RAMALAXMI JIVRAJ Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THE WTO issued a notice under s. 14(2) of the W.T. Act, 1957 (hereinafter referred to as ' the Act'), calling upon the assessee to furnish return of wealth for each of the assessment years 1973 -74 and 1974 -75. The assessee, however, failed to furnish the return. The WTO proceeded under s. 16(5) of the Act and determined the assessee's net wealth at Rs. 1,70,000 in each of the assessment years 1973 -74 and 1974 -75 and initiated penalty proceedings under s. 18(1)(a) of the Act. The assessee did not submit any explanation or reply to the show -cause notice issued to her by the WTO. The WTO levied penalty of Rs. 15,400 and Rs.11,200 for the assessment years 1973 -74 and 1974 -75, respectively, under s. 18(1)(a) of the Act. In the appeals preferred by the assessee, the AAC set aside the orders levying penalty on the ground that the assessee's wealth was not taxable in each of the years under reference. Revenue went up in appeal before the Income -tax Appellate Tribunal (hereinafter referred to as 'the Tribunal') and challenged the orders of the AAC. The Tribunal did not go into the question whether or not the assessee had with out any reasonable cause failed to furnish a return of her wealth in each of the said years in response to the notice under s. 14(2) of the Act. According to the Tribunal, a failure to furnish the returns in response to the notice under s. 14(2), by itself, attracted penalty. In the result, it set aside the orders passed by the AAC and restored the orders of the WTO levying penalty as stated above.

(2.) IT is in the background of the above facts that at the instance of the assessee the following questions have been referred to us for our opinion under s. 27(1) of the Act :

(3.) THE question whether or not the assessee's net wealth in each of the assessment years under reference was taxable has an important bearing on the question of levy of penalty. Penalty under s. 18(1)(a) of the Act is leviable provided and only provided it is established that the assessee has, without reasonable cause, failed to furnish the return which he or she was required to furnish in response to a notice given under sub -s. (2) of s. 14. If the assessee's net wealth was not taxable, it would be open to the assessee to contend that the failure to furnish a return could not be laid to be without reasonable cause. The Tribunal, however, has not addressed itself to the correct question. The AAC found, as a matter of fact that the assessee's net wealth for each of the assessment years under reference was not taxable and it was, therefore, that he set aside the orders levying penalty passed by the WTO. It would, therefore, appear that, though not expressed in so many words, the AAC came to the conclusion that failure to furnish return of wealth by the assessee was not without reasonable cause. In view of this finding recorded by the AAC, the Tribunal ought to have examined whether or not the assessee's net wealth was taxable in the light of the provisions contained in s. 5(1)(xxxii). If there was not enough material to come to the conclusion whether the provision of s. 5(1)(xxxii) were attracted, the Tribunal could have remanded the matter either to the AAC or to the WTO to ascertain and verify the relevant facts. In a penalty proceeding, it is open to the assessee to contend that his net wealth was not within the taxable limits and consequently the failure on his part to file a return in response to a notice under s. 14(2) could not be said to be without reasonable cause. In our opinion, therefore, the Tribunal ought to have examined the plea of the assessee on merits. We, therefore, decline to answer the question as reframed by us and remand the matter to the Tribunal for deciding it afresh in accordance with law and in the light of the observations made above. It would be open to the Tribunal to remand the matter either to the AAC or the the WTO to make further investigation into the facts. Both the sides will be at liberty to place such evidence and material on record as they may think proper.