COMMISSIONER OF WEALTH-TAX Vs. SWADESH KUMAR

JUDGEMENT

(1.) THIS order shall dispose of Wealth -tax References Nos. 18 and 19 of 1981 which arise out of a consolidated order of the Tribunal whereby the following three questions of law have been referred to this court for its opinion :

(2.) THE facts, shortly stated, are as under : The assessee, Swadesh Kumar, filed his return of wealth as an individual for the two years 1969 -70 and 1970 -71 under the Wealth -tax Act, 1957 (hereinafter referred to as 'the Act'). The data for the two relevant assessment years giving the due date of return, date of filing the return, net wealth returned and the net wealth computed is given below :

(3.) THE Commissioner of Wealth -tax, in exercise of his revisional powers under Section 25 of the Act, called for and examined the record relatingto the assessment years 1969 -70 and 1970 -71. The Commissioner of Wealth -tax, in his revisional jurisdiction under Section 25 of the Act, has the power to call for and examine the record of any proceedings under the Act if he considers that any order passed therein by an Assessing Officer is erroneous in so far as it is prejudicial to the Revenue. He may, after giving the assessee an opportunity of being heard and after holding such enquiry as he deems necessary, pass an order as in the circumstances of the case justifiable including an order enhancing or modifying the assessment or cancelling it and directing a fresh decision. In this particular case, the Commissioner of Wealth -tax considered the orders of the Wealth -tax Officer as erroneous and prejudicial to the interests of the Revenue and held that the Wealth -tax Officer has erred in dropping the penalty proceedings for the assessment year 1969 -70 solely on the ground that the penalty leviable under Section 18(1)(a) of the Act was nominal. It was held that, for both the years, i.e., 1969 -70 and 1970 -71, the Wealth -tax Officer misapplied the law under which the penalty was leviable for these two assessment years. The law applicable for the levy of penalty for the relevant assessment years for late filing of the return was at the rate of half per cent, of the net wealth assessed under Section 16 of the Act as reduced by the amount specified under Section 18(1)(a)(i)(A) of the Act, i.e., Rs. 1,00,000 in the case of individual and Rs. 2,00,000 in the case of Hindu undivided family while the Wealth -tax Officer, in his order, had levied the penalty as per the Taxation Laws (Amendment) Act, 1975, which came into force with effect from April 1, 1976 and, on that basis, levied the penalty at the rate of 2% of the tax for each month of the default subject to 50% of the tax levied. It was held by the Commissioner of Wealth -tax that the Wealth -tax Officer, while levying the penalty for the assessment years 1969 -70 and 1970 -71, applied the law which was not applicable to the proceedings for those years. He, therefore, considered and held that the two orders passed by the Wealth -tax Officer for the assessment years 1969 -70 and 1970 -71 were erroneous and prejudicial to the interests of the Revenue. The Wealth -tax Commissioner levied a penalty of Rs. 3,376 and Rs. 4,433 respectively for the years 1969 -70 and 1970 -71.