TMI Blog1985 (8) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... in view of the provision of section 42C of the Wealth-tax Act, 1957? 3. Inasmuch as, in our opinion, no referable question of law, as suggested by the revenue, emanates from our said order, we, therefore, decline to make a reference. However, for doing so, we state our reasons in the succeeding paragraphs. 4. Return of net wealth was due by 30-6-1971. It was filed by the asse- ssee only on 5-3-1975. There was, thus, a delay of 44 months. The WTO issued a show-cause notice in terms of section 18(2) of the Act. It appears, the WTO asked the assessee to explain similar delays in the filing of wealth-tax returns for various other assessment years as well. The assessee filed a reply on 16-3-1980. This dealt with the assessment years 1970-71 and 1972-73 to 1974-75; but there was no explanation given here regarding the delay in filing the return for this assessment year. The WTO considered this reply. However, since the assessee had no explanation to offer for the assessment year 1971-72 (the assessment year in appeal here) he concluded that the assessee had 'no evidence' to explain the delay. In these circumstances, he levied the impugned penalty. 5. The AAC confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al after appreciating the material placed on record. Moreover, the section, i.e., 42C of the Act made mention of in the question was introduced from 1-10-1975 and the return was filed earlier to that as we are concerned with the assessment year 1971-72. At the same time, the Board's circular further makes it abundantly clear that this section was not having retrospective effect. In these circumstances, since no referable question of law, as suggested by the revenue, arises from the said order, we decline to make a reference. 8. In the result, the application is dismissed. Per Shri B. Gupta, Accountant Member - Since I have not been able to persuade myself to agree with the order of the learned Judicial Member rejecting the captioned Reference Application No. 1092 (Delhi) of 1984 filed by the revenue, I would with respect express a note of dissent as follows. 2. In the assessment year 1971-72 a penalty of ₹ 9,030 had been imposed upon the assessee under the provisions of section 18(1)(a). The return of wealth was due to be filed on 30-6-1971. But it had been filed only on 5-3-1975. In order that the assessee could explain the delay of 44 months in the submission o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by the learned WTO, is most arbitrary and unjustified and the same must be quashed. At the time of hearing of the appeal on 20-3-1984 the authorised counsel of the assessee moved an additional ground which was in the following terms: That the notice for levy of penalty is irregular and invalid inasmuch as the notice dated 26-3-1980 calls for appearance on 13-3-1980 and on that ground alone the penalty be quashed. This prayer is being made since it is a legal issue and does not call for any investigation of the records. 3. The Tribunal heard the representations of the assessee and the department on the admissibility of the additional ground and after so doing it admitted the additional ground as, according to it, the question was a pure question of law and as it went to the root of the matter. After the additional ground was admitted the learned counsel of the assessee argued that the penalty notice dated 26-3-1980 asking for compliance of the assessee on 13-3-1980 was ab initio void and that all proceedings founded upon such an invalid notice were non est in law. On the other hand, the departmental representative submitted that the assessee having already submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued by the WTO was ab initio void. According to me, the Tribunal having itself held that the additional ground raised by the assessee gave rise to a pure question of law and that pure question of law having been decided by the Tribunal in cancelling the penalty, a question of law does arise from the order of the Tribunal dated 2-5-1984. The question as raised by the revenue in the reference application filed by it is not appropriately worded and, therefore, it certainly needs an amendment. According to me, the following question of law arises out of the order of the Tribunal which is hereby referred to the Hon'ble Delhi High Court for its esteemed opinion: Whether on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the penalty imposed by the WTO under section 18(1)(a) of the Wealth-tax Act, 1957 in the assessment year 1971-72. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 Per Shri S.S. Mehra, Judicial Member - As we have differed regarding the conclusion in the above case, we refer the point of difference to the President, Tribunal for getting the matter heard by one or more of the other members of the Tribunal. The po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t his reply was absolutely silent so far as this year is concerned but the assessee had also no evidence to cover up the delay. Obviously, the default of late filing the return becomes patent and the penalty is leviable. Thereafter the assessee preferred an appeal before the AAC who upheld the levy of penalty. His reason for confirming the penalty was again the failure of the assessee to adduce any reason for the delayed submission of the return. The assessee then filed an appeal before the Tribunal. Before the Tribunal, the assessee raised the following ground in the grounds of appeal: On the facts and in the circumstances of the case, the action of the learned AAC of Wealth-tax in confirming the penalty of ₹ 9,030 imposed under section 18(1)(a) of the Wealth-tax Act by the learned WTO, is most arbitrary, and unjustified and the same must be quashed. But at the time of the hearing of the appeal, the assessee moved an additional ground, which was in the following terms: That the notice for levy of penalty is irregular and invalid inasmuch as the notice dated 26-3-1980 calls for appearance on 13-3-1980 and on that ground alone the penalty be quashed. This pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1957? 2. The learned: Judicial Member after referring to the above facts observed that the question raised by the revenue was neither examined by the authorities below nor by the Tribunal at any stage. In fact it was never raised. A question that was not raised before the Tribunal could not be said to arise out of the order of the Tribunal. Section 42C referred to in the question was introduced with effect from 1-10-1975 and as the return in this case was filed earlier to that date, the question of section 42C applying does not arise more particularly when a circular issued by the CBDT made it clear that section 42C is only prospective in opera- tion and not retrospective. Eventually he held that no question of law arose from the order of the Tribunal. But the learned Accountant Member held to the contrary. According to him when the Tribunal admitted the additional ground on the ground that it gave rise to a pure question of law, that pure question of law having been decided by the Tribunal by eventually cancelling the penalty, a question of law did arise out of the order of the Tribunal. However, he felt that the question of law that arose was not a question that was raised b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investigation into facts. If such a ground is raised, that ground can be admitted. The reason for the admission of that ground is existence of a legal question. Once the ground was admitted, it becomes part of the several grounds raised. Then the Tribunal passes an order after hearing those grounds. It is that order that was eventually passed by the Tribunal that must give rise to a question of law. If eventually the order passed by the Tribunal does not give rise to a question of law, the mere fact that an additional ground was admitted on the ground that it raised a question of law does not convert the decision given by the Tribunal into a question of law even though the decision ultimately given was on the basis of the appreciation of evidence, e.g., in the case of reopening of an assessment it is absolutely essential to assume jurisdiction under section 147 to serve a notice under section 148 of the Act. Suppose an assessee takes the plea before the Tribunal that no notice was received by him, then that is a legal question and also goes to the root of the assessment. The Tribunal may admit that ground and on examination find that no notice was served. The Tribunal may then ann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut by the learned Judicial Member with whom I agree that question of application of section 42C was never raised before the Tribunal nor was it ever in its contemplation. It is now well settled that the questions of law that can be said to arise out of the order of the Tribunal are: 1. When a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order. 2. When a question of law is raised before the Tribunal but the Tribunal fails to, deal with it, it must be deemed to have been dealt with by it, and is, therefore, one arising out of its order. 3. When a question is not raised before the Tribunal but the Tribunal deals with it, that will also be a question arising out of its order. 4. When a question of law is neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that it may arise on the findings given by it. This is a case, in my opinion, covered by item 4 as pointed out by the Supreme Court in the case of CIT v. Scindia Steam Navigation Co. Ltd. (1961) 42 ITR 589 and, therefore, it cannot be said that any question of law arises out of the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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