INDU BARUA Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal has, at the instance of the assessee, referred under Section 27 of the W,T. Act, 1957 (hereinafter called " the Act "), the following questions to this court:

(2.) QUESTION No. 1 was referred by the Appellate Tribunal under Section 27(1) of the Act, and questions Nos. 2 to 5 were referred by the Tribunal under Section 27(1) of the Act, pursuant to the order of this court, dated March 9, 1976, passed in Civil Rule 20(M) to 26(M) of 1976. The reference relates to the assessment years 1964-65, 1965-66, 1966-67, 1967-68, 1968-69, 1969-70 and 1970-71. The due date for filing a return under the Act for each of the assessment years was 30th June, except for the assessment year 1968-69; and for the assessment year 1968-69, the due date was August 31, 1968, according to Circular No. 4 (WT) of 1968, dated August 13, 1968, of the CBDT. The assessee, Smt. Indu Barua, had not been assessed to wealth-tax by way of regular assessment. The WTO, 'B' Ward, Jorhat, issued notices under Section 17 read with Section 14(2) of the Act on September 2, 1969, regarding wealth escaping assessment for each of the assessment years 1964-65 to 1969-70. Notice for each of the assessment years 1964-65 to 1968-69 was not personally served on the assessee but was served upon her husband on October 7, 1969. Notice was, however, served on the assessee herself for the assessment year 1969-70 on October 7, 1969. The assessee filed returns on July 6, 1971, for all the assessment years 1964-65 to 1970-71. The WTO, thereafter, initiated penalty proceedings for all the assessment years under Section 18(1)(a) of the Act for delay in filing returns. In her explanation, she gave three reasons as forming reasonable cause, which are common for all the years, for the failure to file returns within time ; first, the net wealth of the assessee was below and/or at marginal level of the taxable wealth; secondly, the assessment was completed at a higher figure which was disputed in appeal and the assessee expected substantial relief; and, thirdly, frequent changes in law as regards exemption limit and the includibility of various assets in the net total wealth were the reasons that prevented her from filing returns within time. The WTO rejected her explanation, and pointed out that the net wealth shown in the returns was more than Rs. 2,00,000 ; the movable property of the assessee, which did not involve any question of valuation, was itself in excess of the exemption limit, and in addition to the movable property, the assessee had substantial immovable property. The WTO further held that the exemption limit for individuals, which continued to be Rs. 2,00,000 up to the assessment year 1963-64, from the very inception of the wealth-tax, was lowered to Rs. 1,00,000 with effect from April 1, 1964, long before the returns were filed, and held, as such, that ignorance of law either as to exemption limit or to includibility of various assets could not be considered as an excuse in the eye of law, particularly in the case of a person of the assessee's status and affluence. The WTO imposed penalty of Rs. 16,486, Rs. 21,468, Rs. 20,693, Rs. 25,075, Rs. 27,347, Rs. 24,177 and Rs. 8,988, respectively, for the assessment years 1964-65 to 1970-71, under Section 18(1)(a) of the Act. The assessee's appeals before the AAC of Wealth-tax for all the years, which were heard together, were dismissed, and the penalties levied by the WTO were confirmed by his common order dated July 12, 1974. The assessee carried further appeals to the Income-tax Appellate Tribunal for all the assessment years. The Tribunal dismissed the appeals, by its consolidated order, dated February 28, 1976, and confirmed the penalties imposed on the assessee. Penalties were calculated for the assessment years 1964-65 to 1968-69, in accordance with law as amended from time to time, in the view that the default was a continuing one.

(3.) THE Tribunal considered failure on the part of the assessee to furnish returns for the assessment years 1964-65 to 1968-69, despite service of notices upon the assessee's husband, under Section 17 of the Act, issued in the name of the assessee as one of the circumstances showing contumacious conduct that she acted deliberately in defiance of law and/or consciously disregarded the provisions of law. It held that service of notices under Section 17 of the Act on her husband who was residing with her was legal and valid as to bind the assessee. It was contended on behalf of the assessee that the service of notice was not in compliance with the provisions of Section 41 of the Act, read with Order 5, Rule 15 of the CPC, 1908, as amended for the State of Assam, and that there was no legal and valid service of notice on the assessee. Rejecting the contention, the Tribunal held the service legal and valid, relying on the decision of the Calcutta High Court in Rampiyari Khemka v. CIT, 1966 61 ITR 600.