The Commissioner Of Wealth Tax, ... vs H.S. Chauhan
2000 Latest Caselaw 571 Del

ORDER

Arijit Pasayat, CJ.

1. On being moved by the Revenue, following question has been referred by the Income-tax Appellate Tribunal, Delhi Bench 'B' (for short the 'Tribunal') under Section 27(1) of the Wealth-tax Act, 1957 (for short the Act) for the opinion of this Court:

"Whether on the facts and in the circumstances of the case, the Tribunal was justified in upholding the order of the Appellate Assistant Commissioner, cancelling the penalties on the ground that no penalty could be levied under Section 18(1)(a) of the Wealth-tax Act, 1957 on the legal heir after the death of the assesseed?"

2. Since the question is a pure question of law factual aspects need not be dealt with in detail except stating the bare essentials briefly. Shri H.S. Chauhan is legal heir of one late Shri Bawa Singh Chauhan. He is referred to as assesseed. For the assessment years 1960-61 to 71-72 returns were filed by late Bawa Singh Chauhan. He died after completion of assessments. Since there was delay in filing of the returns by him, proceedings under Section 18(1)(a) of the Act had been initiated which were continued against legal heir. Various amounts were levied as penalty for delay in filing of the returns. The matter was carried in appeal before the Appellate Assistant Commissioner of Income-tax, Special Range-III, New Delhi (hereinafter referred to as the AAC). The said authority was of the view that penalty could not have been levied on the legal heir. Reference was made for the purpose to sub-section (3) of Section 19 of the Act. Matter was carried in further appeal by the revenue before the Tribunal which concurred with the view of the AAC and sustained deletion of penalties.

3. Learned counsel for the Revenue submitted that a reading of Section 19 as a whole shows that penalty could be imposed on the legal heir.

There is no appearance on behalf of the legal heir in spite of notice.

4. Scheme of the Act needs to be noted in some detail while considering the question whether penalty can be levied on the legal heir. Wealth-tax is charged in respect of net wealth on the corresponding valuation date of every individual, HUF and company at the rates specified in the schedule under Section 3 of the Act. Section 14 postulates filing of return of wealth in the prescribed form before the prescribed date by every person who is assessable under the Act to tax. A return beyond the prescribed time or a revised return can be filed under certain circumstances as contemplated under Section 15. Modalities of assessment and determination of tax payable is done under Section 16 by the Assessing Officer. The expression "assessee" is defined in clause (c) of Section 2 of the Act in the following manner:

"(c) "assesseed" means a person by whom wealth-tax or any other sum of money is payable under this Act, and includes:

(i) every person in respect of whom any proceeding under this Act has been taken for the determination of wealth-tax payable by him or by any other person or the amount of refund due to him or such other person;

(ii) every person who is deemed to be an assesseed under this Act;

(iii) every person who is deemed to be an assesseed in default under this Act;"

Escapement of wealth from assessment is dealt with in Section 17 of the Act. Section 18 is the pivotal provision with which we are concerned in the present case. It, inter alia, deals with power to levy penalty for failure to furnish return or to comply with notice and concealment of assets etc. Clause (a) of sub-section (1) of Section 18 deals with failure to furnish return within the prescribed time. Admittedly the predecessor of the assesseed had filed the returns beyond the prescribed periods. There-

fore, the only question, that needs to be adjudicated is whether penalty could be levied on the legal heir that is the assesseed.

5. Learned counsel for the Revenue referred to Section 19 to submit that on a combined reading of various sub-sections thereof it is clear that penalty could be levied. Section 19 appears in Chapter V of the Act which deals with liability to assessment in special cases. It reads as follows:

"19(1) where a person dies, his executor, administrator or other legal representative shall be liable to pay out of the estate of the deceased person, to the extent to which the estate is capable of meeting the charge, the wealth-tax assessed as payable by such person, or any sum, which would have been payable by him under this Act if he had not died.

(2) Where a person dies without having furnished a return under the provisions of Section 14 or after having furnished a return which the Assessing Officer has reason to believe to be incorrect or incomplete, the Assessing Officer may make an assessment of the net wealth of such person and determine the wealth-tax payable by the person on the basis of such assessment, nd for this purpose may, by the issue of the appropriate notice which would have had to be served upon the deceased person if he had survived, require from the executor, administrator or other legal representative of the deceased person, any accounts, documents, or other evidence which might under the provisions of Section 16 have been required from the deceased person.

(3) The provisions of Sections 14,15 and 17 shall apply to an executor, administrator or other legal representative as they apply to any person referred to in those sections.

6. As noted above, sub-section (3) of Section 19 provides that provisions of Section 14,15 and 17 shall apply to an executor, administrator or other legal representative as they apply to any person referred to in those sections. Sub-section (1) deals with liability of legal representative to pay tax of a deceased person. Sub-sections(2) and (3) deal with liability to assessment. Sub-section(2) provides for initiating proceedings for assessment and determination of net wealth payable by the deceased person. It, therefore, has no application to a proceeding in relation to imposition of penalty. Sections 14, 15 and 17 contemplate and authorise initiation as well as continuance of proceedings for determining wealth-tax on the basis of return as well as on the basis of escapement of wealth against, inter alia, a legal representative. Therefore, the provisions of Section 18 do not come within the ambit of Section 19. At this juncture it will be rele-

vant to note that under Section 159 of the Income-tax Act, 1961(for short the I.T.Act) there is a clear prescription for continuance of proceedings, inter alia, for imposing penalty against legal representative. Sub-section (2) of Section 159 of I.T. Act is contextually different from sub-section (3) of Section 19 of the Act. The osition is not similar sofar as proceedings under Section 18 of the Act are concerned.

7. We are, therefore, of the view that the Tribunal was justified in its conclusion that penalty could not be levied on the legal representative. Our answer to the question is in the affirmative, in favour of the assesseed and against the revenue.

The references are disposed of accordingly.