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Addl. Commissioner of Wealth-tax Vs. Nathoolal Balaram - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMadhya Pradesh High Court
Decided On
Case NumberMisc. Civil Case No. 317 of 1976
Judge
Reported in[1980]125ITR596(MP)
ActsWealth Tax Act, 1957 - Sections 18(1) and 25(2); Income Tax Act, 1961 - Sections 263 and 271(1)
AppellantAddl. Commissioner of Wealth-tax
RespondentNathoolal Balaram
Appellant AdvocateS.C. Bagadia, Adv.
Respondent AdvocateG.M. Chaphekar, Adv.
Excerpt:
.....giving rise to this reference as set out in the statement of the case are these :the return of wealth of the assessee for the assessment year 1970-71 was due on or before september 30, 1970. the assessee, however, filed the return showing his net wealth at rs. cwt on a perusal of the order passed by the wto was of the view that the said order was erroneous and was prejudicial to the interests of the revenue inasmuch as the wto had failed to initiate penalty proceedings against the respondent. commissioner was bad in law. 3. it is not in dispute that the provisions of section 18(1)(a) of the act were attracted in the present case because the assessee had failed to furnish the return of wealth within the time allowed by the act and the wto omitted to take notice of this fact and..........revenue inasmuch as the wto had failed to initiate penalty proceedings against the respondent. the addl. commissioner, therefore, issued a notice to the assessee to show cause as to why an order be not passed directing the wto to initiate penalty proceedings against him. after considering the objections of the assessee, the addl. commissioner passed an order under section 25(2) of the act on september 25, 1973, holding that the order of the wto was erroneous in so far as it was prejudicial to the interests of the revenue. he, accordingly, set aside the order of the wto and directed him to make a fresh assessment in accordance with law keeping in view the applicability of the provisions of section 18(1)(a) of the act. the assessee preferred an appeal against the order of the addl......
Judgment:

Vijayvargiya, J.

1. By this reference under Section 27(1) of the W.T. Act, 1957 (hereinafter referred to as 'the Act'), the Income-tax Appellate Tribunal, Indore Bench, Indore, has referred the following question of law for the opinion of this court :

' Whether the Tribunal was justified in holding on the facts and the circumstances of the case that the order of the Additional Commissioner of Wealth-tax under Section 25(2) of the Wealth-tax Act, 1957, directing the WTO to make a fresh assessment keeping in view the applicability of the provisions of Section 18(1)(a) of the Wealth-tax Act was bad in law '

2. The facts giving rise to this reference as set out in the statement of the case are these : The return of wealth of the assessee for the assessment year 1970-71 was due on or before September 30, 1970. The assessee, however, filed the return showing his net wealth at Rs. 1,14,600 on July 7, 1971. The WTO while finalising the assessment on December 10, 1971, did not pass any order for initiating proceedings for imposition of penalty on the assessee under Section 18(1)(a) of the Act. The Addl. CWT on a perusal of the order passed by the WTO was of the view that the said order was erroneous and was prejudicial to the interests of the revenue inasmuch as the WTO had failed to initiate penalty proceedings against the respondent. The Addl. Commissioner, therefore, issued a notice to the assessee to show cause as to why an order be not passed directing the WTO to initiate penalty proceedings against him. After considering the objections of the assessee, the Addl. Commissioner passed an order under Section 25(2) of the Act on September 25, 1973, holding that the order of the WTO was erroneous in so far as it was prejudicial to the interests of the revenue. He, accordingly, set aside the order of the WTO and directed him to make a fresh assessment in accordance with law keeping in view the applicability of the provisions of Section 18(1)(a) of the Act. The assessee preferred an appeal against the order of the Addl. Commissioner before the Income-tax Appellate Tribunal (hereinafter referred to as ' the Tribunal '). The Tribunal accepted the appeal and held that the order passed by the Addl. Commissioner was bad in law. At the instance of the Addl. Commissioner, the Tribunal has referred the aforesaid question of law for the opinion of this court.

3. It is not in dispute that the provisions of Section 18(1)(a) of the Act were attracted in the present case because the assessee had failed to furnish the return of wealth within the time allowed by the Act and the WTO omitted to take notice of this fact and initiate appropriate proceedings against the assessee. The learned counsel for the assesee contended that merely because the WTO omitted to consider the facts attracting the provisions of Section 18(1)(a) of the Act during the pendency of the assessment proceedings, it would not make the order of assessment passed by him erroneous and, therefore, the Commissioner has no power under Section 25(2) of the Act to revise the said order.

4. The contention of the learned counsel for the assessee cannot be upheld. While construing similar provisions of Section 263 of the Income-tax Act a Division Bench of this court in Addl. CIT v. Indian Pharmaceuticals : [1980]123ITR874(MP) held that if the ITO during the pendency of the proceedings has omitted to take notice of a fact attracting Section 271(1)(a) of the Act which ultimately ended in an order of assessment, the order would be erroneous and in this view of the matter the Commissioner was right in exercising the jurisdiction conferred on him under Section 263 of the Act. Thisdecision was followed by us in Addl. CIT v. Kantilal Jain (M.C.C. No. 280/ 1976--decided on October 5, 1979) : [1980]125ITR373(MP) . The language of Sections 25(2) of the Act and 263 of the I.T. Act is identical. Following the aforesaid decisions of this court we are of the opinion that the view taken by the Tribunal is not correct and the question referred to us has to be answered in favour of the department.

5. As a result of the discussion aforesaid, our answer to the question referred to us is in the negative and against the assessee. In the circumstances of the case, the parties shall bear their own costs of this reference.


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