Skip to content


Manjuladevi Tody Vs. Commissioner of Wealth-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMadhya Pradesh High Court
Decided On
Case NumberM.C.C. No. 123 of 1979
Judge
Reported in[1982]138ITR760(MP)
ActsWealth Tax Act, 1957 - Sections 18(1), 18(3); Taxation Laws (Amendment) Act, 1975
AppellantManjuladevi Tody
RespondentCommissioner of Wealth-tax
Appellant AdvocateA.M. Mathur, Adv.
Respondent AdvocateR.C. Mukati, Adv.
Excerpt:
.....referred to as 'the act'), the income-tax appellate tribunal, indore bench, indore, has referred the following questions of law to this court for its opinion :(1) whether, on the facts and in the circumstances of the case, the iac had any jurisdiction to impose penalty under section 18(1)(c) of the wealth-tax act, 1957, on march 24, 1977, after the amendment of section 18(3) with effect from april 1, 1976, by the taxation laws (amendment) act, 1975 ? (2) whether, on the facts and in the circumstances of the case,once, the iac had imposed composite penalties for concealment detectedby the wto and enhanced by the aac in the value of shares and jewellery on estimate, the order was bad even relating to the part, which hadbeen originally detected by the wto, and, therefore, could..........12th of january, 1977. it is in the light of this additional fact that we have to answer the first question referred to this court.5. by the taxation laws (amendment) act, 1975, which came into force from 1st april, 1976, the provisions of section 18(3) of the act, which required the wto to refer the case to the iac in cases covered by that provision, has been recast as follows :'18. (3) notwithstanding anything contained in clause (iii) of subsection (1), if, in a case falling under clause (c) of that sub-section, the amount (as determined by the wealth-tax officer on assessment) in respect of which penalty is imposable under clause (c) aforesaid exceeds a sum of twenty-five thousand rupees, the wealth-tax officer shall not issue any direction under sub-section (1) for payment by way of.....
Judgment:

Sohani, 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 questions of law to this court for its opinion :

'(1) Whether, on the facts and in the circumstances of the case, the IAC had any jurisdiction to impose penalty Under Section 18(1)(c) of the Wealth-tax Act, 1957, on March 24, 1977, after the amendment of Section 18(3) with effect from April 1, 1976, by the Taxation Laws (Amendment) Act, 1975 ?

(2) Whether, on the facts and in the circumstances of the case,once, the IAC had imposed composite penalties for concealment detectedby the WTO and enhanced by the AAC in the value of shares and jewellery on estimate, the order was bad even relating to the part, which hadbeen originally detected by the WTO, and, therefore, could not be maintained qua that part ?'

2. The material facts giving rise to this reference briefly are as follows :

3. For the assessment year 1973-74, the assessee declared her net wealth at Rs. 77,483. The WTO completed the assessment on a net wealth of Rs. 1,22,483. Similarly, for the assessment year 1974-75, the assessee had declared her net wealth at Rs. 88,205 but the WTO determined her net wealth at Rs. 1,33,205. The WTO also initiated penalty proceedings under Section 18(1)(c) of the Act and referred the case to the IAC. When the penalty proceedings came up for consideration before the IAC, he found that the assessee had committed default for the two assessment years in question in terms of the Explanation to Section 18(1)(c) of the Act and accordingly penalties were imposed on her. Aggrieved by those orders, the assessee preferred appeals before the Tribunal. On behalf of the assessee, it was, inter alia, contended before the Tribunal that the IAC had no jurisdiction to impose penalties after 1st of April, 1976. It was urged that the orders of the IAC dated 24th of March, 1977, imposing penalties under Section 18(1)(c) of the Act were without jurisdiction. The Appellate Tribunal, however, rejected that contention and with some modifications, affirmed the orders imposing penalties passed by the IAC. Aggrieved by the order passed by the Tribunal, the assessee sought a reference and it is at the instance of the assessee that the aforesaid questions have been referred to this court for its opinion.

4. When the matter came up for consideration before this court, by an order dated 20th of March, 1981, this court directed the Appellate Tribunal to send a supplementary statement of the case and to state the date on which the matter regarding the imposition of penalty was referred by the WTO to the IAC in the instant case. In pursuance of this order, a supplementary statement of the case has been received and it has been stated therein that the references were made by the WTO on 12th of January, 1977. It is in the light of this additional fact that we have to answer the first question referred to this court.

5. By the Taxation Laws (Amendment) Act, 1975, which came into force from 1st April, 1976, the provisions of Section 18(3) of the Act, which required the WTO to refer the case to the IAC in cases covered by that provision, has been recast as follows :

'18. (3) Notwithstanding anything contained in Clause (iii) of subsection (1), if, in a case falling under Clause (c) of that sub-section, the amount (as determined by the Wealth-tax Officer on assessment) in respect of which penalty is imposable under Clause (c) aforesaid exceeds a sum of twenty-five thousand rupees, the Wealth-tax Officer shall not issue any direction under Sub-section (1) for payment by way of penalty without the previous approval of the Inspecting Assistant Commissioner.'

6. Thus, from 1st April, 1976, the IAC has no jurisdiction to impose penalty. While considering similar provisions in the I.T. Act, 1961, a Division Bench of this court in CIT v. A. N. Tiwari [1981] 124 ITR 680, held that what was important to see was whether the reference was validly made to the IAC and that if the reference was valid in accordance with the provisions as they stood at the time of making the reference, it would not be invalidated by a subsequent amendment in that provision. The jurisdiction of the IAC for the purpose of imposing penalty is derived on a reference made to him by the WTO and if the reference was not validly made, then it follows that the IAC would have no jurisdiction to impose the penalty. In the instant case, as stated in the supplementary statement of the case, the references were made by the WTO on 12th January, 1977, when the provisions of Section 18(3) of the Act requiring the WTO to refer the case to the IAC were substituted by the aforesaid provisions of Section 18(3) of the Act. In our opinion, therefore, on the facts and in the circumstances of the case, the IAC had no jurisdiction to impose penalty under Section 18(1)(c) of the Act after the amendment of Section 18(3), with effect from 1st April, 1976, by the Taxation Laws (Amendment) Act, 1975. Our answer to the first question referred to this court, therefore, is against the Department. In view of our answer to the first question, learned counsel for the parties conceded that it would not be necessary to answer the second question referred to this court. We, therefore, decline to answer that question.

7. Reference answered accordingly.

8. Parties shall bear their own costs of this reference.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //