Commissioner of Wealth Tax vs Sultan Ali

Jeevan Reddy, J.—The question referred for our opinion u/s 27(1) of the Wealth-tax Act, 1957, is :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the penalty u/s 18(1)(a) should be computed after deducting the total wealth assessed u/s 16 from the total wealth assessed u/s 17 of the Act ?"

The relevant facts are that for the assessment year 1967-68, the assessment was completed on March 28, 1968. The assessment was made u/s 16(3) of the Wealth-tax Act. No proceedings for levy of penalty u/s 18 were initiated on this occasion. Subsequently, a notice u/s 17 was issued and served upon the assessee on May 3, 1972. (Section 17 of the Act provides for bringing to tax the escaped wealth.) 35 days time was granted under this notice for filing a revised return. The assessee, however, did not file any such return within the said period or thereafter. Accordingly, the Wealth-tax Officer made an assessment on March 31, 1973, to the best of his judgment u/s 16(5) read with section 17 of the Act. Simultaneously, he initiated proceedings for penalty and levied penalty u/s 18 upon the total wealth so assessed by him by his order, dated March 31, 1973. This was challenged by the assessee in appeal before the Appellate Assistant Commissioner, but without success. On further appeal, however, the Tribunal agreed with the assessee and held that penalty should be levied upon the total wealth assessed as per the order, dated March 31, 1973, as reduced by the wealth assessed as per the order dated March 28, 1968. The correctness of the said view is sought to be questioned before us in this referred case. We are not, however, satisfied that the view taken by the Tribunal is in any manner contrary to law. The previous assessment was made u/s 16(3) and no penalty proceedings were initiated on that occasion. Now, as a result of the proceedings u/s 17, the value of the net wealth has gone up, but while levying penalty, it is but just and proper that the Wealth assessed earlier should be deducted. If this is not so done, the result would be that penalty would be levied not only upon the escaped wealth but also upon the wealth initially returned and assessed and in respect of which no penalty proceedings whatsoever were initiated. It is not brought to our notice that any provision of law under the Act or the Rules militates against this just proposition.

For the above reasons, the answer to the question referred to us is in the affirmative, i.e., in favour of the assessee and against the Revenue.