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TMI Blog1989 (7) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... alth-tax is reproduced hereunder : " 6. In the result, the WTO is directed to modify the assessments for the assessment years 1968-69 to 1974-75 after determining the correct value of the gold ornaments and articles of ' Judtar ' and after referring them for valuation to the Government's Approved Valuer. The WTO shall, of course, give adequate opportunity to the assessee to present her case in this regard, before modifying the assessments in question." The penalty proceedings initiated u/s. 18(1)(a) at the time of completing the original assessments on 30-3-1979 were to get barred by limitation on 31-3-1981. However, since the Commissioner had already passed the order u/s. 25(2) on 18-3-1981 prior to the aforesaid date of limitation of time for penalty order, the WTO neither dropped the penalty proceedings nor passed any order imposing penalty u/s. 18(1)(a) with reference to penalty proceedings initiated at the time of making the original assessment orders on 30-3-1979. The WTO passed fresh orders pursuant to order u/s. 25(2) passed by the CWT on 29-3-1985 and once again initiated penalty proceedings under section 18(1)(a) on that date, i.e., on 29-3-1985. The WTO levied penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t initiation of penalty proceedings, the same would have become infructuous with passing of the order by the CWT u/s. 25(2) and it would have unnecessarily resulted in multiplicity of proceedings. He further submitted that the doctrine of merger is also available in the present case and the original assessment order merged with the order passed by the Commissioner of Wealth-tax u/s. 25(2) and the assessment proceedings should be deemed to have been completed on 29-3-1985, when the WTO passed fresh assessment orders pursuant to order passed by the CWT. The learned D.R. contended that the penalty proceedings initiated once again at the time of making fresh assessment order on 29-3-1985 was perfectly valid and in view of this fact the penalty orders passed by the WTO on 19-3-1987 are not barred by limitation of time, as erroneously decided by the AAC. He therefore submitted that the order passed by the AAC deserves to be cancelled and the orders passed by the WTO imposing the penalties u/s.18(1)(a) for all the aforesaid years should be restored. The learned D.R. further contended that the assessee's case is clearly covered by the provisions of section 18(5)(b) of WT Act, 1957 which pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings, in the course of which action for imposition of penalty has been initiated, are completed. In this case the penalty proceedings were initiated during the course of assessment proceedings which were completed on 30-3-1979 and hence the time limit for levy of penalty expired on 31-3-1981. In view of the aforesaid provisions, the penalty order passed by the WTO are apparently barred by limitation of time and the learned AAC was fully justified in cancelling the penalty orders for all the aforesaid years. He further contended that there is no provision in the Wealth-tax Act for separate limitation of time with reference to order of revision passed by the Commissioner u/s. 25(2). The learned counsel also contended that Direct Tax Laws (Amendment) Act, 1985 has now inserted section 5(ii) providing for separate limitation of time where the relevant assessment is the subject matter of revision u/s. 25(2). This provision is effective from 1-4-1989. It was submitted that by necessary implication, at establishes that prior to amendment of section 18(5) made by Direct Tax Laws (Amendment) Act, 1989, the provisions of Wealth-tax Act did not provide for any separate time limit for pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which the order of the Deputy Commissioner (Appeals) or the Commissioner (Appeals) or as the case may be, the Appellate Tribunal is received by the Chief Commissioner or Commissioner, whichever is later ; (ii) in a case where the relevant assessment is the subject matter of revision under sub-section (2) of section 25, after the expiry of six months from the end of the month in which such order of revision is passed ; (iii) in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. Explanation : Incomputing the period of limitation for the purposes of this section (i) any period during which the immunity granted under section 22H remained in force ; (ii) the time taken in given an opportunity to the assessee to be reheard under the proviso to section 39 ; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders within six months from the end of the month in which the appellate order passed by the AAC/CWT(A) or the Tribunal is received by the Commissioner, whichever period expires later. This provision was inserted to enable the W.T.O. to pass penalty orders after the quantum appeals are decided by the appellate authorities so that the penalty can be correctly quantified. This amendment was made to obviate difficulties arising in cases where the appeals were filed against the assessments, for reducing infructuous work and avoiding hardships to the assessee. The provision of section 18(5), as it existed during the relevant periods did not contain any separate period of limitation where the relevant assessment is the subject matter of revision u/s. 25(2), although specific provision was provided for with reference to limitation of time for passing penalty orders where the relevant assessment were the subject matter of appeals. In section 18(5)(b) the limitation is provided for all residuary cases where the assessments are not subject matter of appeals. The penalty proceedings were admittedly initiated in the aforesaid case at the time when the original assessment orders were passed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n relation to such modified assessment orders. A comparison of the language of section 18(5)(a) with section 18(5)(b) clearly reveals that the residuary clause (b) should be interpreted to mean that the period of limitation of two years will begin from the end of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed. The proceedings for penalty in this case were initiated during the course of original assessment proceedings. Therefore, the limitation period of two years should be computed from the date when the original assessments were completed on 30-3-1979. The subsequent revision or modification of the assessment order pursuant to order u/s. 25(2) passed by the Commissioner cannot alter the limitation period which had already expired with reference to the date of completion of the original assessments. Any modification, revision or alteration in the assessment order will take place only after the completion of the original assessments and it cannot be said that the proceedings in which the penalty proceedings were initiated, were completed when the modified assessment order was passed pursuant to o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequent re-initiation of similar proceedings u/s. 18(1)(a) is contrary to the provisions of law as no person can be vexed twice in respect of the same default, namely, late riling of the return, which are obviously quasi-criminal proceedings. In the present case the order passed by the Commissioner u/s. 25(2) merely contained directions for modification of the assessment orders already passed by the W.T.O. only with regard to specific items of wealth mentioned in the C.W.T.'s order u/s. 25(2). Such specific direction also precludes the W.T.O. to once again initiate penalty proceedings u/s. 18(1)(a) at the time of passing modified order in pursuance of the order of the C.W.T. In view of specific order of the C.W.T. requiring limited and specific modification, the W.T.O. could not validly re-initiate the penalty proceedings, specially when the earlier proceedings initiated u/s. 18(1)(a) on 30-3-1979 were allowed to become barred by limitation of time by him. In view of the aforesaid discussions we agree with the findings given by the A.A.C. that the penalties imposed for all the aforesaid years by the W.T.O. vide order dt. 19-3-1987 had already become barred by limitation of time an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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