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Smt. Kiran Kanwar and Smt. Kanchan Kanwar Vs. the Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtRajasthan High Court
Decided On
Case NumberS.B. Civil W.P. Nos. 1723 and 1724 of 1975
Judge
Reported in1985(1)WLN90
AppellantSmt. Kiran Kanwar and Smt. Kanchan Kanwar
RespondentThe Union of India (Uoi) and ors.
Cases ReferredJagdish Agrawal v. Commissioner of Wealth Tax
Excerpt:
.....given by the commissioner.;(f) wealth tax act, 1957 - section 18(2a)(b) & 23--order passed by commissioner is final--held, it does not take away powers under section 23.;as the provisions of section 18(2)(b) apply when the order has been passed by the commissioner and the above order passed by the commissioner in exercise of power conferred by section 18(2)(a) is not appealable, it is final. but it does not take away the power which the assessee is having under the provision of section 23 of the act.;order accordingly - section 2(k), 2(1), 7 & 40 & juvenile justice (care and protection of children) rules, 2007, rule 12 & 98 & juvenile justice act, 1986, section 2(h): [altamas kabir & cyriac joseph, jj] determination as to juvenile - appellant was found to have completed..........rights of an individual, an opportunity of being heard must be given to the individual.the cwt passed orders under section 18(2a) of the wt act, 1957, whereby he declined to waive or reduce the penalties imposed on the assessee for the relevant assessment years. the assessee challenged the orders of the cwt on the ground that no opportunity of being heard was, given to him before the cwt passed his orders, which violated the principles of natural justice. the cwt contended that before passing the orders under section 19(2a), the matter was considered by him carefully and the assessee was not heard personally as no such opportunity was required to be given to the assessee. on a writ petition filed by the assessee for quashing the order of the cwi'. held, that the remedy which the.....
Judgment:

Dinkar Lal Mehta, J.

1. This Court passed an order on 21st September, 1977 that S.B. Civil Writ Petition Mo. 1724 of 1975 should also be heard along with this writ petition. The file of S.B. Civil Writ Petition No. 1724 of 1975, Smt. Kanchan Kanwar v. Union of India was tagged with this file However, only S.B. Civil writ Petition No. 172 of 1975, Smt. Kiran Kanwar v. Union of India and Ors. was listed for heading today in the Court. Therefore, supplementary cause list was prepared and S.B. Civil Writ Petition No. 1724 of 1975, Kanchan Kanvar v. Union of India was also listed today.

2. None appeared on behalf of respondents in both the cases. The peon of this Court was deputed to call the counsel for the respondents, but none appeared even upto 10.30 AM. So, both the writ petitions were heard ex-parte in the absence of the counsel for the respondents.

3. The facts of S.B. Civil Writ Petition No. 1723 of 1975, Kiran Kanwar v. Union of India and Ors. are that the petitioner owned property taxable under the Wealth Tax Act, 1957 (hereinafter to be referred to as the Act), but on account of certain disputes as to the property in the family and certain other personal matters, which were hanging heavy on the petitioner, the petitioner could not file returns for the wealth required under Section 14(1) of the Act, for the assessment years 1962-63 to 1970-71 within the time allowed under the provisions of the Act. No notice under Section 14(2) of the Act was issued to the petitioner. The petitioner voluntarily and suo motu filed returns for the wealth with the Wealth-tax Officer at Ajmer in the month of February 1970. The Wealth-tax Officer assessed the wealth a little to high and hence appeals were preferred before the Appellate Asstt. Commissioner. So far as the assessments for the years 1952 63 to 1963-64 are concerned, the authorities hell that the petitioners wealth is not taxable. The petitioner after the assessment deposited the whole amount of tax on 15th January, 1972.

4. The petitioner submitted an application (Annx. A) before the Commissioner of Wealth tax, Rajasthan, Jaipur under Section 18(2A) of the Act. The Commissioner of Wealth-tax Rajasthan, Jaipur intimated, vide letter dated 26th March, 1973, (Marked Annx. B) that necessary instructions have been issued to the Wealth-tax Officer. Ajmer vide his orders Annexures E to K dated 20th March, 1973. It will not be out of place to refer a portion of order, Annexure E, which reads as under:

The assessee filed a petition under Section 18(2A) before the Commissioner of wealth-tax Rajasthan Jaipur who has directed that penalty of Rs. 2000/- only may be imposed. I, therefore, impose a penalty of Rs. 2000/-.

Similar orders were also issue in other relevant Annexures. Being aggrieved of the order imposing the penalty appeals were preferred by the present petitioner. The appeals were disposed of by the Appellate Assistant Commissioner of Income tax vide his judgment dated 16th August, 1973. The Appellate Assistant Commissioner held that the provisions of Section 18(2B) of the wealth-tax Act apply. He also considered the appeals on merits and held that there does not exist any reasonable cause for not furnishing the returns within the period specified under Section 14(1) of the Act. Being aggrieved of the order passed by the Appellate Assistant Commissioner, appeals were preferred before the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur. The Tribunal held that the order passed by the Commissioner in exercise of his power conferred under Section 18(2A) of the Act are not appealable and there is a specific bar under Section 18(2B). The petitioner has preferred this writ petition before this Court and has challenged these orders of the Wealth-tax Officer, Appellate Assistant Commissioner, Tribunal and the order passed by the Commissioner of Income-tax (Wealth-tax), Jaipur.

5. So far as the facts of S.B. Civil Writ Petition No. 1724 of 1974 Smt. Kanchan Kanwar v. Union of India and Ors. are concerned, I will not go into the detailed facts of the case. The facts of this case are practically the same. In this writ petitioner has challenged the orders of the Commissioner of Wealth-tax, Appellate Assistant Commissioner of Income-tax, Ajmer Range, Ajmer, and the Income-tax Appellate Tribunal, Jaipur Bench Jaipur.

On behalf of the Revenue no reply has been filed.

6. The questions involved in both these writ petitions are the same and, therefore, I would like to dispose of these writ petitions by this common order.

7. The learned Counsel for the petitioners has invited my attention to the provisions of Section 18 of the Wealth-tax Act, which reads as under:

18. Penalty for failure to furnish returns, to comply with notices and concealment of assets, etc. (1). If the Wealth-tax Officer, Appellate--Assistant Commissioner, Commissioner or Appellate Tribunal in the course of any proceeding under this Act is satisfied that any person-

(a) has without reasonable cause failed to furnish the return which be is required to furnish under Sub-section (1) of Section 14 or by notice given under Section (2) of Section 14 or Section 17, has without reasonable cause failed to furnish within the time allowed and in the manner required by subSection (1) of Section 14 or by such notice, as the case may be; or

(b) has without reasonable cause failed to comply with a notice under Sub-section (2) or Sub-section (4) of Section 16; or

(c) has concealed the particulars of any assets or furnished inaccurate particulars of any assets or furnished inaccurate particulars of any assets or debts;

he or it may, by order in writing, direct that such person shall pay by way of penalty-

(i) in the cases referred to in Clause (a), in addition to the amount of wealth-tax, if any payable by him, a sum equal to two per cent, of the assessed tax for every month during which the default continued.

xxxx xxxxx xxxx(ii) in the cases referred to in Clause (b), in addition to the amount of wealth-tax payable by him, a sum which shall not be less than ten percent, but which shall not exceed fifty percent, of the amount of the wealth-tax, if any, which would have been avoided if the net wealth returned by such person had been accepted as the correct net wealth;

(iii) in the cases referred to in Clause (c), in addition to wealth-tax payable by him, a sum which shall not be less than, but which shall not exceed five times, the amount of tax sought to be evaded by reason of the concealment of particulars of any assets or the furnishing of inaccurate particulars in respect of any assets or debts.

8. In Clause (a) of Section 18, it has been provided that if the assessee fails, without reasonable cause, to furnish return which he is required to furnish under Sub-section (1) of Section 14 or by such notice given under Sub-section (2) of Section 14 or 17, the Wealth-tax Officer may or in writing direct that such person shall pay by way of penalty the amount specified in Clause ( ) It has been provided that in the case referred to in Clause fa) in addition to the amount of wealth-tax, if any payable by him, a sum, for every month during which the default continued, equal to one half per cent of the net wealth assessed under Section 16. Thus, under Section 18. the Wealth-tax officer has to determine whether the assessee is guilty without any reasonable cause in filing the returns as provided under the law. The minimum amount of penalty has also been fixed under Clause (1) of Section (a)(1) of Section 18. Any order passed by the Wealth-tax Officer in exercise of the powers conferred under Section 18 is appealable under Section 23 of the Act. Under Clause (2) of Section 18, there is a further provision that no order shall be made under Sub-section (1) unless the person concerned has been given a reasonable opportunity of being heard. Section 18(a)(1) in independent in its nature and character and the Wealth-tax Officer is not bound to obey and administrative directions given by the Commissioner of Wealth-tax.

9. Mr. H.P. Gupta appearing on behalf of the petitioner has cited the case of Bndya Nath Sarma v. CWT (Gauhati) , in which their Lordships of the Gauhati H.C. held, 'that the power to 'waive' under Section 18(1A) of the Wealth-tax Act, 1957, is quite distinct and different from the power to 'impose penalty' contemplated under Section 18(1). Section 18(2A) comes into play only when penalty has been imposed under Section 18(1). The order of imposition of penalty remains intact but the order under Section 18(2A) merely reduces the quantum of penalty or waives the collection of the amount of penalty imposed. Section 18(2A) clearly indicates that a party may obtain relief of waiver or reduction even when the penalty imposable under Section 18(1) is justified. While considering an application under Section 18(2A) the relevant factors which are to be considered are: (a) the gravity of the default; (b) whether the assessee had defaulted to make any wrongful gain for himself or to cause wrongful loss to the Revenue; and (c) the nature of the conduct and behaviour of the assessee throughout the proceedings and thereafter. The Commissioner has to consider all the relevant factors to find out whether the assessee should be asked to pay the penalty for the wrong committed by him. When there is a reasonable cause for the delay in submitting the return, no occasion to levy penalty arises and the assessee is entitled to be exonerated. The power conferred on the Commissioner under Section 18(2A) is in the nature of a discretionary power which has been conferred on a quasi-judicial authority whose orders must have some backing of reasons. Though the section incorporates the expression 'the Commissioner may in his discretion reduce or waive' the penalty, yet the discretion cannot be arbitrary; it must be exercised on a consideration of relevant or material facts and circumstances. Though the provisions of the statute do not provide any guidelines as to when and how the power to waive or reduce the penalty should be exercised and there is no mechanism or methodology for waiving or reducing the penalty under Section 18(2A), yet the Commissioner is duty bound to give reasons for his decision The obligation to give reasons forms a part of natural justice and springs from the constitutional provisions contained in Articles 32, 136, 226 and 227 of the Constitution.'

10. Mr. Gupta, learned Counsel for the petitioner has also cited the case of S. Daljit Singh v. Commissioner of Wealth-tax, Patiala , which lays down as under:

Before an order can be passed even by an executive authority, much less a quasi-judicial authority, affecting the civil rights of an individual, an opportunity of being heard must be given to the individual.

The CWT passed orders under Section 18(2A) of the WT Act, 1957, whereby he declined to waive or reduce the penalties imposed on the assessee for the relevant assessment years. The assessee challenged the orders of the CWT on the ground that no opportunity of being heard was, given to him before the CWT passed his orders, which violated the principles of natural justice. The CWT contended that before passing the orders under Section 19(2A), the matter was considered by him carefully and the assessee was not heard personally as no such opportunity was required to be given to the assessee. On a writ petition filed by the assessee for quashing the order of the CWI'. Held, that the remedy which the assessee was seeking by approaching the CWT was a statutory remedy available to him and the assessee was entitled to be heard before the CWT passed his orders

11. Mr. Gupta, learned Counsel for the petitioner has referred the case of Jagdish Agrawal v. Commissioner of Wealth Tax MP-II, wherein it has been held as under:

An assessee is liable for penalty under Section 18(1)(a) of the WT Act, 1957, when he was without reasonable cause failed to furnish the return within time. The WTO who passes an order imposing penalty under the section has to decide the questions whether the return is late and whether there was reasonable cause for the delay in furnishing the return. He can impose a penalty after he decides on these two points against the assessee. The Commissioner's jurisdiction to waive or reduce penalty, Under Section 18(2A), is entirely different.

Section 18(2A) of the Act proceeds upon the assumption that the assessee has become liable for penalty on his failure to furnish the return within time without reasonable cause. The waiver of penalty is ordered by the Commissioner not on the ground that there was reasonable cause for late filing of return or that the return was not filed late, but upon entirely different considerations. The considerations, briefly stated, are that the assessee had made a full disclosure of his net wealth voluntarily and in good faith prior to the issue of notice under Section 14(2), has co-operated in any enquiry relating to the assessment and has either paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed in respect of relevant assessment year. The circumstances which the Commissioner has to take into account in passing an order of waiver of penalty are not to be considered by the, WTO and, similarly, the facts which the WTO has to examine under Section 18(1)(a) are not to be examined by the Commissioner. The two jurisdiction are entirely different and distinct. Therefore, if the Commissioner refuses to waive penalty, it cannot be said that there was no reasonable cause for late filing of the return. That question, which is the subject-matter of enquiry before the WTO, still remains open and if the WTO decides against the assessee, his finding can be challenged in appeal before the AAC. Therefore, the right of going up in appeal for challenging an order, imposing penalty passed by the WTO remains effective and is not waived simply because the assessee approaches the Commissioner for waiver of penalty and he refuses to waive the penalty under Section 18(2A).

12. Mr. Gupta has further cited the case of Commissioner of Wealth-tax M.P.-1I v. Kakatpure Ginning & Pressing Factory : [1984]145ITR813(MP) .

13. It is an admitted position that the Commissioner has not given an opportunity of hearing to the petitioner and has disposed of his application dated 2nd October, 1972, marked Annexure 1. The order passed by the Commissioner is not available on record. The petitioner submitted an application. Annexure-C to the Commissioner of Income-tax, Rajasthan, Jaipur to provide him the copy of the order passed by the Commissioner. On 12th April, 1975, an application was again moved to supply the copy of the order but the copy of the order has not been supplied to the petitioner. None is present on behalf of the Revenue to explain why the copy of the order passed by the Commissioner in exercise of the power conferred under Section 18(2A) has not been supplied to the petitioner. The Commissioner while exercising the power under Section 18(2A) is expected to follow the principles of natural justice. Even in the administrative matters generally the principles of natural justice have to be followed. The Commissioner while exercising power conferred under Section 18(2) acts as a quasi-judicial authority and it is incumbent upon him to hear the parties and then pass necessary orders according to law. It is also necessary that he should himself satisfy whether the party had a reasonable cause for non-submission of the return as required under Section 14(1) of the Act. Further more, the Commissioner can pass order and can waive or reduce the penalty which is imposable under the law; but he but he has no authority to issue instructions in exercise of power conferred under sub Section (2A).

14. As soon as the Commissioner passes the order in exercise of power conferred under subSection (2A) then the imposable penalty is automatically reduced or waived and, after passing of the order under Section 18(2A) the Wealth-tax Officer cannot impose the penalty.

15. The question that further arises is whether an application under Section 18(2A) can be moved prior to the passing of the order under Section 18(1)(a) of the Act by the Wealth-tax Officer. In the case of Baidya Nath Sharma v. CWT (supra) their Lordship have hold that the power to waive penalty under Section 18(2A) of the Act is quite district and different from the power to impose penalty contemplated under Section 18(1). Section 18(2A) comes into play only when penalty has been impose under Section 18(1). The order of imposition of penally remains intact but the order under Section 18(2A) merely reduces the quantum of penalty or waives the collection of the amount of penalty imposed.

16. A query was made by the Court whether the application, Annexure A, moved on 2nd October, 19, 1972, is pre-mature or not in the light of the fact that the penalty has been imposed on 20th March,1973. Mr. Gupta learned Counsel for the petitioner submits that under Section 18 of the Act, the Wealth-tax Officer can waive the penalty it he has arrived at a finding that the assessee has failed to furnish the return for bonafide reasons He has further submitted that under Section 18(1) the minimum penalty which is imposable under the Rules, cannot be reduced if he comes to the otherwise conclusion. Mr. Gupta further submits that under Section 18(2A) there is power to reduce as well as to valve the penalty which is imposable under the Act. Thus there is a waste distinction between the two and both the provisions are independent of each other and the assessee has right to approach any of the authorises or both the authorities under the law. A query was made by the Court as to how the penalty can be reduced unless it is imposed, on which Mr. Gupta submits that imposition of penalty is a formality as minimum penalty has been prescribed under Section 18(a)(1). Mr. Gupta his pointed out that the word 'imposable' has been used in Section 18(2A)(1) and (2). He further submits that the words used in Clause (1) and (2) of Section 18(2A) are 'reduced or waived' the amount of minimum penalty is imposable Mr. Gupta submits that the word 'imposable' is were enough and cannot be equated with the words 'penalty imposed '. The law provides the minimum penalty which is imposable under law, as the assessee has a right to move an application tinder Section 18(2A) even before the decision under Section 18(a)(1) Mr. Gupta submits that in the case of Baidya Nath Sharma v. CWT (supra), the Wealth-tax Officer imposed penalty on the assessee under Section 18(1) of the Act for the assessment years i.e. assessee filed four separate applications under Section 18(2A) Of the Act before the Commissioner. The Commissioner found that full and complete disclosures of wealth were made by the assessee voluntarily before the issue of notice under Section 14(2) that there was no concealment of wealth, the assessee had extended full co-operation in completing the assessment and further held that the applications under Section 18(2A) are well founded The Commissioner further held in that case that the reasons for late submission of the returns were bonafide, though they did not constitute conclusive deference and reasonable cause Under Section 18(1)(a) for non-levy of the penalty; but where as application can be moved under Section 18(a) before an order passed by the wealth tax Officer in exercise of the power conferred under sec(18(a)(1) of the Act, has not been specifically discussed in that citation.

17. The argument of the learned Counsel for the petitioner that an application can be moved even before the passing of the order by the Wealth tax Officer in exercise of the power conferred under Section 18(a)(1) is well founded. The Commissioner, Wealth tax knows that the minimum penalty has been prescribed and the Wealth-tax Officer is not competent to reduce the penalty, though be is competent to waive the penalty. The Legislature in its wisdom he used the word 'reduce or waive the amount of minimum penalty imposable on a person.' Under Clause (1) of Sub-section (1) penalty could be imposed if the assessee fails to file returns without reasonable cause which he was required to furnish under Sub-section (1) of Section 14. The words 'penalty imposable' should be construed and interpreted in a way which may lead to avoidance of inconsistency The word 'imposable' means that any penalty which could be imposed at a subsequent date under the provisions of law. For this reason, I hold that the application moved by the petitioner prior to the passing of the order by the Wealth tax Officer in exercise of power conferred under Section 18(a)(1) is not a premature application and the petitioner was justified in moving the application. Nothing has been brought on record to show that any order has been passed by the Commissioner after hearing the petitioner. The principles of natural justice have been violated and if any order has been passed, or any instructions have been issued by the Commissioner even then they are vitiated. While exercising power conferred under Section 18(2A) the Commissioner arrives at a decision and can com; to a finding whether the petitioner has bonafide reasons in the matter of later submission of the returns or not. The Commissioner has issued instructions which are not on record and the instructions have also not been placed on record. The petitioner has applied for the copy of the order or the instructions a number of time, but the copy of the same has not been supplied to the petitioners. It was also the duty of the Revenue to submit the copy of the order before this Court. However, the Revenue has miserably failed. Therefore, the order, if any passed by the Commissioner, cannot be maintained.

18. For the reasons mentioned above, I set aside the instructions given by the Commissioner as referred to in the letter, Annexure B, dated 17-19 March, 1973 and direct that the petitioner should be heard and appropriate orders should be passed by the Commissioner on his application, dated 2nd March, 1972.

19. As far as the orders Annexures E to K, passed by the Wealth-tax Officer, dated 20th March, 1973, are concerned, they are vitiated only on the ground that the Wealth-tax Officer has not applied his mind. No administrative instructions can come in the way of exercising power conferred on the Wealth-tax Officer under Section 18(a)(1). The Wealth-tax Officer has stated in the orders referred to above, that the Commissioner of Wealth-tax, Jaipur has directed to impose penalty on assessee and, therefore, he imposed a penalty of the like amount. The Appellate Assistant Commissioner has not appreciated the provisions of Section 18(2)(B). There is no order of the Commissioner on record and further more the provisions of Section 18(2)(B) do not apply. The right of appeal which is vested in the assessee under the provisions of Section 23 is independent and has not been taken away by the provisions of Section (2)(B). The learned Members of the Tribunal have also held that the provisions of Section 18(2)(B) apply. As the provisions of Section 18(2)(B) apply when the order has been pissed by the Commissioner and the above order passed by the Commissioner in exercise of power conferred by Section 18(2A) is not appealable, it is final. But it does not take away the power which the assessee is having under the provisions of Section 23 of the Act.

20. For the reasons mentioned above, I set aside the order of assessment and the judgment of the Appellate Assistant Commissioner as well as the Tribunal and direct the Wealth-tax Officer that fresh orders should be passed after hearing the parties in accordance with law.

21. I would like to make a specific reference that the petitioner is having a remedy of appeal as well as the remedy under Section 18(2A). However, it is necessary that harmonious construction should be given to both the provisions and if an order under any of the provisions have been issued, then the other authorities should not disturb the order as it may lead to the passing of inconsistent orders For example, if the party has approached the commissioner Under Section 18(2A) and the Commissioner has passed an order in exercise of power conferred Under Section 18(2A), then the order passed by the Commissioner should be deemed to be a final order and no relief can be granted to the assessee by the assessing authority as it may lead to the passing of inconsistent orders. Similarly, if the WTO has assessed and passed the penalty order, then the party should be given an opportunity either to seek the redress by way of appeal from the concerned authority and not from the Commissioner in exercise of power conferred Under Section 18(2A) and if one of the authorities has passed the order, the other authority should refrain from passing an order which may be inconsistent with the order. This is necessary for the reason that the Appellate Tribunal, or the Appellate Assistant Commissioner or the WTO may say that there are bonafide reasons or sufficient grounds for waiving the penalty which is imposable under the law and the Commissioner may hold a different view. This will lead to the passing of inconsistent orders and for this reason I think it proper that there should be a harmonious construction as party is allowed to seek a remedy and both the forums As soon as the order has been passed at one of the forums then the other forums should restrain itself from passing any order which may be inconsistent with the order passed by any of the authority. Ft will not be out of place further to mention that the Legislature in its wisdom has for this very reason, used the word 'imposable', under Section 18(2A). The word 'imposable' cannot be equated with the word 'imposed'. So, the Legislature intended only that when the Wealth-tax Officer has passed an order of penalty, then the penalty is imposed and it cannot be equated with the word 'imposable'. So as soon as the powers have been exercised under Section 18(a)(1) the powers of the Commissioner under Section 18(2A) come to an end and as the penalty is now not imposable, but it has already been imposed and the proper remedy will be to file an appeal before the proper forum.

22. The writ petitions are disposed of accordingly. The parties are left to bear their own costs.


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