COMMISSIONER OF WEALTH TAX Vs. RANI LAXMI DEVI

JUDGEMENT

(1.) The Tribunal, Allahabad, has referred the following question of law under Section 27(1) of the WT Act, 1957 (hereinafter referred to as "the Act") for opinion to this Court :

(2.) Briefly stated, the facts giving rise to the present reference are as follows : The reference relates to the asst. yrs. 1967-68 to 1975-76. The respondent-assessee had made a disclosure of a net wealth in terms of Section 15(1) of the Voluntary Disclosure of Income and Wealth Ordinance, 1975, subsequently replaced by the Voluntary Disclosure of Income and Wealth Act, 1976 (hereinafter referred to as "the Disclosure Act"). As required under Rule 5 of the Voluntary Disclosure of Income and Wealth Rules, 1975, the respondent-assessee had made the declaration in duplicate in Form C and were accompanied by return of net wealth in the form prescribed under Section 14 of the Act. She made a declaration for the asst. yrs. 1967-68 to 1975-76, before the CWT. Along with the declaration, she had submitted a letter that she had no liquid asset to pay the huge demand of wealth-tax for the above years and that it was also not possible for her to sell the properties due to various restrictive laws and, therefore, it was requested that the entire demand be stayed till the orders regarding the sale of the property by the Government are received, She, however, as a token, paid a sum of Rs. 200 as wealth-tax. The declarations were forwarded by the CWT to the WTO along with the relevant enclosures, who, on the basis of return so filed, completed the assessment on 13th Feb., 1979, by passing a common order. The quantum of wealth had been modified to some extent which had not been disputed by the respondent-assessee. The WTO also directed for issuance of notice under Section 18(1)(a) of the Act for late filing of return. In response to the notice issued under Section 18(1)(a) of the Act, the respondent-assessee submitted her reply stating therein that no penal action can be initiated as she had filed her return under the Disclosure Act. She further submitted that she was not able to pay her taxes because of the nonavailability of liquid fund and inability to sell her property and requested the WTO to attach the property disclosed under the Disclosure Act to satisfy the tax demand. In this view of the matter, it was requested that the penalty proceedings be dropped. The WTO was not satisfied with the explanation submitted by the respondent-assessee and imposed various amounts of penalty under Section 18(1)(a) of the Act. Feeling aggrieved, the assessee preferred separate appeals before the AAC who, however, confirmed the order imposing the penalty. Still feeling aggrieved, the assessee preferred separate appeals before the Tribunal. The tribunal while allowing the appeal has held that the action of the WTO in taking recourse to Section 18(1)(a) of the Act for imposing the penalties because of the alleged failure on the part of the assessee to pay the tax found payable in consequence of her having voluntarily disclosed certain wealth, is totally erroneous and in their opinion, all that the WTO was entitled to under Section 15(4) of the Disclosure Act was to make an assessment of tax leviable on the voluntarily disclosed wealth and could not proceed further to impose penalty on the basis of the information furnished in that particular proforma. The Tribunal has further held that even if the assessee has not paid the tax on the wealth voluntarily disclosed as provided in the Disclosure Act, the question of validity or otherwise of the immunity from the penalty and the proceedings under the Act had to be considered in the relevant proceedings under the Act but not in the process of quantification of the assessee's liability of tax on the voluntarily disclosed wealth.

(3.) We have heard Sri Shambhoo Chopra, the learned counsel for the Revenue. The learned counsel for the Revenue submitted that as the respondent had not paid the due taxes on her voluntarily disclosed wealth, she was not entitled for any immunity. Thus, the WTO was perfectly justified in initiating and imposing penalty under Section 18(1)(a) of the Act. He relied upon the following two decisions : (i) Banaras Chemical Factory v. CIT (1977) 108 ITR 96 (All); (ii) Jaswant Rai v. CBDT (1982) 133 ITR 19 (Del).