2008 (9) TMI 287 - HC - Wealth-tax

The returns were filed by the deceased assessee and there was no obligation on the legal representative to file the return of wealth. Pursuant to the returns of wealth filed by the deceased assessee assessments were also completed and after issuance of penalty notice and during the pendency of penalty proceedings but before the penalty orders were passed the deceased expired. Thus the penalty orders passed on the legal representative are contrary to the provisions of law and he cannot be made liable to any penalty.

Summary

Issues Involved:
1. Whether the Income-tax Appellate Tribunal was right in upholding the order of the Commissioner of Wealth Tax (Appeals) deleting the penalty levied under Section 18(1)(c) of the Wealth Tax Act without considering the provisions of Section 19(1) of the Wealth Tax Act.

Issue-wise Detailed Analysis:

1. Penalty under Section 18(1)(c) for Assessment Year 1984-85:
The Tribunal upheld the deletion of the penalty levied under Section 18(1)(c) for the assessment year 1984-85. The legal representative of the deceased assessee challenged the penalty orders, and the Commissioner of Wealth Tax (Appeals) deleted the penalties, reasoning that since the original assessee had passed away, the penalties could not be justified. The Tribunal confirmed this view, noting that Section 19(1) does not include penalties under Section 18(1)(c).

2. Penalty under Section 18(1)(c) for Assessment Year 1983-84:
Similarly, for the assessment year 1983-84, the Tribunal upheld the deletion of the penalty under Section 18(1)(c). The Commissioner of Wealth Tax (Appeals) had taken the view that penalties could not be levied on the legal representative of the deceased assessee, and the Tribunal confirmed this decision.

3. Penalty under Section 18(1)(a) for Assessment Year 1968-69:
For the assessment year 1968-69, the Tribunal upheld the deletion of the penalty under Section 18(1)(a). The Commissioner of Wealth Tax (Appeals) concluded that the legal representative could not be held liable for penalties for defaults committed by the deceased assessee, and the Tribunal agreed.

4. Penalty under Section 15B for Assessment Year 1970-71:
For the assessment year 1970-71, the Tribunal upheld the deletion of the penalty under Section 15B. The Commissioner of Wealth Tax (Appeals) reasoned that the legal representative could not be penalized for defaults committed by the deceased assessee, and the Tribunal confirmed this view.

5. Penalty under Section 15B for Assessment Year 1971-72:
For the assessment year 1971-72, the Tribunal upheld the deletion of the penalty under Section 15B. The Commissioner of Wealth Tax (Appeals) held that penalties could not be levied on the legal representative, and the Tribunal agreed.

Legal Arguments and Court's Analysis:
- The Revenue argued that Section 19(1) of the Wealth Tax Act allows for the recovery of penalties from the legal representative of the deceased assessee, citing the Patna High Court decision in Rani H. R. Laxmi (Late) through B. K. Singh v. Commissioner of Wealth Tax.
- The respondent's counsel argued that Section 19(1) does not include penalties and that Section 19(3) specifically excludes Sections 15B and 18 from its ambit, thus penalties cannot be imposed on legal representatives.
- The Court noted that the plain reading of Section 19(1) and 19(3) supports the view that penalties cannot be levied on legal representatives. The Court cited various High Court decisions, including those from Andhra Pradesh, Madras, Allahabad, Madhya Pradesh, Rajasthan, and Delhi, which consistently held that legal representatives are not liable for penalties for defaults committed by the deceased assessee.

Conclusion:
The Court concluded that no substantial question of law arises from the Tribunal's order, as the legal representatives of the deceased assessee cannot be held liable for penalties under Sections 18(1)(a), 18(1)(c), and 15B of the Wealth Tax Act. The appeals filed by the Revenue were dismissed.