1978 (1) TMI 100 - AT - Wealth-tax

Summary

Issues:
- Competence of the AAC to entertain appeals against penalties under s. 18(1)(a) of the Wealth-tax Act when CWT has already exercised power under s. 18(2A)
- Jurisdiction of CWT to entertain applications under s. 18(2A) for assessment year 1971-72 due to non-voluntary filing of returns

Analysis:

1. The appeals were filed by the Department against the order passed by the AAC cancelling penalties levied by the WTO under s. 18(1)(a) of the Wealth-tax Act for default in filing wealth-tax returns for assessment years 1967-68 to 1971-72. The Department contended that the appeals were not maintainable before the AAC as the CWT had already passed a composite order reducing penalties for the earlier assessment years under s. 18(2A) but rejecting the application for waiver or reduction of penalty for the year 1971-72.

2. The counsel for the assessee argued that the jurisdiction of CWT under s. 18(2A) is different from that of the AAC under s. 23(5) of the WT Act, emphasizing the need for the AAC to examine the reasonable cause for late filing of returns. The Tribunal noted the absence of a specific decision on whether the AAC can entertain an appeal when CWT has already exercised power under s. 18(2A). A decision by the Third Member of the Tribunal held that the AAC is not competent to cancel penalties when CWT has already passed an order under s. 18(2A).

3. Regarding the assessment year 1971-72, the CWT declined to grant relief under s. 18(2A) due to non-voluntary filing of returns, which the assessee argued did not bar the AAC from considering the question of reasonable cause. However, the Tribunal rejected this argument, stating that the CWT had jurisdiction to pass the order even if relief was not granted based on fulfillment of conditions under s. 18(2A). The decision of the Third Member of the Tribunal was deemed applicable for this assessment year as well.

4. Ultimately, the Tribunal held that the AAC was not competent to entertain the appeals and cancel the penalties. Consequently, the impugned orders were set aside, and the orders of the WTO, consequential to the order under s. 18(2A) passed by the CWT, were restored. The Tribunal's decision was based on the principle that the AAC cannot interfere with penalties when CWT has already exercised its power under the Wealth-tax Act.