COMMISSIONER OF WEALTH TAX Vs. A N SARVARIA

JUDGEMENT

(1.) THE following question has been referred to this Court for its opinion under S. 27(1) of the WT Act, 1957: "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in cancelling the order of the CWT passed under S. 25(2) of the WT Act, 1957, which directed the WTO to consider initiation of proceedings under S. 18(1)(a) of the Act in the fresh assessment proceedings -

(2.) THE question arises in the following circumstances: The assessment year involved in 1967 -68 for which the WTO completed the assessment by her order dt. 23rd Dec., 1971, on the assessee who is taxed in the status of an individual. His valuationdate was 31st March, 1967. Though the return was filed late, the WTO did not initiate penalty proceedings as contemplated by the provisions of s. 18(1)(a) r/w S. 18(2) of the WT Act. The CWT in suo motu revision under S. 25(2) of the WT Act set aside the assessment order and directed for framing of fresh assessment by duly considering the penal provisions referred to earlier.

(3.) THE assessee went up in appeal before the Tribunal and the Delhi Tribunal while relying upon the decision in the case of Shri J. K. D'Costa, New Delhi vs. ITO, Private Salary Circle -VI reported in Taxation, 1st April973 issue, S. VI, page 100, and also relying upon another decision of Delhi Bench of the Tribunal in the case of Shri Satya Narain Shiv Shankar, Delhi and Shri R. L. Puri, c/o. M/s Prakash Bros. & Co. Karol Bagh, New Delhi, set aside the order of the CWT on the ground that the CWT while hearing a revision under S. 25(2) of the Act had no jurisdiction to quash the assessment order as erroneous merely because the WTO failed to initiate proceeding for levying penalties. The decision of the Tribunal in the case of Shri J. K. D'Costa, New Delhi (Taxation April 1973, issue, s. VI, page 100) has since been approved by a Division Bench of this Court in the case of Addl. CIT vs. J. K. D' Costa [1981] 133 ITR 7 and special leave petition against that decision of the Delhi High Court has also been dismissed by the Supreme Court in CIT vs. J. K. D' Costa [1984] 147 ITR (Statutes) 1. This decision of the Delhi High Court in the case of J. K. D' Costa [1982] 133 ITR 7 was followed by the Delhi High Court in the case of Addl. CIT vs. Achal Kumar Jain [1983] 142 ITR 606. On a similar question, a matter came up before Chadha and Goel JJ. in the case of P. C. Puri vs. CIT [1985] 151 ITR 584 (Delhi) and on a difference of opinion between the learned judges, the matter was referred to a third judge, A. B. Rohatgi J., sitting as third judge, with Chadha J., and approved the decision in the case of J. K. D' Costa [1982] 133 ITR 7 (Delhi) and Achal Kumar Jain [1983] 142 ITR 606 (Delhi). The learned judge dissented from the contrary view of the Madhya Pradesh High Court in the cases of Addl. CIT vs. Indian Pharmaceuticals [1980] 123 ITR 874, Addl. CIT vs. Kantilal Jain [1980] 125 ITR 373, Addl CWT vs. Nathoolal Balaram [1980] 125 ITR 596 and CIT vs. Narpat Singh Malkhan Singh [1981] 128 ITR 77.