1. This simple case raises an important question regarding the right of an assessee to file an appeal under Section 23 of the Wealth-tax Act, 1957 ('the Act') after making application for waiver of penalty under Section 18B of the Act thereof.
2. The return of wealth was due on 15-8-1973 but it was filed on 25-3-1977. Before the WTO it was contended that the assessee was entitled to exemption under Section 5(1)(xxxii) of the Act because the firm in which he was a partner had manufacturing business and taking that exemption into account the assessee's net wealth was not taxable and, therefore, the penalty was not leviable. The WTO rejected this contention and levied a penalty. The assessee also made an application to the Commissioner for waiver of penalty under Section 18B. The Commissioner reduced the penalty by Rs. 6,837. The assessee also filed an appeal where he put forward the same arguments as before the WTO.The AAC held that assessee had not proved that the firm in which the assessee was a partner was engaged in manufacturing goods and since the assessee had himself returned the wealth of Rs. 1,63,569, the arguments put forward before him were afterthoughts and not genuine. He confirmed the penalty order of the WTO and rejected the appeal.
3. Before us again substantially the same arguments as those before the WTO and the AAC were urged on behalf of the assessee. However, the revenue in reply has raised an interesting preliminary point that the assessee having made an application for waiver of penalty could not file an appeal before the AAC, relying upon the decision of the Gujarat High Court in the case of Smt. Kherunissa Allibhai v. CIT  113 ITR 443 and the decision of this Tribunal in the case of ITO v.Vithaldas Bechardar Dalai [IT Appeal No. 1774(Ahd.) of 1977-78] On the other hand, Shri J.P. Shah on behalf of the assessee has argued that the aforesaid decision of the Gujarat High Court is not applicable to the facts of this case and relied upon the decision of the Madhya Pardesh High Court in the case of CWT v. Smt. Gulab Bai Mittal  141 ITR 755.
4. In the case before the Gujarat High Court certain penalties under the Income-tax Act, 1961 ('the 1961 Act') were imposed upon the assessee and her appeals were dismissed by the AAC. The Commissioner rejected her application for waiver of penalty on the ground that the assessee had taken the recourse to appeal and so her application became 'redundant' and 'not feasible'. The Gujarat High Court held that Section 273A of the 1961 Act did not prevent the Commissioner from entertaining an application after an appeal had been preferred against the order of penalty and directed the Commissioner to hear the application on merits. The reasoning of the Hon'ble High Court is that wherever the Legislature wanted to exclude a revision in case an appeal had been preferred or could be preferred, it in terms said so. In this connection the High Court has cited Section 264(4) and Section 115 of the Act and the Code of Civil Procedure, 1908 and mentioned the Code of Criminal Procedure, 1898, also. Thereafter, the High Court has observed as follows : ...The whole concept under Section 273A is that the assessee concerned admits his liability to penalty but relies upon certain mitigating circumstances or certains circumstances specified in the section for the purpose of getting the penalty waived or reduced.
When the assessee approaches the Commissioner under Section 273A he does not dispute his liability to pay the penalty. All that he says is that he should be given the relief of reduction or waiver by the fact that the conditions specified in Section 273A are satisfied....
(pp. 445-46) It is on this passage that reliance has been placed on behalf of the revenue and argued that once the liability is admitted, the appeal cannot lie because in the appeal the assessee would deny his liability.
5. Shri J.P. Shah, on the other hand, argued that the Gujarat High Court was concerned with a case where an appeal preceded a waiver application which was exactly opposite to the facts here where the latter preceded the former and that the aforesaid observations of the Gujarat High Court were not relevant. He pointed out that since the Court had held that the provision for waiver had not been excluded by an appeal, the substance of the decision was that in order that a certain remedy may be excluded, there should be a provision to that effect in the statute. He urged that the decision of the Madhya Pradesh High Court was directly applicable to the facts of this case because it was concerned exactly with similar facts, namely, the appeal after waiver application and also the same provisions of the Act were involved in that case. He finally argued that on general principle also in order that a remedy may be taken away, it has to be done by a positive statutory provision which was also the sum and substance of both the Gujarat and Madhya Pradesh High Court decisions.
6. We are, therefore, faced with a situation where there is a certain degree of conflict between the judicial precedents and the consideration of a legal principle about the necessity of a provision for deprivation of a right. This appeal involves consideration of the age old important relief of clemency given to a delinquent. Beneath the surface of the words of the statute it is that relief which has to be considered. There is no doubt that the Madhya Pardesh High Court held in favour of the assessee. It has in terms stated as follows : ...The provisions of Section 18B of the WT Act, 1957, which confer power on the Commissioner to reduce or waive the amount of penalty imposed on an assessee under Section 18(1), do not affect the right conferred by Section 23 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 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) is not lost.... (p. 756) 7. However, the Gujarat High Court's observations quoted above are clear and unmistakable. It contains within it a statement of an important element in the request for clemency. In our opinion, they also cannot be regarded as irrelevant for the decision. The Hon'ble High Court of Gujarat was reasoning that the right to a certain relief has to be taken away in order that it may be denied and in doing so it has referred to Section 273A.In continuation of the above quoted passage of the Gujarat High Court, it observed as follows : ...However, when an assessee files an appeal against the order of penalty, he is challenging the very imposition of penalty and his effort in the appeal is to show that, in the circumstances of his particular case, penalty was not imposable at all. This distinction between what can be urged in an appeal and what can be urged in proceedings under Section 273A must be clearly borne in mind.... (p.
446) Therefore, in order to show that the appeal did not exclude a waiver application, it contrasted the two.
8. In fact the implication of the observations is that while an appeal does not exclude a waiver application, a waiver application excludes an appeal. Our decision in this case is in consonance with the above view of the Gujarat High Court. Further, Section 23(1)(d) gives right of appeal only to a person who is objecting to any penalty imposed...under Section 18 of the Act. In this case, the assessee does not object to the penalty. As held by the Gujarat High Court he admits his liability to penalty. Hence, in the first instance the appeal does not lie, i.e., he does not have a right of appeal. Consequently, the question of taking away that right does not arise. Therefore, neither of the arguments put forward by Shri J.P. Shah can be accepted.
We also cannot overlook the fact that this is a case of an assessee who has not only made an application under Section 273A but derived benefit by it. A person who asks for a waiver of penalty, asks for mercy, asks for pardon, asks for forgiveness. It is beyond him to say any more that he has not committed a default. Ultimately, the Tribunal's decision is based on this consideration and it is for that reason that his appeal must fail.
In view of this, it is not necessary to consider the appeal on merits.
The appeal is rejected.