional authorities have to act.
6. In these circumstances, the Tribunal, in our opinion, was right in holding that the AAC was not justified in dismissing the appeals summarily.
7. For all these reasons, our answer to the question referred to us is in the affirmative and against the Department.
8. In the circumstances of the case, parties shall bear their own costs of this reference.
9. Reference answered accordingly.